INNOBLOG

MIT Technology Review reports on new advances in implantable device technology -- thin, flexible silicon electronics built on silk substrates, resulting in electronics that almost completely dissolve inside the body. Says the report, "These electronics don't need protection [from the body], and the silk means the electronics conform to biological tissue. The silk melts away over time and the thin silicon circuits left behind don't cause irritation because they are just nanometers thick." The research that has made this possible took place on several fronts, including the development of flexible, stretchable silicon circuits that perform as well as more traditional rigid circuits, and making such circuits bio-compatible. 

Applications could include "silk-silicon LEDs that might act as photonic tattoos that can show blood-sugar readings, as well as arrays of conformable electrodes that might interface with the nervous system," according to the article. The same research group is currently designing electrodes built on silk as interfaces for the nervous system. Such electrodes could integrate much better with biological tissues than existing electrodes, which either pierce the tissue or sit on top of it. Electrodes built on silk could be wrapped around individual peripheral nerves to help control prostheses.

If nothing else, developments in the e-reader market provide substantial fodder for online commentary. It seems that every week features a story in a mainstream publication about the latest "Kindle killer" followed by endless chatter and eager speculation in blogs and on Twitter.

This week's discussion centered on Barnes & Noble's "Nook" device. It's not hard to see why this particular device sparked such discussion. The slick-looking device has unique features, such as the ability to "lend" books that friends can view on multiple platforms for 14 days, use of Google's Android operating system, and a small color touch-screen.

I very much like Barnes & Noble thinking outside its business model box. The company has been aggressively seeking to find new paths to revenue and growth, an appropriate approach given the challenges facing its core business.

So will the device be a huge success? Will Amazon's early e-reader success with its Kindle offering end up looking analogous to early success by Rio and Creative in the MP3 market before the emergence of Apple's iPod?

The answer to both questions could be yes. But in reality, those questions are simply impossible to answer for three reasons:

1. No one knows what consumers will do until they actually do it. Barnes & Noble's device will appeal to some consumers for sure, but will it lead early adopters to ditch their Kindle? Does it have enough features to attract the next class of potential customers? As a Silicon Alley Insider commentator wrote, "Amazon is obviously designing to real user needs and covering the gameboard. B&N is fiddling around with goofy stuff that might just be crazy enough to work."
2. No single device will "end" e-reader battles, whether it's from Amazon, Barnes & Noble, Sony, Plastic Logic, or another competitor. Amazon is quite likely to have further devices in its production line. Does Barnes & Noble have anything else up its sleeves?
3. No one is quite sure what Apple will do in the space. There's significant speculation that Apple will introduce a $500-$700 tablet early next year. The company's history in the computing, music device, and smartphone market suggest watching this development carefully.

Read the rest at Scott's Havard Management blog, Innovation Insights.

Purdue University researchers have made a breakthrough in designing cooling systems with highly efficient heat-transfer rates, reports CNet News. These researchers have developed and tested new mathematical formulas concerning the properties of boiling liquids in "microchannels," which are tiny channels through which fluid is directed in some types of high-power electronic cooling systems. The idea is that "allowing a liquid to boil in cooling systems dramatically increases how much heat can be removed, compared to simply heating a liquid to below its boiling point," according to the researchers' report. "Boiling occurs differently in tiny channels than it does in ordinary size tubing used in conventional cooling systems," lead researcher Dr. Suresh Garimella said in a statement. The results of this research could be used to improve cooling systems for computer chips and hybrid cars. 

On August 19, 3M introduced the first electronic stethoscope with Bluetooth functionality. Adding Bluetooth solves a problem that has plagued electronic stethoscopes -- they can capture sounds that are hard for the ear to hear using an analog stethoscope, but taking those sounds off the devices for analysis has proved difficult. The new stethoscope can send its data to a Bluetooth-enabled computer, and comes with software to allow doctors to interpret the data. The sounds can also be sent as an audio file to other doctors for second opinions. The goal is to give physicians better information with which to make diagnoses and potentially cut down on the use of unnecessary referrals to specialists in some cases. While the stethoscopes now are only compatible with Windows XP and Vista, reportedly there will be Blackberry support in the future, which could make the electronic stethoscopes attractive for physicians who use PDAs.

This Wired article discusses advances in structural DNA nanotechnology, a field now beginning to show promise. DNA has a unique capacity for precise self-assembly, and scientists have been experimenting with using DNA as a building material for nanotech. According to the article, "Scientists in the burgeoning field of structural DNA nanotechnology are exploring DNA’s potential as raw material for next-generation circuits, sensors, and biomedical devices. Advocates say it could become the new go-to material for engineers, scientists, and clinicians." 

One example of a use for structural DNA nanotechnology: "biocomputers" made from DNA, RNA, and protein that respond to biological signals. For example, A DNA-based sensor that recognizes RNA messages produced because of cancer or viral infection could trigger the release of RNA or DNA strands with therapeutic properties.

The article also notes challenges: many in the scientific community are still skeptical, and it is difficult to recruit scientists to work in a field noted for its interdisciplinary nature — structural DNA nanotechnology brings together elements of biology, physics, chemistry, computer science, and materials.

The new version of Amazon’s Kindle e-book reader has been attracting quite a lot of press (including within this blog), and generally the coverage so far seems to be positive: its screen is easier to read and displays more shades of gray, it’s thinner, its keyboard is easier to use, and it doesn’t look quite as much like a medical device. One improvement, however, has been strongly criticized and may threaten an existing business model.

This new feature is the Kindle’s ability to “read” text out loud; text-to-speech technology has been improving rapidly in recent years, and supposedly the Kindle’s computer-generated voice – named “Tom” – is reasonably pleasant to listen to, at least for a little while. Surprisingly, this has stirred up some controversy.

In this New York Times op-ed, Roy Blount, the President of the Authors Guild, argues that the Kindle’s new ability is essentially stealing value from authors and publishers because it offers each title as “an e-book and an audio book rolled into one” but doesn’t pay anyone for audio rights and may threaten the market for audio books. Although one writer responds that the Kindle’s speech synthesis just isn’t good enough to compete with audio books, it seems inevitable that the technology will reach that point in the not-too-distant future.

This is a terrific example of an entrenched business model threatened by (and fighting against) a new technology that undermines it. From Baldwin Locomotive to VCRs to Better Place, this kind of tension is ubiquitous, and overcoming it can require businesses to transform their business models to adapt – because, litigation aside, new technologies are tough to stop. Baldwin Locomotive may not have seen diesel coming early enough, but the entertainment industry adapted to VCRs after failing to stop them in court by using them as a new channel to sell their content. Through sites like Hulu, it’s now adapting to the Internet as well. Whether Better Place’s nascent business model will be undermined by better batteries remains to be seen, as my colleague Luke Langford explains.

So how will book publishers adapt? The audio book industry may well be in for some tough times, but the Kindle could enable some fascinating (and potentially lucrative) new business models that weren’t possible within the paper-and-ink paradigm. This blog post suggests just a few good ideas, from dynamic pricing to social networking to self-publishing. Making money through the Kindle might look different from making money through Barnes & Noble, but the faster the authors and publishers of the world recognize that business model innovation will be necessary and doesn’t have to be zero- or negative-sum, the brighter the industry’s future will be.

Update: Amazon appears to be taking this argument seriously, at least for now.  On February 27th, Amazon announced it would be allowing publishers to decide whether to allow text-to-speech to be made available for their content.

Here are some thoughts about how three pieces of the $787 billion stimulus package could affect healthcare companies:

1. $17B for roll-out of Electronic Medical Records (EMR) over the next 5 years - EMR has the potential to vastly increase payor (e.g. Aetna, UnitedHealth) power over physicians, mandating the use of standardized protocols and evidence-based medicine. This is more bad news for the traditional high-touch sales and marketing model of device and pharmaceutical companies, and means that the days of me-too competition in a therapeutic class will be short in number.

Suppliers to the industry will need to focus and differentiate, partly through offering total solutions vs. pill or device widgets. Many of these solutions may require partnerships with firms whose identity as long-term friend or foe remains uncertain (e.g. Microsoft, Medco). Pharmacy Benefit Managers will try to leverage EMR and their own databases to be high-value repositories of information. Vendors of decision algorithm software will grow rapidly in number.

The stimulus included privacy and opt-in provisions around health records; the impact of those rules is unclear, but likely it creates benefit for those who own the patient relationship and who therefore can get the opt-in most easily. ...

Read the rest at Scott Anthony's Harvard Management blog.

 A growing number of physicians believe that the interoperability of medical devices — their ability to communicate with each other — could make hospitals safer and more efficient,” reported MIT Technology Review in a July 2008 article surveying the state of interoperability in the increasingly high-tech world of hospital care. Interoperability could help realize the full potential of many of the new devices now finding their way into ICUs and operating rooms, and could also help reduce the distressingly high rate of errors in hospital care.

Cited as an example was the Center for Integration of Medicine and Innovative Technology (CIMIT)'s Medical Device Interoperability Program, based at Massachusetts General Hospital. CIMIT has developed two demonstration projects that illustrate the idea of the "plug and play" operating room. One project is an integrated ventilator that tackles the job of taking an x-ray of a patient on a ventilator without having to turn the ventilator off while the image is taken, as is common today. The integrated ventilator reduces risk by "simply not having to turn off the ventilator at all," says Peter Szolovits, a professor of computer science at MIT who studies medical data integration.

Taking a different approach to the problem is Cambridge Consultants, which in March announced the release of a new platform for wireless device connectivity… said to make almost any medical device wireless for less than $10 of extra manufacturing cost, according to the MedGadget blog. The platform can be used with multiple devices, providing a connection to online records through a monitoring station, home PC or set-top box, and can even be used to transmit data via mobile phone for health and fitness applications on the move.

The iPhone 3G hogged its share of the spotlight over the weekend. The “twice the speed, half the price” phone sold upwards 1 million units over the weekend. But while most of the spotlight was focused on the new phone itself (and the difficulties experienced during the launch), I believe time will show the iPhone App Store — a iTunes-integrated online store that allows consumers to easily install a seemingly endless variety of games, utilities and other applications — was the Apple release most deserving of the weekend spotlight.

The new features (3G antenna, standard headphone jack, etc.) are improvements, don’t get me wrong. But they are the sort of sustaining improvements that customers expect, and they don’t exactly break new ground. I doubt whether these features alone can propel the iPhone to the level of success that Apple’s other “i” product has achieved. (If they could, you’d see a lot more buzz about the LG Dare and the Samsung Instinct).

It is the App Store that adds features in a disruptive way that other phones can’t match. With it, the Apple finally gives consumers a way to conveniently add third-party programs to their phones. (I’ve used both Palm OS and Windows mobile devices and can testify that until now this has been neither a quick nor a convenient process). In the same way that the iTunes music store made the iPod much more than another digital music player by allowing the consumer to easily buy, organize, sync and play music, the App Store makes the iPhone more than another smartphone. It turns it into a computer in your pocket, ready to be customized with the applications that you want.

How significant will the effect of the App Store be? Well, if the history of the iPod before and after iTunes is any guide, the effect will be enormous.

Prior to the release of iTunes in April, 2004, no more than 1 million iPods has been sold during any quarter. After it was released for Windows in October of 2004 (it was a Mac only release for the first few months), at least 4 million iPods (and as many as 22 million!) have been sold every quarter.

Of course, there are differences. Consumers already had well-established habits relating to buying and listening to music that the iPod + iTunes could build on. Similar habits relating to the use of third-party applications on mobile devices may not be as prevalent. And this time, the competition isn’t as far behind. Google is hard at work pushing its own mobile platform, Android, with headset makers and application developers (and might even be developing a Google phone). Also, incumbents like Nokia, which acquired Symbian recently, aren’t sitting still either. Both may be able to offer consumers devices that are as flexible and application ready as the iPhone in the near term.

In the face of these challenges, it will be interesting to see whether Apple will be able to repeat the success of the iPod. It is doing plenty right. But will it be enough?

VS.

An announcement from Research in Motion last week put two distinct mobile device strategies in stark relief: while RIM is opening up its beloved software to other device makers, Apple continues to play the proprietary game. Which of these two strategies makes the most sense, given current market conditions?

The value chain evolution theory, described in chapter 5 of The Innovators Solution, postulates that integrated solutions are best for developing markets in which new technologies are just getting started. Since there is so much uncertainty afoot, it makes sense for one company to oversee multiple parts of an offering in order to ensure consistent quality and a simple, easy to use interface. Think of how in the early days of computing a company like IBM built the entire mainframe from componentry to software. Since the industry was in its infancy and relatively little was understood about it, the world-class scientists at IBM needed to collaborate on all aspects of product design in order to deliver a top-notch, fully reliable product. IBM leveraged its expertise to achieve 70% share in the mainframe market throughout the 60s and 70s.

However, as markets mature the game changes. Once in the market, technologies become less novel and less mysterious, leading to the emergence of industry standards. As a result, expertise begins to commoditize and value chains modularize. Astute entrants, then, can begin to pick off attractive niches with focused business models that offer improved performance along certain, prized dimensions such as cost, reliability, or convenience. They carve out valuable spaces for themselves while advancing the industry as a whole. As computing matured and the mainframe gave way to the minicomputer to the PC, the industry fragmented: hardware companies like Compaq emerged to assemble the machines, chip companies like Intel provided the processors, and software companies like Microsoft programmed the operating system and various other software applications. Before too long, as Innosight founder Clayton Christensen likes to point out, there was Michael Dell assembling a computer in his dorm room. A task that had previously required a massive company employing the worlds top computer scientists could now be accomplished by an enterprising college kid. Whats more, combine Intels engineers and Dells savvy business processes and you get a more powerful and more affordable computer than any integrated provider could offer.

So whats the lesson for Apple and RIM? Apple, which essentially invented the PC and many vital software applications, fell from grace through the 80s because it tried to hold onto its proprietary, integrated architecture and refused to license its operating system. Controlling its value chain from hardware to components to software had enabled Apple to put together a consistently delightful product, but as the WinTel and Dell value network developed and matured the company got left in the dust.

Fortunately for MacHeads, long-term Apple stock holders, and portable music appreciators, Steve Jobs and his merry band had enough in the tank to regroup and reinvent another, adjacent industry with their iPod. And how did they do it? By integrating. They brought together the device the iPod and the software iTunes in a novel, simple to use, convenient, and highly effective way. An integrated provider, remember, can master the kinks of a new and emerging market to provide the reliability and performance that customers need. Similarly, RIM was famously integrated. Its handy devices did not rely on the buggy Symbian or Microsoft OS, but operated on proprietary, delightful software, and the Blackberry came to dominate the wireless handheld device market.

So that brings us up to the present. As has been widely predicted, handheld devices iPods, PDAs, cell phones are rapidly converging. Your Blackberry now checks email, makes calls, takes pictures and plays MP3s and your iPod will soon become your iPhone. Technological advances and emerging industry standards are driving the convergence. More and more people are leaving their iPods at home, since their homely standard-issue Verizon phone plays songs, and who has room in their pocket for two devices?

And yet, Apple continues to insist on proprietary, integrated architecture: iTunes only works with iPods. For how much longer will people stick to iTunes, as their iPod becomes less essential and competing services Napster, Yahoo Music, Real Music, eMusic get better and better? All the consumer insight and design savvy in the world may not be enough to ward off the multiplying hordes of competitors at different, now modular, parts of the value chain (Christensen has been warning about this for some time now, on this blog and in Business Week).

RIM, on the other hand, has boldly stepped out of the integration trap. By making their email service available to users of other devices, they are seeking to become the "Intel Inside of device software, rather than the Apple Computer of PCs. As markets modularize, this seems to be the wiser strategy.