It's no surprise, really. Offline devices just don't carry the allure that they once did, and in fact, yours truly would argue that they simply lack the requisite functionality to become runaway hits in the modern era. It's genuinely difficult to think of a flagship consumer electronics product, with a display of any kind, being engineered in the year 2013 without at least some level of internet connectivity in mind. Even a Kickstarter dream dubbed Pebble would be borderline useless without an online link, and as consumer demands shift dramatically towards expecting more for less, it's the carriers who have found themselves positioned to take advantage.
Verizon has joined a host of other megacorps in launching so-called innovation centers across the world. Earlier this year, Samsung committed $1.1 billion to create a pair of Open Innovation Centers -- temporary homes for upstarts looking to woo Sammy's check writers into believing in their technology. In 2011, AT&T's Palo Alto, Calif.-based Foundry innovation center joined similar entities already running in Texas and Israel. Microsoft, Intel and Vodafone have all done likewise in the past three years.
I recently had the opportunity to visit Verizon's first Innovation Center -- a sprawling facility located squarely in Massachusetts' famed Route 128 technology corridor. The center opened in Waltham in the middle of 2011, and now enables roughly 25 employees to "largely operate outside" of what you probably associate with the word "Verizon." What I found was the world's greatest case against the existence of a "dumb pipe" -- a phrase often used to describe carriers that do little more than provide access to a network. No structured technical support, no humans on the other side, no bloatware on the devices they sell. Companies who show up looking for aid in the art of interconnectedness face no fees, no risk of surrendering intellectual property and no requirements of exclusivity. This is the future of the wireless carrier: an increasingly vital component in making tomorrow's whiz-bang gadget one that this generation will actually crave.
Verizon's Waltham, Mass. Innovation Center gallery
If you build it, they will come
The facility is fairly nondescript from the outside -- save for that unmistakable Verizon logo visible through panes of crystal at the entrance. But, as with most high-security office buildings located within business parks, the real magic requires an ID badge to see. Upon entering, I'm blitzed with red. It's on the floor, on the walls and emitted from a smattering of overhead projectors. As far as the eye can see, it's one concept after another -- or "visionary product," as director of Verizon's Innovation Program Praveen Atreya puts it. It's quite clear that the goal here is to boast a bit about what this center has accomplished in two years. Atreya points to a Trek bicycle that's equipped with a camera, a battery pack, biometric sensors and a Fujitsu clamshell PC. As he tells it, Verizon teamed up with Ericsson after it asked a group of kids in Dallas to think of something that's not currently connected, but should be.
The end result is a conceptual, but totally rideable, mountain bike that would certainly go over well on the next X Games. (Street legality, of course, is another matter.) Atreya confirms to me that projects like this end up generating interest elsewhere -- while the Trek was merely a cute idea, he tells me an undisclosed bicycle manufacturer is "currently in talks" with the carrier about a connected bike. Immediately, my imagination runs wild. What would be possible if a bicycle's internal sensors could evaluate elevation changes, braking habits, speed and the rider's change in heart rate? And then, what would be possible if all of that data were sent to the cloud for real-time processing? In-ear feedback on what gear to switch to? Occasional reminders on how you're tracking in terms of time? Archives of statistics for those in training?
The impending connected bicycle is just the start. Both Atreya and Gagan Puranik, associate director for Verizon's Innovation Centers, say this lab was concocted shortly after the operator placed its 4G bets on LTE. "It was built proactively," Puranik states, replying to an inquiry about whether the center was built due to partner demand or by VZW's hopes for the future. Indeed, carriers have been mulling ways to avoid becoming dumb pipes for years.
Mobile users in Europe have grown quite accustomed to the bring-your-own-device (BYOD) regime; simply buy the unlocked phone of your choice, walk into a carrier store and depart with a functional SIM. In almost every case, it's cheaper for the savvy user. But it also puts the carrier in a precarious spot: if you're only in the access business, how are you hedging your bets?
I just want to be your everything
Puranik and Atreya agree that Verizon is aiming to be "more than just a carrier." The term "services provider" is tossed around with abandon, but I get the feeling it's more than lip service. As I roam the halls of the showcase area, I spot a fount of products that would simply feel uninspiring without an always-on connection. A home health-monitoring system that can't be eyed remotely? Fairly useless. A security system that still requires a landline? Hardly titillating. A washing machine that can't monitor neighborhood energy usage in order to activate when power is cheapest? Pardon the yawn.
To combat the rising tide of boredom, Verizon created an entire business that exists solely to connect things to the internet. This is what people mean by "The Internet of Things." Taken to its extreme, it's a mythical world where each and every product we touch is linked to the same internet, and in theory, to an overarching ecosystem that enables our lives to be lived in a more intelligent and efficient manner. Utopian? Oh, absolutely. But the products I'm seeing here are proof positive that we're already (partially) living in such a society. Of course, it's not as if Verizon's doing this for the good of mankind. It's looking out for its long-term benefit. While connected devices will surely please consumers, Verizon knows that other carriers would eat (or already have eaten) from this slice of the pie should the company wait idly by. And, of course, Verizon would much rather see a shelf full of third-party products with a VZW radio than a shelf full of products ready to support whatever SIM card a consumer brings along.
What Verizon has accomplished thus far could not have been done on older 3G networks. The power of LTE -- for all carriers, in fact -- is that it's actually faster than what applications presently need. We see the same phenomenon whenever a new GPU is released to gamers; for a small window of time, the backend horsepower exceeds the application demands in the market. Of course, the moment Thinx -- a company showcasing an LTE-embedded security camera -- swaps its 720p sensor for a 4K one, the ball will then be thrown back in Verizon's court.
To date, "over 30 products" have gone from incubation to market via Verizon's Innovation Center. For example, Verizon has enabled wireless updates in select Mercedes-Benz automobiles, LTE video streaming in Thinx's security camera range and remote monitoring of fill levels within BigBelly Solar cans. I'm told that items arrive in all manner of stages. Some companies show up with a finalized product that merely needs an embedded LTE module and a spit shine on the firmware level; some outfits arrive with charcoal sketches and a wry grin. Verizon's not saying how many projects have entered and failed, but that's mostly due to the youth of this facility; rather than rushing a product out of the door. Verizon has every reason to let things simmer until it can time the market right.
Puranik tells me there's "no predetermined length of time" for an item to be within Verizon's labs. He also notes there are "a lot more than 30 [products] in the Innovation Center pipeline, scheduled to ship in 2013 and 2014." According to Atreya, Verizon's vision when it set this up years ago "was to incubate, develop and ship commercial solutions." Now that it's in motion, there's a constant balancing act between inviting "high-volume products" into the mix (an example being Netgear's MBR1000 router) and keeping visionary kit rolling through the door "as a means of inspiration."
Atreya tells me Verizon has the "technology, tools and people to transform ideas into connected products and solutions," be it a "device, app or accessory." Currently, the operator has some 200 partners -- from software engineers to antenna makers -- tucked within an ever-growing black book. If a company arrives with a problem that VZW's own personnel can't solve, there's a fairly good chance one of those 200 others can. If you're an inventor, why go anywhere else? Because this facility exists, you have fee-free access to a laundry list of people that can help bring your dream to reality, and if it's funding you need, Verizon's created an arm for that, too. And, if you're able to produce something that's marketable, Verizon's not going to stop you from taking your wares to AT&T in order to ship a version that can be used in Puerto Rico -- or any other area that Verizon lacks coverage. Frankly, it's almost too good to be true; but on the other hand, what choice does Verizon have? You either extend the hand now, or wait for companies that would be planning a visit to Waltham to solve their connected woes through other means.
A deal you can't refuse
I ask both Puranik and Atreya about the split between push and pull. Or, the ratio of companies pinging Verizon for help versus those showing up at the center's request. While neither gentleman would give me a firm number, I can tell that it's shifting. They're quick to admit that upon opening the lab, it was largely Verizon making calls to companies it thought would benefit from adding connectivity. Now that the doors have been open a while, there are far more inbound requests to deal with -- a trend that Atreya suggests won't be reversing anytime soon. In fact, Verizon has been forced to expand its San Francisco-based Innovation Center because there are more companies seeking access than the present facility can house.
A handful of actual launch partners are on hand to discuss their journeys, and Matthew Volpi from BigBelly Solar has one of the more interesting tales. After launching a line of compacting trash bins a decade ago, the company realized that waste-management outfits could gain huge efficiencies if these bins reported fill levels back to base. It actually began shipping solar compactors with AT&T modules a few years ago, but because Verizon's policies were so welcoming, they simply wheeled an AT&T version into the Innovation Center and asked to partner up. In "a few months," I'm told, the first VZW-equipped compactors will hit streets -- and Big Red isn't making BigBelly convert those already on a rival network.
Beyond the showcase floors sit a number of offices, and more importantly, a range of RF-shielded rooms that house any number of incubators at a given time. Just inches away, Qualcomm and Ericsson could be gathered in the same facility testing competing solutions. On Verizon's dime, no less. I actually get to visit one of those very rooms, and the included hardware is nothing short of astonishing.
Incubators are able to recreate the signals of nearly every carrier in the world within a 10 x 10-foot cube. They're able to simulate a signal at 300 miles per hour in the event that their product needs to be compatible on a bullet train from the future, and they're able to test gear on a network that's being maliciously attacked from every angle. They're able to assess an LTE-to-3G handoff with a trip through a tunnel in between. They're even able to analyze new products on Verizon's VoLTE and LTE-Advanced protocols, long before either is released for public use. It simply cannot be understated how immensely valuable this is for a company looking to launch a connected product that works. For the vast majority, building an environment like this would take an impossible amount of cash, and moreover, a request for broadcasting approvals from the FCC that aren't handed over to just anyone.
For those wondering about the importance of data (or, looked at another way, the waning criticality of simple voice services), the Innovation Center is only set up to handle IP testing. In other words, data or voice transmissions over data. You'd probably expect nothing less given the title of the place, but it's safe to say that Verizon's cutting edge has certainly labeled 1xCDMA as antediluvian, and trusts that every new connected product being engineered today will rely on the internet for every facet of communication.
It's painfully easy to knock Verizon Wireless for its consumer-facing practices. Strong-arming users into a tiered data plan by removing subsidy payments on new devices for those who still value "unlimited"? Pathetic. Taking the guillotine to its New Every Two program? Disappointing. Cluttering up every Android phone that comes its way with apps you don't want? Shameful, indeed. In the effort of giving credit where it's due, however, the Innovation Center is a breath of fresh air in the carrier world. It's almost alarming how pro-consumer the entire concept is, but it's all because of one overriding theme: this is a long game for Verizon.
In the short run, it would benefit far more by charging astronomical fees for the privilege of using its testing grounds, and if it grabbed a stake of every idea it helped bring to market‚ well, let's just say there's money to be made in electronic royalties. But all of that would be destructive to the actual mission, which is to simply have more devices paying to connect to the Verizon network than any other. The long game, you see, is to simply be the best at what it is: a pipe. A smart one.