Startups

Editor’s note: Matt Turck is a managing director of FirstMark Capital. Follow him on Twitter @mattturck. The emerging Internet of Things — essentially, the world of physical devices connected to the network/Internet, from your Fitbit or Nest to industrial machines — is experiencing a burst of activity and creativity that is getting entrepreneurs, VCs and the press equally excited. The space looks like a boisterous hodgepodge of smart hobbyists, new startups and large corporations that are eager to be a part of what could be a huge market, and all sorts of enabling products and technologies, some of which, including crowdfunding and 3D printing, are themselves far from established. (Click to enlarge) The chart to the right is an attempt at making sense of this frenetic activity. From bottom to top, I see three broad areas – building blocks, verticals and horizontals: Building Blocks The concept of the Internet of Things is not new (the term itself was coined in 1999), but it is now in the process of becoming a reality thanks to the confluence of several key factors. First, while still challenging, it is easier and cheaper than ever to produce hardware – some components are open sourced (e.g. Arduino microcontrollers); 3D printing helps with rapid prototyping; specialized providers like Dragon Innovation and PCH can handle key parts of the production process, and emerging marketplaces such as Grand St. help with distribution. Crowdfunding sites like Kickstarter or Indiegogo considerably de-risk the early phase of creating hardware by establishing market demand and providing financing. Second, the world of wireless connectivity has dramatically evolved over the last few years. The mobile phone (or tablet), now a supercomputer in everyone’s hand, is becoming the universal remote control of the Internet of Things. Ubiquitous connectivity is becoming a reality (Wi-Fi, Bluetooth, 4G) and standards are starting to emerge (MQTT).  The slight irony of the “Internet of Things” moniker is that things are often connected via M2M (machine to machine) protocols rather than the Internet itself. Third, the Internet of Things is able to leverage an entire infrastructure that has emerged in related areas. Cloud computing enables the creation of “dumb” (simpler, cheaper) devices, with all the intelligence processed in the cloud. Big data tools, often open sourced (Hadoop), enable the processing of massive amounts of data captured by the devices and will play a crucial role in the space. Verticals Unlike the Big Data space, where the action is gradually moving from core infrastructure to vertical applications, the Internet of Things space is seeing a lot of early action directly at the vertical application level. Some notable players like Nest Labs seem to have adopted a deeply integrated vertical strategy where they control key pieces of the product, including both hardware and software, in order to have complete control over the end-user experience (a lot like Apple, which is not surprising considering the founders’ background). Beyond the Nest, home automation in general has become the central battlefield of the Internet of Things, with some of the most exciting startups in the space jockeying for position. Another hot consumer-facing area is obviously quantified self, which is playing a huge role in developing consumers’ awareness of the potential of the Internet of Things. Beyond consumer, B2B/enterprise vertical applications of the Internet of Things, fueled in part by robotics, hold considerable promise in a number of areas such as manufacturing, transportation, healthcare, retail and energy. Some of clearest revenue opportunities for IoT startups are in the enterprise area. Horizontals While a lot of the action is happening at the vertical application level, the ultimate prize for many ambitious players in the space is to become the software platform upon which all vertical applications in th

It’s that time of the week for CrunchWeek, the show where a few of us writers chat up the most interesting stories from the past seven days. Ryan Lawler, Greg Kumparak, and I chatted about Yahoo’s $1.1 billion purchase of Tumblr (and the reports that the company is eyeing a purchase of Hulu); Lyft’s $60 million raise from Andreessen Horowitz and the big reveal of Microsoft’s next generation gaming console, the Xbox 1. Tune in above for more!

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Editor’s note: Tadhg Kelly is a veteran game designer, creator of leading game design blog What Games Are and creative director of Jawfish Games. You can follow him on Twitter here. During the 1940s Howard Hughes spent millions developing and building a plane with the largest wingspan in history and a huge carrying capacity. The Spruce Goose was meant to solve a problem of moving troops and material for the second world war effort, but by the time it was tested, the war was already over and the plane’s engine technology was being superseded by jets. Even with more money at his disposal than Solomon, Hughes could not convince the world that his propellered giant had a place. I think it might be a similar story for the Microsoft Xbox One. What’s Xbox One Good For? Even at a physical level the Xbox One idea just doesn’t work for me. For one thing, it looks huge and ugly, like an old Toshiba VCR. Its next-generation Kinect is farcically large for what amounts to a fancy webcam, and the console also needs to be connected to your cable box in order to serve up all of its television features. That’s a lot of technology to find room for under your TV set at a time when everything else seems to be getting smaller. Unlike the miniature Apple TV or OUYA, Xbox One demands pride-of-place and lots of room, and when I put those two ideas together it just doesn’t work. It fails my wife’s test of asking that our living room not be overrun with technology. It fails the small-apartment test, the small bedroom test and the crowded family home test. The fact that the Kinect needs to be attached before it can even be switched on merely reinforces that fact. And even after all that, what is Xbox One’s core function?  TV TV TV. TV you can control with gestures. TV you can command with your voice. TV that can be sidebarred. TV that can trend, find, recommend and socialize. Transmedia TV. Gamelike additions to TV. Halo the TV show. It’s a fancy remote controller, an adjunct to your existing services whose job is to make it slightly easier to search for Game of Thrones. It’s also a way to have Skype chats with friends while watching Star Trek, listening to both friend and film speak over each other in real time. What else? A music player perhaps, but doubtful one that will work with your iTunes library. A social networking device if you can get voice recognition to actually work. A Netflix box perhaps, but what isn’t these days? A games machine, but not for all of the varied types of innovative games that now populate your smartphone. Only the big and the bold will do for Xbox One. When you say it like that this new console does seem rather odd, doesn’t it? The Short Head What started when the Xbox 360 went from a much-beloved home of indie games in 2008 to a monotone Metro-powered top-10s machine in 2011, Xbox One continues. It’s what Chris Anderson might call aiming for the short head. Microsoft only wants to talk big, top 10, top 25. It seems to believe that that’s the only conversation that anyone cares about. As part of the event, Microsoft had Electronic Arts showing us a demonstration of a new game engine delivering water dripping off NFL players’ helmets and UA fighters getting slow-mo kicked in the face. It had Activision showing Call of Duty clips and dog animations that gave the Internet plenty of GIF ammunition. It had next generation Forza. These are all big-game plays, and between showing them off and talking about key partnerships, the implication is that Xbox One intends to use a strategy similar to the old Nintendo Entertainment System. That is to say: tentpole releases only, nothing but strikes. No great depth of diversity, but instead a system targeted solely at mass audiences. Madden-as-a-service, hooked up to your real NFL tv shows and fantasy games. A way for big connected plays to capture all of their value and place Microsoft at the heart of gamin