Cloud computing and “as-a-service” offerings are causing a fundamental shift in how corporations consume technology solutions. “As-a-service” means the ability to rent and pay for software and hardware as and when it is used, rather than buying an expensive license or powerful computers. Big Tech has responded to this by setting up cloud computing behemoths—Amazon, Google and Microsoft are all deep into this game. They have scaled up into this space from almost nowhere.
The rent vs. own decision ebbs and flows over time. Classical thinking would predict that this sort of rental model will not work for cutting-edge tech that fundamentally alters the workings of a firm. But the economics, at least for now, sides with the rental model. The models used in cloud services and solutions work on the premise of economies of scale derived from large operations. This means that computing capability is becoming more centralized. But today’s buyer behaviour also demands less “latency”—or quicker response times—for almost all uses. Centralizing services runs counter to latency. The physical distance from a computing device affects response times, even if the network/internet connection to the centralized computer is on the fattest possible pipe with massive data throughput. That is why broking firms demand real estate space that is close to a stock exchange. They want to set up their computers close to the computer where stocks are traded.
If Internet of Things is to be useful, IoT devices need to have the ability to communicate with each other over long distances. Many “connected things” in remote areas are at long distances from the nearest telecommunications station, or deep within buildings, which shield them from a wireless signal. Others are on the move—being shipped from the factory to the consumer, for instance—resulting in spotty signal. Until now, machine-to-machine communication has relied on 2G networks, long considered insufficient for human interaction. While this may today be enough for unsophisticated equipment at the perimeter or on the move, the amount of data being communicated from machine to machine is now increasing as products grow in technical sophistication.
While machines at the edge are evolving, humanity also evolves along with the technologies it invents. Humans and tech now overlap so much that we have become one with our inventions. We have now gone beyond the smartphone and its increasing capability to deliver what was yesterday’s supercomputer into a miniaturized handheld. The use of wearable devices is popping up everywhere. The healthcare and fitness industries have introduced many promising wearables. Technologies like virtual reality and augmented reality will push this frontier further.
When this latency and communication variable is thrown into the equation, the only way is for enterprises to shift their computing capability closer to the “edge”. This is the point where it is most needed, whether that point is in an autonomous machine or in the hands of a human. This is where the rubber meets the road. The edge, then, is the new “point of truth”.
Siddharth Pai is founder of Siana Capital, a venture fund management company focused on deep science and tech in India.