>> author larry downs says we are now in the second generation of disrupted innovation as a result of the digital revolution. soon everything from our home they are stat, drier, car and door locks will communicate with each other in the sensor revolution. he joined communications consultant robin murdoch and author sean dubravik about data collections and electronics at the churchill club in san jose, california. >> welcome everyone. i'm the chief economist for the consumer electronics n, possibly best known as the producer of a small little trade show in las vegas called the international cs. we're just off our biggest year, almost 50 years of history. 2.2 million square feet, 170,000 of your nearest and dearest friends so i'm sure we'll be talking about that today and this is my oprah moment.

we've given you all a copy of my newest book which was just published yesterday "digital dysny" which looks at the history of how we ended up here but also paints a picture of what the implications are when everything becomes digital, becomes connected, becomes sensorized and we see a world that impacts every experience we have. we'll get into that as well. larry, let me turn it to you and perhaps you can spend a minute to introduce yourself, robin as well? >>. >> sure. thank you and thank you to the churchill club and center and congratulations on your book. i had the privilege of reading it in manuscript so i can say with complete confidence it will be a terrific success. i think it encapsulates a lot of the same kinds of technologies that i've been looking gnat the research i've been doing and

that was the basis of our book last year "big bang disruption," and it e's more of the same. we talked about that this year because we were there, my feet still hurt. but i think one of the big themes i want to look at is what we think of as the sort of the second generation of disruptive innovation as a result of the digital revolution. so 20 years ago when i first started writing about these trends, the industries affected immediately were the obvious ones, consumer electronics, computing, communication, entertainment and media. the ones that were effectively using those technologies all along as kind of the core of their offering. what we found the research for big bang destruction was that now we're entering a new stage where all the other industries that weren't affected or weren't as transformed first time around now it's their turn. and a lot of interesting reasons

we could talk about, why some industries happen slower than other, some happening faster than others but all the same kinds of being amazon, being napsterized, all the sort of same things that happened the first time around are starting to happen in industries that had very little impact last time and that's created an interesting set of threats and opportunities for incumbent businesses as well as startups, investors, and, you know, other interested parties. so those are the technologies i think that you write about so well in the book and,=e you kn we should sort of hopefully talk about some -- as many as we can. >> robin? >> my leads are global industry that serves our social clients around the world. i've been with accenture for nearly two decades and one of the privileges of working there

is i get to work with lots of exciting clients and as i charity my history with accenture, i've been working around digital disruption for the last couple of decades and it's interesting you mentioned napst napster. i was working with the music major, all of them, when napster hit them and made their response or lack thereof and then i -- i've done work on the console gaming space. i've worked over the last three generations of the consoles we know and love today. and those are kind of interesting from arp"% digital disruption perspective because unlike the smart phone we throw away every three years, consoles, playstation, xbox, they have to last for a much longer period of time so the strategy and digital decisions you're going to make around architecting those consoles and how you launch them and they

work through those generation different from a lot of the throw away consumer electronics we've seen today. i've been lucky enough since 2005 worked with the leading cloud providers on architecting their global clients and that's interesting because you're making decisions that are quite often a decade or, indeed, if you're looking at things like network technology, that's a two decade investment so you're peering into the digital future and trying to guess where the world is heading. then as you look at sort of some of the other areas i've worked ino+;jw around mobile and iat a you look at the results from ces, amazing development just over the past year around the internet of things and just bringing it full circle, i started my career with ford motor company back in europe in vehicles development around

electronics and i worked with ford back in '95 with virtual reality, using silicon graphics and i a thing called a cyber glove that you put on and you could see your hand. 20 years on it actually works. back in the day 20 years ago it didn't and we couldn't achieve what we want. so it's interesting as we look at digital disruption and the fast pace that we see that everything is changing really, really fast, that there are these long cycle developments around digital technology that actually underpin a lot of the change we see and the disruption we see right now. although we look at disruption and say it's happening right now, a lot of the seeds and foundations that allow that disruption to occur are sew sow other a decade or so. so congratulations on the book, sean. i've skimmed it. i haven't had a day to read it but fascinating reading. >> thank you. it's interesting we both -- all three of us but really both of

you have talked about time act it's something i talk about in the book as well. we tend to think of these eureka moments. these ah-ha moments where innovation is binary but really it's part of this broader evolutionary path that plays out over years or decades. i think that's definitely what we see with the trends we're talking about today, digitization, connection, sensorization, we started first with devices that were owned at very high frequencies, televisions were one of the first to become digitized, 98% of households have them, they own three of them. so you take something widely owned and start there. so we've now gone through over the last 15 years all of the core devices that we have. and we're starting to now spill over into these adjacent space, these second order effects, i suppose, if you will. what do those start to look like? we can paint to the end of the story where everything gets

impacted. that's an easy jump. what's the sequence of events? do we see from now until the end of digitization, if you will. >> well, as a general rule, one of the things that we have found in our research about industry transformation is it sort of happens -- there's a famous quote from ernest hemingway, a character asks another character "how did you go bankrupt?" and he says "two ways, gradually and suddenly." and that's what we've found in the industries. you see a long period of graj wall change where the incumbents say all right, this new technology is coming, it may eventually affect our core customers or products but it's happening as an incremental way, almost a predictable way and we don't to worry about it. then one day some event happens or some critical mass is reached, some product, somebody finally gets the right combination of technologies and business model and they put it together and they let it go and

it's facebook and all of a sudden, you know, all of the rules are changed and i think that's sort of -- you know, the general trend we're seeing. so as you talk about in the book, the price performance and size and power utilization are also very important of sensor technologies and kind of, you know, computing stuff is getting better all the time and you keep having this moor's law type of effect. so it now becomes cost effective to start introducing intelligence into more and more things and my takeaway, i think, from las vegas last week i said in an article that we did for "forbes" was if there was a sort of one overriding message, it was kind of the theme song from the lego movie. instead of everything is awesome it would be everything is connected. everything you saw was connected to everything else. and one of the ones that really struck me was the next start

thermostat. they now have a partner program called -- works with nest and a list of partners initially seemed completely bizarre. it was the car companies, it was the lock company, it was -- i'm trying to remember some of the -- oh, your fitbit, like what do those have to do with the thermostat? well -- oh, and the dryer, that was it, whirlpool was part of it. so your dryer is talking to your thermostat. what's going on? well, it's telling you if you're -- let's say you get in the car and you left, okay, well, the cartels that to the thermostat, the thermostat says nobody's home, turn down the heat or turn off the air conditioning. and if you're not home, then the dryer can be told "hey, they're not coming back so slow down the cycle and ten minutes before they arrive turn it back on to get a fresh cycle." or when you put your key in the smart lock it says "oh, sean just walked in the house, this

is the temperature he likes." so adjust the settings accordingly. and these are kind of connections that, as i say, initially they seem quite bizarre but as you kind of work your way through it you realize, wow, that makes a lot of sense and, of course, these are totally different industries, the car companies and the washing machine companies and they were stat companies and google. they don't normally seem like people who would be partners or things that would go together but once you get to that incredibly low price point and you just shove a sensor, dozens of sensors into everything then suddenly these connections become possible and the idea of industry, you know, this is the car industry, this is the manufacturing industry, this is agriculture, the very idea of industry starts to fall away and you see these very strange bedfellows. >> and i think one of the things that happens in technology is we have resources that go from scarcity to surplus. so i was thinking about '60s and

'70s where computing power was a scarcity and so we used it sparingly. universities may or may not have had computer access. there might have been a mainframe people could queue up for, they would sign up for time on the computer and then around '84 we take that scarce resource and it kind of becomes an abundance so we start to waste it. 1984 apple, of course, introduces the mcintosh, the first computer to use a practical user interface. prior to that time we never would have wasted power on that because it was a redundant feature. if you wanted to control the computer, you would use a command window. xerox tried a graphic cal user interface in '81 but it wasn't successful and it was expensive because you had a pay a premium for that computing power. i feel like sensors are there today where it's gone from scarcity to surplus and we waste it and when we do it creates

these new opportunities or these new marketplaces so i think about image sensors of phone. we used to include one image sensor on the book, then we included a second one on the front, now we're including multiple ones. but include a second one on the front and what happens? it changes our behavior and introduces the selfie and then we can argue whether that's a good thing or bad thing. >> the word of the year -- two years ago. >> and that's'm power because we deployed sensors on the front of that mobile device. so if you're in an industry you need to think about what are the deployment of sensors going do to the experience that my end user has. >> that's a great example of the gradual and suddenly phenomenon. one of the things that's driving the sensorizization of everything is sort of an unexpected event which was the smart phone revolution. so we now have a billion plus smart phone devices. and what that's done is created the secondary market for the

parts that go into smart phones. so if you take a commercial drone, if you take a 3d printer, if you take most of the things in the internet of things, if you literally take them apart, you find most of the pieces in them are smart phone pieces. obvious they're last-generation smart phone pieces and you can buy them cheap on the secondary market because they've been made in such incredible volume you say i need a gyroscope, the chip sets, they're being made in such volume in the smart phone market that it spills over into these other industries and suddenly what might have been years away from being a cost effective moment in which to introduce these torjs ooechnologies, oops it's happening overnight. >> i'd say if you look at the core technology, i like to think of it in simplistic terms as the device level, huge advances as both of you rightly say at the sensor level. you've then got the network, the connectivity, talking about these connective devices.

arguably connectivity certainly is not moving as fast as we're seeing in advances in devices and then you've got the cloud which is unlocking incredible creativity. but i'm struck by the at a technology level there were those things happening but there are three other things that i think are almost as vital and i think the reason we're seeing the explosion of creativity and everything you're seeing is not only the technology development but also the fact that there are kind of open ecosystems for development. so if you're a small startup today, you can now conceivably go into the hardware space. you can work with a variety of different players in the supply chain from shenzhen to using amazonsh ship bar to do your fulfillment. you can get into the hardware space. and in the software space we've seen years of open source so you can stand on the shoulders of

giants. the other thing, and we mentioned smart phones, you can look at the smart phone or the user and the financial power of that user and, you know, with android and ios, that's one billion customer accounts. one billion paying users that you as an individual developer are willing to sign up and develop for android or ios, you can access. well, that's unique. that's something happen that's happened over the last year and then sort of back to your world, sean, you know, just continual rise in consumer electronics. and, indeed, enterprises spend in consumer electronics and what's fascinating in that space is not only are we spending more and more on consumer electronics at the expense of other categories, products like your tv is costing less, certain categories are going obsolete so you've kind of got a hedge room opening soup that kind of fuelling of spans in these new

categories is phenomenal and it comes to the point of, you know, how many units of the apple watch will be sold and what's your proxy for how many apple watches will be mold? well, there's such a huge amount of spend opening up for these i think we're in an amazing tim of creativity in the digital space and it's almost this cambrian moment where we're just seeing proliferation of so many by cs. the interesting thing will be one which ones of those will survive, which ecosystems will eórvive? '"tp'd to your point, larry, ab how will they interact, it's a very good question. which services will be the king makers and the platforms that everything will congregate to? will bitit be ios or android? i think it will be a fascinating time and incredible amount of

change we see over the next few years. >> and the standards, too. a big part of it, we've been seeing this on the internet of things for the last several years is there is not yet a kind of dominant standard for how these devices will share data and interact. there are three, four, maybe five competing ones, we don't -- i wouldn't predict which one is going to win but we also found in the research that it's very typical in an emerging new co-system that you will see -- in fact, it's a sign of maturity when you see a fight among different possible standards providers and eventually, as i say, it gets worked out. but until it gets worked out it's very chaotic and right now most of the internet of things, solutions -- and there were many more of them this year than last year -- but most of them are point solution, like okay, this is the smart baby monitor, this is the smart electric grill, this is the smart -- what was my favorite? oh, the smart yoga mat. that was a good one this year. they're really aimed at a particular solution for a

particular audience. they're not really part of some whole. but you can see it's kind of groping towards that and we know it will happen, but as you say, we don't know who is going to make the market. >> and i think what we're doing is we're building up the nodes, right? so you're building up the nodes of the network and the nodes of the network five years ago were a couple of core device, primarily p.c.s, mobile phones started to show up, tablets. but we've changed the structure of the network making the mobile phone right now the center of this network so it becomes a hub device. and if you look at those devices that are launching, connecting to the internet, they don't have an interface. the interface is the smart phone, that's the view finder into this digital life. i look back 15 years ago and our digital existence was separate from our analog existence. we kept those two worlds separate and we would actually

go online. we even talked about going online or logging online and we viewed those as very distinct identities. and we see that blurring with that mobile phone really becoming the bridge that allows us to easily toggle between those two identities which were once very distinct and now we're quickly merging. >> which may not necessarily be such a good thing. >> yeah. and i think -- i mean, that's an interesting premise that social norms will start to sets in and will start to apply social norms to what we want to have digitized and what we don't want to have digitize sod the question now is not can we digitize it, it's not a technical question anymore. and that used to be the focus was, you know, the technical solutions, now it's should we digitize? and if so, how do we connect? do we connect it directly over a 4g or 3g or 2g network? do we use bluetooth? do we use some other type of

communication protocol? what's the use case scenario. that's the paramount question. what is the use case scenario for my experience? >> and one of the sort of -- one of the positive side effects of all this entrepreneurship and innovation is you do get kind of a thousand flowers blooming and people experimenting and as robin says it's so easy you can source the part, you can build stuff and everything can be done so --in such a virtual wall that buck in the hardware business even if you're one person and we found great examples, a couple art teachers making products just for fun. the risk, though, is because there is no head to this monster is i think one of the big problems we're already seeing. we're concerned about privacy and security which is no surprise. so, you know, a lot of the folks are going into the business of internet of things, sort of smart device, don't a lot of history, they may have no

history, they may literally be startups so they don't understand concepts like privacy by design, they don't think about encryption or what's the risk case here and not so much even the damage but the bad pr that it causes for everybody when somebody hacks the smart baby monitor and starts talking to somebody else's kid which which it's so creepy that people step back and say, well, maybe there should be a central authority here defining the standards before we go too much further. clearly not the way things nap the united states so it doesn't matter if that's what you want or not. but it is one of, i think, one of the downsides to our open-ended kind of permissionless innovation culture. >> it's interesting. you mentioned the data sets that are being built and whether it's controlled. one of the things that sort of we're seeing is that there's all this silo data being built up by multiple different players that isn't talking to each other and,

in fact, a little exercise over the last few months i extracted all the data i could from every single digital service that i use so i wanted to see who had one on me and i went to google, to facebook, to fitbit, to all of these sources and pulled the data and the reality is, what you realize when you do that is, well, one, there's an unparalleled amount of information being captured. for instance, i learned fromming into that will my average altitude last year was 602 feet. [ laughter ] how does google know my average a altitude? well, that's a factoid they don't necessarily publish. but i'm struck by the silo data. and what i'm intrigued by is you can look at all of the trust issues, security threat, privacy, okay, naught to one side. what's the opportunity or that data being connected? and where is that going to lead and how will that data be

brought together. i think a really nice example of that is in our personal memory space so in our photos and our videos and if any of you are like me, you know, you've got your photos stored in a variety of different places and video. you have your fitness data and other data sets. think about that narrative if it was brought together about telling a story about what you did last year, where you were. i know some of it's shown on facebook. facebook's done interesting things with their year in review. but i'm just fascinated by how does that data set get harnessed in the future. how does it get combined? and how does it draw insights and improve our life, entertain us, inform us. certainly in the business world, how does it improve business outcomes. i think we're in this interesting period of time where things aren't really talking to each other. we're all creating this proliferation of data but it's yet to really be harnessed. i think one of the brilliant thing, though, is it's

offsetting in cloud so when technology finally catches up, my 40,000 photos that sit on icloud or in google, you know, interesting things will happen with those in the future. >> when i think it's when we start to move to predictive recommendation. so right now we do a great job of looking in the past. here's your photos, here's the number of steps you took, here's the movies that you've watched. but we don't do a great job of predicting a recommendation. especially when it deviates from the historical course. so there's no reason today that some of these fitness devices, wearable devices, couldn't also look at my calendar, which is digital, and say, hey, you're not going to hit your goals today unless you deviate from your course. looking at the foe toerphoto, y easily imagine vacation

recommendations and places where you might want to go, like saying oh, we see a lot of beach photos, those are your favorite photos and it connects with this inner enjoyment that we have that we didn't maybe fully recognize. i thought i liked the beach, and these recommendations are now saying i should can check out these beaches because of the photos. i think one of the big struggles for companies today is figuring out how much do i tell the customer about themselves? they know a tremendous amount and they're hesitant to be to over the top with how much they can tell them. so they don't bother to tell you what your average altitude is because they don't want necessarily to freak you out. but when that becomes a use ffu data source to inform and predict something you might be interested in, that's something you see. >> and how you drive usefulness out of it.

i've been using the tile app, the google tile that you attach to your keys and it's track mig location and am i fully aware of that this small startup has this location data? well, i am. but it's the reason when i'm in a concert and park my car in a place where that i forgot it was able to guide me back to my car. so i'm happy to have that tradeoff of them knowing my location when events like that happen that are remarkable. >> you're both talking about this use of dictate for personal enlightenment. i was hearing a story on the radio this morning about the genetic service 23 and me where you take a swab of your saliva and they decode interesting parts of your dna and in a short time they've built up a

substantial database of individual dna samples. they're now with the permission of their members said they've -- they've sent a data set of 5,000 sets of this information to pfizer to use in research on future lupus treatments and lupus drugs. and in some ways putting the information about you is valuable, even more information you put all the information or some subset of the information about a lot of people abstract it and use for something differe different. and when you start talking about those uses, then what i consider the creepy factor kicks in. 23 and me is sending data to drug companies, that sounds awful but then you think they have permission, two research, three it may improve health outcomes so you have to start making tradeoffs as you were saying and sometimes they're implicit and explicit we have to

make more of them as data sets start to become connected or connectible. and we see these pockets and we realize okay the good news is x, the bad news is y. >> it's an incremental set of jumps. one of the things i find amazing over the last couple of years, three years or so, there's been lots of talks about when we were going to use the cloud as our golden copy for our data and it's been talked about the internet space, technology space for years. if any of you brought in your iphone and you when you had your old iphone and you wiped your old iphone then you downloaded everything to your phone, most people did it through itunes.

wuhl, in that one case all of your personal data was in the clouds and your golden copy was in the cloud and your phone became secondary to your golden copy to the cloud. and i think that is happened. and that flip from stuff being stored likely and all of your personal memories being stored to now the golden copy being in the cloud is something that happened to us and most people don't realize that the massive shift occurred. but i think there are incremental jumps that are happening and -- and i think back to one of the earlier comments, each one of those might not seem that big, but my god, it takes you so far, in the golden globes richard link letter won for boyhood where he shot it three days, every year, for the last 12 years. and one of the things he did, it was a great interview with the

economist and he made sure that in every shot they did, every shoot they did each year, they included some technology of the day in the shots so you could see the advance that had occurred because he wass insightful enough to know that over changing the 12 years of the film, the one things that would impress the people was the change of technology and that is what you see over the 12 years. the technology being used in each one of the years of the movie was remarkable. and so i think that is that -- >> the phones get smaller and smaller and then get bigger and bigger, and smaller and smaller. >> it is fascinating how our preferences change in a short period of time. and you know this sean, much more qualified to talk about this than i am, but just the change in smartphones. we had all small smartphones thinking that was the norm to they feel weird if you have an

iphone 6 plus and holding the iphone 5, you think it is a toy device. and so i think behavioral change can happen fast. an that is why i'm pullish on the apple watch because i think we'll shift to it fairly rapidly. >> i think that is the experiment that is taking place now. it is not the technology question about if, but is it technology meaningful. and when i look at the apple watch or any quote, unquote, smart watch, what we're looking at does the internet make sense on the wrist and if so, what are the usemx@ case scenarios. one is payments. payments make a lot of sense on the wrist. so we're going to empower pages on the wrist. but at the fundamental level, that is the question we're asking everywhere. does the internet make sense in a yoga mat. does it make sense in your vehicle? does the internet make sense here and there. so that is the question that i think we're going to be asking

for the next three to five years. and then you start to say, does data elsewhere make the internet in that yoga mat a better experience. and then you start to tie the data streams together. so if i can take some information here and influence this decision over here or this experience, and that to me is the ultimate test for all of these things. something happens in the physical world and we digitize it and connect it and sensorize it and it is the easy part and the question is do we close the feedback loop and get something to change back into the physical so if it is a fitness device and digitized the level of fitness an the steps, does it cause me to eat and sleep differently, to do different things to change my behavior. because if it doesn't, that is where things start to unwind. and i think that is some of what will start to set in. or we go the use case scenario

isn't that rich so i'm going to keep my analog whatever -- my analog yoga mat because knowing that i have payments on my wrist didn't influence it or whatever it is. >> sure, to say that. it is interesting. but with technology prices collapses so fast, do you even need to make the decision about whether you digitalize or not. is everything going to be digital and the question is whether it is on or off. like the yoga mat. are the point to where the sensors -- where we're getting to the point where they are so inexpensive. maybe they can draw power for your motion. it is just going to be implicit in most products over a certain value. >> so i think, yes, but i think the bigger question is does it provide a meaningful experience for the end user. if it doesn't provide a meaningful use case scenario then it doesn't matter whether

it is digital, connected, sensorized because it doesn't change what is happening. so i think you already see that in some states of the world. and if you look at the way we greet each other, we do that in ayana log way and it is efficient way and digitalization hasn't impacted that. just because digital can be doesn't mean it will be. >> but to me the secondary effects are more dramatic and more important from an economic standpoint than the questions you are asking here. is thisc?$ñ valuable for me. but more importantly, you look at the range of health and fitness related iot devices and types of biometrics being watched. and if you put those things together and collect the information in a standardized way, it tells you about yourself

and you change your behavior and nutrition and exercise, i'm not even interested in that. i'm more interested on what effect that has on the health care industry. so we have -- in western civ, we have a professional class of doctors and health care informational and they could only tell you yu blood pressure and glucose level and oxygen level and that is how the health care industry for better or worse has been structured. now suddenly as an accidental consequence of the cheap pretty sunshine a world in which every patient has that information about themselves. and they are collecting it, analyzing it and getting feedback and changing behavior as a result of that. how does that effect the health care industry and it's model of both delivery and training of professionals an so on. that is what i think of the

second order of effects from an industry standpoint that can be much more devastating because they were unintended or unplanned, the ones that can catch the incumbents by surprise in sort of an exciting way, depending on which side of the equation you are looking at. >> and if nothing else it changes the dialogue. at the very minimum it changes the dialogue with these professional services. and ultimately i think it changes the experience that we have. so we already see that taking place. if you look at the digitization of entertainment. with music, it allowed us to break apart the album easily and you saw the explosion of single track experiences and that continued on with streaming services and other elements and that entire music experience is fundamentally different than it was prior to digitalization. >> an now it is happening with video. >> right. it is happening with video and with books. and you even see the breakdown if books where amazon has kindle

singles to fit into a smaller space. and when i look at this other spaces, it has the ability to influence the experience we have. so we talk about autonomous vehicles at ces. so you don't need a steering wheel or seats that face forward. can you do anything you want in the vehicle. you can put beds, couches, a hot tub. it is a fundamentally different experience because of the building blocks and you can change everything. and if you are in an experience industry you need to think about how that experience changes once it becomes digitized. >> especially when it becoming from left field, like google or the smartphone manufacturer and have no intention of disrupting you but you are collateral damage. >> and larry i have to ask you, you are more connected with washington, but regulation, you

mentioned health and driving, we've mentioned drones. as you look at all of those, regulation plays a massive part in the ability for businesses, maybe not consumers, but for businesses to be able to do some of the -- some of the novel use cases. how do you see that playing out? >> well this is also a big part of sean's work as well. but i think that was when i mentioned before that some industries are effected in a different pace than others. one of the big determinants of how fast digitization transforms an industry is the degree to which it is already protected in some ways. it is an existing business care model. health care is a good example. it is protected from transformation by vast regulatory space. so in some ways, you could -- they complain about it but now it becomes their protection from change and a weapon.

so you see this very publicly in how the taxi cab companies are responding to things like uber and the hotel industry is responding to things like air bnb and we have to live in this highly regulated world and it may not make sense any more or we could do it differently but that is not the conversation we want to have. the conversation we want to have is you have to stop these guys from working because they don't have to deliver by the rules they can deliver these at a lower cost because they don't have the regulation and that is the bludgeon with which to show or change the pace of disruption often for worse, sometimes for better, but in many cases, it really becomes the gating factor of what we refer to as the bullet time from the matrix, where they can use it to slow down which would otherwise be a much faster disruption. and sean, you and cea have

thoughts about this because we work closely on these issues. >> definitely. it is setting up hurdles that inhibit the spread of technology. >> so let's now open the conversation more broadly to q&a. there pay or may not be -- may or may not be microphones around. there are two microphones around. so feel free to join our conversation here. we have one comment up here that i see. why don't you just -- and then we have one -- >> they are all on this side. >> thank you. it works. thank you. you guys are talking a great deal about consumer electronics and i understand the meeting and what you do. is this change going to be driven by consumer toys or by industrial applications like

water grids. >> i'm sorry? >> water grids. >> i think it is both. they are happening at the same time. and again it is the question of where does the internet make the most sense. so i think we're at this period where we're moving into the next phase of the internet. and the example i like to give is in 1995 the home page for the internet is like a yahoo putting additional information on a single page and you go there and the metrics were using to measure success is how long are people on that page. and with the explosion of websites we move to a search engine like a google. and with a further explosion of internet properties, we start to move to something like a redick, which is a curated experience. i feel like we're now moving as we go from 2 billion smartphones in the world and 1.7 pc's to 50

billion objects and we're moving to the next phase of the internet where we're redefining the home page. so what is happening on the enterprise and the consumer side are both moving in that direction. but the question is does the internet make sense in water grids or in locomotives or in engines. that is the ebts prize size. and ge calls it the industrial internet, cisco called it the internet of everything. we will just call it the internet. we don't talk about the mobile web. it is just the internet. and the same thing will happen with the internet of things it. will just be the internet. >> i think both are happening but i think there has been a fundamental shift toward consumers taking the lead. i remember when i first started looking at disruptive technology many years ago, the model we had was it starts in the military applications an moves to the business application ab then finally to the consumer.

particularly for computing because it was expensive. now it is clearly the other direction. and that is something that is just spreading. and consumers -- because of social media in particular, they can experiment and they can communicate about new stuff much more effectively than enterprises can and so they do so. and they become sort of the lab rats for moving the other way. >> i think just the barriers to -- i mean everyone has access to the same technology but the reality is the barriers to get something into a consumer's hands are far lower than getting into an enterprise or indeed getting into a military application. so i think invariably consumers or end users are where things hit first. and then i think also you mentioned regulation, regulation slows down a lot of commercial applications of certain technologies. so i think we're going to continue to see it consumer led initially and then used by the enterprise. what is a great example, is a

good one, big infrastructure, it takes a while to deploy technology to enterprise applications so i think that consumer leads. and also the buzz, the brands, is consumer led, let's be honest. >> next question. >> way in the back there is a mic. >> larry, this is for you. when we speak about a macro environment with the information and digital, what companies or technologies do we need for it to be a conduit of this information and what rep ostories can we develop off of this. who will lead the way in this? >> i think we have most of the core technologies in place. the cloud, the high speed network, we now all talk about 4 g but i was at a conference late last year on 5-g network which is coming in the next decade and they are crazier than the last. those are the key building blocks obviously. and then the standardized data.

who is going to lead? that is an interesting question. you can make the case economically it could be the providers or the network engineers, sort of the ericsons or the verizons or the information experts that the googles and so on. and i think all are plausible and some combination there of. >> and in exploding technology and innovation, is we go through periods of chaos and try to organize it and then we have chaos and try to organize it. and you can see if you just look simply at the web, where google tried to organize it and then as it explodes, we start to move to other things that cure ate it and we have a constant cycle of explosions of information and curation that tries to apply order to that explosion.

and so i think you want to look at whichever companies are trying to reate order. and that order might look like allegation, it might look like insights but it is into the chaos of unfolding. >> and you talked about it in your book. the network. who will create the network effect that drives the most value and locks up certain eco-syst eco-systems. >> and that is why there are focus on platforms. because platform businesses today are trying to create the order to the chaos. next question. >> um, what new business models do you see emerging because take for example a couple of things that -- ge doesn't sell jet engines any more, right. they are renting the rotation of the rotors, or if you take uber

and then the driverless car and build a whole new industry, you don't need to own a car any more. assets become services. so what do you see emerging now as any buzz models that are going to result from that? that is question number one. question number two is, aren't you guys a little bit afraid of what the ultimate solution could be because kearsewell talked about sing lairity or if you watch the tv shows like person of interest where there is a master computer that basically directs you to do certain things and you have google doing that already. aren't you worried that at some juncture we're just, you know -- we are not the cog -- we are not the director, we are just a cog in some big thing. so to go back to the first question, what is the real business model? >> so i think you hit on a piece of it. which is this idea that capital

becomes more productive. so one of the things that we've seen over a long period of time is that we replace labor with capital or we infuse labor with capital. we give our workers pc's and heavy machinery and the next stage is that we give them sensors and sensor data. and that is one way that we'll make them more productive. so i look at areas where we have large pools of labor and areas highly labor intensive and you are suing the infusion of capital into the experiences. i look at leisure and entertainment, hotels that have crews that come around to clean the room. today they ring the door bell and wait. they ring again and wait and then knock and somebody is in there and shut the door and on to the next one. you are seeing them use infrared door bells to tell if there is

somebody in the room and they become more efficient. you look at uber and air bnb, this is taking capital underutilized and producing it in a more productive way. so anywhere we have capital underutilized or a large labor pool isn't using a lot of capital are areas disrupted in the next ten years. larry -- >> i like the second question. i don't have any science or empirical evidence for this, but i'm been very optimistic about the likely impact of future technologies and the way i try to think about it is, there are two possible outcomes an if you put this in star trek terms you have the united cooperation of planets and where everybody corporates and achieves their personal enlightenment and personal best or you have the borg where everybody is nobody and it is just one giant

collective. and some ways these are two different futures that come from the same set of technologies. i've just imagined it would be more like the federation and less like the board. >> just on that big question, i think you could look at the negative and all of the fear, but i think there are so many exciting problems that need solving. half of the planet, at the home level and at a mobile level, is not connected to the internet. there is diseases, there are so many big-ticket problems to get solv solved, that will be solved over the next few years that i think it is hugely exciting. and the progress that is being made already. so i think you mentioned the change in the automotive space. there are so many big items, like i think you have it in your book, the number of people

killed on the roads, things like that being driven down to -- that our kids will speak to their children and talk about a time when 30,000 people got killed on the roads. there are so many of these really big ticket items to get solved that technology will help solve, i think -- i'm really optimistic. >> and i look at the way we again toggle between the physical real world and our digital world. we used to view those as separate identities and then they start to blend and today the mobile phone is the bridge. so we are constantly going to the mobile phone. but over time as technology becomes both more pervasive but more seamless with the analog world, that it becomes less intrusive. and i think it will become a much more natural intuitive experience. i look at the way we talk with computers today you go back in time, we used punch cards. things we didn't understand. if you just looked at it, but

that computers understood. and over time it is a continuum where it is a natural conversation, similar to what we might have with another person. last question. >> yeah. i have a point to make. i was at ces last week and saw hundreds and hundreds of great ideas but what struck me is what to get past the early adaptors an the gadget freaks to make use of these things. we used to have parents who have a vcr blinking 12:00 all of the time. and consumer just tushed it in. so i we have a problem going from early adopters to massive products, no matter how sophisticated they are, they don't know how to use them and how do we get past the adoption curve with the devices. >> i think we are moving to

fragmented innovation. we are focused thus far on the products widely owned. 80-90% of households but few products are owned by 80% or 90% of households. only 64% of households own their home. and so i think we're going to move into niche markets where the saturation is 30%, 40%, and we start to identify -- i think the idea is you start with well-defined, discrete problems and you offer a solution to that and then you start to, over time, pull those together to create a much more holistic appearance. you look at what is happening with cars, we're getting there by solving well defined discrete problems. parallel parking, you get assist. and falling asleep while driving, you get lane assist. and approaching a vehicle while you have cruise control engage and you have adaptive cruise

control. each one of those looks like a discrete autonomous experience. you put them together and you end up with the full autonomous driverless experience. and that is what happens. you define and solve these well-defined problems that may only be applicable or of interest to 20% of individuals, 20% of households. i don't think we're going to necessarily see mass market adoption of connected yoga mats because not everybody does yoga. and we saw propane tacts to -- tanks to connect to the internet so you could know how full they were. that is not applicable to everybody because not everybody used a gas grill. we move into the smaller niche pockets. >> and i have the opposite opinion. because the cost of experimentation is so low you see a thousand experiments, 999 of them fail utterly but when

consumers find the right one, somebody who got the thing right, we talked in our book about the game draw something and how it went from zero to millions of users in a matter of days, for whatever reason, they got it right. and now consumers essentially tell each other, it the not broadcast marketing like it used to be, it is social-media based and this is the right one that works, this is the right television or smartphone or app or whatever the electronic it, they figure out a winner and it is a winner take all, a very short winner take all markets but one experiment or a couple of experiments succeed and the rest all fail and the cost wasn't that much in the first place so the investors whoever they are are willing to keep the system going. >> thank you very much.

[ applause ] american history tv starts every night this week at 8:00 p.m. on c-span 3. tonight's speakers look at the styles of modern first ladies from florence harding to michelle obama. the ohio state university at marion and the first lady's library hosted the discussion starting at 8:00 p.m. eastern time. now a forum discussing the impact of technology on the u.s. economy and the workforce. former treasury second larry summers, former u.s. chief technology officer aniece chopra and director arthur prom hawker and andrew mcafee offer their views at this brookings institution event. >> well thank you all for

joining us this afternoon. my name is melissa kearney and i have the priv lentil of moderating our -- privilege of moderating our first panel discussion this morning. we are going to take the premise that there has been rapid technology advance in the information sector and we're going to ask the question what does that imply for the future of work, for the future of workers and the nature of employment in this country in particular. and as we tried to lay out in our hamilton project paper and there are a wide new of views an how good this is going to be on net of society. we have an expert group to discuss this issues this us. truly i would say some of the leading minds in the world on these very questions. you have the full bios in your program so i won't run them

through. but i'll introduce them. to my left is david oughter, professor at mit and a leading economist who contributed more to the recent trends in labor markets than anyone. and then larry summers. university professor, president emeritus at harvard university and served as secretary of the treasury of the united states and director of the national economic counsel. aneesh chopra, our first chief technology officer appointed by barack obama and previously served as virginia's fourth secretary of technology. he is currently the co-founder and executive director of hunch analyti analytics, a technology firm. and erik brynjolfsonn has been introduced from the technology school. and i'm going to pose an opening

question to each of our panelists an move into a moderated free flowing decision and leave the final ten minutes for audience q&a. we will be collecting your questions on note cards which then will be brought up to the panel. okay, so david i'm going to open it up for a question with you. so you have written extensively by the nuanced relationship between technology and computers and workers and particularly noting that there are certain things that computers can do that substitute for tasks historically or traditional by performed by humans and other things that computers do that complement tasks performed by humans. so in light of your research and the framework that erik and andy have laid out for us, how do you see this shaking out for workers? >> that is a great question. i'm honored to be part of the discussion. i really like the work -- the book they've written and i think -- i'm glad this topic is