Welcome to the Industrial IoT Spotlight, your number one spot for insight from industrial IoT thought leaders who are transforming businesses today with your host, Erik Walenza.
Erik: Welcome back to the Industrial IoT Spotlight podcast. I'm your host, Erik Walenza, CEO of IoT ONE, the consultancy that helps companies create value from data to accelerate growth. And our guest today is Steven Statler, SVP of marketing at Wiliot. Wiliot is a leader in battery free Bluetooth semiconductors and sensor management cloud services, scaling the IoT by connecting people with products in new ways.
In this talk, we discuss the supply chain implications of IoT sensors that track location and environmental conditions that cost pennies and are the size of postage stamps. We also explored the importance of partner ecosystems and scaling IoT systems around innovation and core technology.
If you find these conversations valuable, please leave us a comment and a five-star review. And if you'd like to share your company's story or recommend a speaker, please email us at team@IoTone.com. Finally, if you have an IoT research, strategy, or training initiative that you'd like to discuss, you can email me directly at erik.walenza@IoTone.com. Thank you. Steve, thank you so much for joining us on the podcast today.
Steve: No, it's a pleasure, Erik. Thank you.
Erik: Maybe this is a good place to start because I think in addition to being SVP of IoT at Wiliot, you're also obviously very passionate about this technology. You've written the Hitchhiker's Guide to be Consistent. You've hosted a podcast, Mr. Beacon podcast. Where does that passion come from?
Steve: I used to work at a company called Qualcomm which is headquartered here in San Diego, and they're probably actually very well-known, largest maker of semiconductors and mobile devices. And one of the jobs I had there was figuring out how we could get people to buy even more chips and my proposal was to look at retail, because everyone shops, most of us shop every day. And it seems to be a great way of getting wireless technology in people's hands. And I helped start a division called Qualcomm Retail.
And one of the products that we span up and produce arguably one of the first broadly deployed commercial instance of was a Bluetooth beacon. And we produced the Bluetooth beacons that were deployed in the Apple stores and used at the Superbowl and in banks and all sorts of things. Qualcomm decided it didn't want to do retail and so I left and started up a couple of my own businesses. And one of them was a consulting business. And by way of therapy in the evenings, I wrote down pretty much everything that I understood about the Bluetooth ecosystem and created the book, the book was finished, and I became restless. I missed talking to interesting people and so I started the podcast.
And when one of my businesses didn't work out, it was a payment card business that made everything more expensive by rounding up to the nearest dollar and giving the money to your favorite charity. I focused on the other thing I was doing, which was this consulting business and consulting originally was a means to an ends, it was a way of keeping the lights on whilst give the change was being born. And I was giving a Bluetooth beacon training course once that RFID Journal Live. I was in the ‘jaws of the lion’, this IoT RFID ecosystem preaching the benefits of Bluetooth beacon technology.
And this Israeli guy came up to me at the end and said, oh, we're a group of semiconductor engineers. And we're developing the world's first passive Bluetooth beacon, which will be the size of a postage stamp. And I kind of didn't believe him. I made my excuses and tried to escape. But long story short, I ended up doing a consulting engagement with them, trying to figure out what you could use this posted stuff sized computer for.
And my initial skepticism was unfounded. It turned out that these guys in Israel, this was not their first semiconductor design. They pioneered millimeter wave and sold their company and the technology to Qualcomm. And it's now one of the things that makes 5G faster than 4G. And so they were really well qualified to tackle this incredibly challenging problem.
And after a month of looking at this technology, I went from skeptical to just unbelievably enthusiastic. And when they offered me the job of setting up their field operations and talking to customers and putting together a business plan, I jumped at it. But that's how I got from sitting at a desk in Qualcomm doing a broad range of things into the world of Bluetooth beacons and Bluetooth tags and from there, to working for this amazing company, Wiliot, and it's been five years now.
Erik: When you first met them, I suppose they were fairly early stage startup, did they already have product in the market or they basically had a technology concept and they were exploring this?
Steve: Pretty much nothing, I met them was like four months in. So the first month, they'd raise $10 million with basically a business plan that could fit on a napkin. So I was, as I say, skeptical, but then I saw some of the lab experiments, the prototypes. They didn't have any chips at the time. And then in that first year, they went from no chips to six different designs, which is almost unheard of in the semiconductor world, to so rapidly iterate. But they did that with a very unique process of blind designed putting out test chips and designing another one even before you got the first one back from the fab.
And so, that really took them fast forward to some early prototypes. And so now, five years later, Wiliot’s on its well into its second generation of technology, version two, which is a very broadly deployed. But it's still relatively early days for incredibly disruptive technology. So we're still learning lots of things. And one of the best things is seeing what you can do with a computer the size of a postage stamp that can start to connect things that previously were offline into the Internet of Things.
And that's really what the company is trying to do, where our goal is to expand the internet by 100 folds to take it from tens of billions of connections to trillions of connections and to do that by going from taking the IoT from the internet of expensive things to the internet of everyday things, trillions of everyday things, which are things like clothing and food containers, medicine, plastic crates, the kind of stuff that's been left in the dark and has really missed out from all of the intelligence and connectivity that some of the larger things have enjoyed for some time now.
Erik: The podcast here, I tend to talk to a lot of folks that are working at the cutting edge of very expensive and complex technologies. So AI type applications, big CapEx investments, and often very interesting applications. But I think there's a separate set of applications, which are all around simplifying and reducing costs. Actually, I had a very good friend who is one of the early employees of MOBIKE, just the first show biking system here in Shanghai. And really, the incredible thing about that business was that they took technologies that were mature that had been used in high cost industries and then they realized that the cost structure had gone down to the point that all of a sudden, they could put them on a $60 bike and just scatter the bikes around and create a new business model.
So I think this is a super interesting area of innovation, not just technical innovation, but the business model innovation that you're enabling for your customers. If you can just walk us through, what is the value proposition behind Wiliot? I think you call this IoT pixel. So what's the value proposition behind an IoT pixel?
Steve: Well, we call it pixel because pixels are small, and they illuminate things. And when you have lots of pixels together, you suddenly get this high definition picture that you couldn't see before. And that really is a metaphor for what we're trying to do. We're trying to bring visibility to things that were previously in the dark. And there's many, many things that benefit from that. It's a bit like the transistor. If someone came to you 40 years ago and said, what can you do with a transistor, you wouldn't know where to start.
At a high level, what we do is bring this connectivity to everyday things. But specifically, one of the sweet spots for this is illuminating supply chains. And if you think about it, even though we have some very sophisticated supply chains, they’re generally operating in the dark; people see the goods disappearing out of the shipping dock, but they don't really know a lot about where they are in the supply chain. And they don't know very much about who's using them.
And at the other end of the supply chain, people don't really know where things have come from. And so we end up in all sorts of problems with overproduction and shortages. And we're living through supply chain disruption like we've never seen it before with COVID, with the horrendous situation in Ukraine.
But bringing it back to supply chain, we're seeing huge shortages, inflation and there's problems with counterfeit and traceability. If someone gets sick from eating spinach, and we flush every leaf have spinach down the drain in an entire country. So there's loads of opportunities to fix that if we know where everything is and some specific examples.
Before I get into case studies, so what we're putting the tags on at a mundane level, one of the things we're starting on is plastic crates, where we've integrated the tags into vials of COVID vaccine and looked at there so you can continuously monitor their temperature, fill level, dilution, and of course, location. And something like that is super useful. But it's actually a very, very challenging supply chain to fully instrument.
Whereas plastic crates are relatively easy, they already exist. You can put a couple of these stickers on either end of a crate and with some very low cost Bluetooth infrastructure, you can suddenly see where things are. You can look at all sorts of problems like fruits, vegetables, meat medicine being exposed to the wrong temperature or just higher temperatures for longer than they should be. And when you can look at temperature over time, you can start to optimize shelf life and look for safety issues.
And just with the identity of the product, you can look at breakdowns in the flow of products in the supply chain, a first in first out, FIFO, that actually turns into a LIFO when product gets stacked up at the back of a packing shed in a farm or a distribution center or the back room in a store. And I think we've all experienced the disappointment of buying produce at the store and finding that the shelf life isn't what it should be. And very often, it's because the product is not been treated the way it should be. But no one in the supply chain can or wants to share that information. But if the crate or the package is online all the time, then suddenly you have this consistent record.
And we can extend the shelf life of product significantly. 30-40% of produce that is grown of food is disposed of, is thrown away even before it gets to our plates. And so in this world of climate change, this existential threat, food production is a massive part of our carbon footprint. Before we even look at lower cost sources of food, getting rid of meat, let's just stop throwing away 30% or 40% of the food that we make because it's gone bad or it's in the wrong place and tighten up that supply chain.
So there's many, many applications but that supply chain is one. Going forward, there's amazing opportunities to transform business models to implement circular economy type systems that completely change the business of a product company into some kind of subscription company and clothing is an example of that. Look at your wardrobe is probably full. And I would argue, unless you're a much better wardrobe manager than I am, most of what's in there doesn't get worn for long periods of time.
If we had more of a rental model where things that don't fit or you've changed your mind about or you grow out of, in my case, that if you could get value for that, if you could give it back and pass it on some, and maybe the products that were sold could be built with more quality and would be maybe more fashionable even and this fast fashion, which is polluting our rivers and wasting huge amount of manufacturing and resulting in lots of trash in dumpsters and landfills, that could be moved and change.
So many, many things can be changed if we start connecting every day, the products; and it's really a matter of sequencing which applications you go after first and figuring out how to orchestrate an ecosystem that can support the revolution.
Erik: Well, maybe we can dig into these two applications a bit more, one on the produce or agriculture, second time fashion, because these might be good examples of two different usage scenarios. On the agriculture one, I'm imagining that you are putting this on pallets because you're not going to attach it to stamp broccoli. And then the Fashion One, I'm imagining that you're attaching it to the jacket to the clothing. And so you have these different usage scenarios.
And then on the agriculture one, you have, I suppose a more complex set of stakeholders moving from the farmer to distributor to the retailer, and then to the consumer. On the fashion one, also, you have a complex set. How do these differ in terms of when you attach the beacon to some container versus to the actual product? Or how do you think about those two scenarios? And then second would be if we use these examples, who would be the typical customer who actually owns the data as the product is moving through and exchanging hands across the supply chain?
Steve: Well, the data ownership thing, that's a huge subject. But start offs, relatively simple on the use cases and what you're attaching it to. So although it's hard to believe these stickers, and your listeners can't see them, and maybe you can't see them, but literally, it's a flexible sticker, small numbers of pennies. These are already starting to be put on packets of letters.
One of our customers and partners is Sato, the big maker of RFID printers and auto ID systems out of Japan. They did a project with Japan's Ministry of Economy, Trade and Industry, METI, where they started putting the tags on products that were in consumer’s refrigerators, including individual plastic containers with lettuce in them and other products. And there was a mobile application that looked at how long the perishable products were in the fridge and started presenting recipes that encourage people to use up the things that were going bad.
But that's more on the bleeding edge of where this is going. But definitely, we have customers that make appliances. Washing machines can potentially read these tags. But at a more practical level, where can we start and scale very quickly? Then yeah, putting the tags on reusable transport items, or returnable transport items, which is everything from plastic pallets, or even wooden pallets to plastic crates and totes. That's really the most economic way of tracking the flow of a product from when it's picked in the farm to the store and then in the home.
So we actually have done a project with one of Israel's largest retailers. They have hundreds of grocery stores. And we put tags on these foldable plastic crates that are shipped to farmers and the farmers use them in the field. We actually did a webinar recently where there's a video that shows this whole flow, which you can see at Wiliot.com And you can see the farmers or the farm hands putting the zucchinis in the plastic crates and those crates can be read by very low cost Bluetooth devices that are actually attached to the tracker device, and they’re then taken into cold rooms where there's other very low cost Bluetooth devices that cost a few tens of dollars as opposed to the thousands of dollars that RFID readers cost.
And they keep track of the same crates that are in the storage area. And then the crates go in the truck. And the trucks, these days, have telematics devices. And those can also be linked to Bluetooth readers. And ultimately, they can go to the store where there can be other Bluetooth readers. And stores they’re going through a real IoT revolution. But there's electronic shelf labels that are driving wireless infrastructure into the store. And that wireless infrastructure, it can both energize and programed the shelf labels, but it can also energize and read our tags.
That gets you from farm to store. And the same retailer is also putting tags on a different set of reusable transport items that are cooled bags that go to the consumer’s home where we can measure the temperature and keep track of what's in the bags, but also track the crates. This sort of looking for opportunities to extend shelf life is really revolutionary, which is good and bad. It's the possibilities are enormous. But there are very few retailers that are really set up to execute against this.
So what we tend to do is start off with a value proposition which is keep track of your lost crates because that's the problem that exists, whether you have our technology or not, typically, these retailers have millions of crates, and they lose large numbers of them, either through benign or malevolent reasons people steal them or they just get forgotten. And if you can keep track of where those crates are going, you can cut the losses.
But it's really a very shallow one in that the real saving is if I can put two days of shelf life on my produce, then it completely transforms the business, the waste levels go down, the quality goes up, shoppers start coming to your store because the produce is better. I don't know whether you do that. But I'm in search of a decent tasting strawberry that isn't going to go off within a few hours. And people will switch loyalty based on better produce.
So for the retailer, it's an incredibly compelling use case. But it's kind of challenging because there's no one really responsible for that in the retailer. But there are people that are responsible for merchandising and keeping track of pallets. One of the problems that we have is when you completely revolutionize the business model that requires CEO level visibility transformation and initiative. And that's really where we're scratching the surface.
So we're starting off with value propositions, which are don't lose things. So that's the produce use case. If I go to the apparel use case, then ultimately, it's about allowing an apparel company to have a much higher stock market valuation by having a subscription business model by becoming the Netflix of apparel, by having this intimate relationship with your customer. Because you have got connectivity in their garment, you can help program the washing machine into the right level. You can understand if they're not wearing it and offered to take it back and switch it to something that they might like. And there's a bunch of issues around not so much the technology but just the business model and the privacy.
And so what we find is that's kind of the C in the ABC plan. And the A plan is let's just figure out what's in the store. Let's not put the tags in the clothing. But let's put the tags on the clothing. Let's stick them on to the tags that we have the price on because that's dead easy to do. And then let's look at the problem of the day which is how do we stay in business when we're competing with Amazon and a public that's learned to buy their apparel online.
So basically, the value proposition then is get continuous real time inventory, know where everything is in the store. And the moment the last medium pair of blue jeans disappears, send a message to summon to replenish it. So the value proposition is reduce out of stock issues. The value proposition is help find where things are in the store so that you can buy online and pick up in store. There's nothing more annoying than seeing on your app that a product is available in a store and you say, okay, I'm going to give you a chance. I'm not going to buy this on Amazon. I'm going to go to the store. And they say, yes, we've got it, but we don't know where it is.
And if you've got Bluetooth infrastructure, which, again, just costs hundreds of dollars, not thousands, or hundreds of thousands or millions of dollars, you can know where everything is in the store all the time. And that allows you to have smaller stores with a small number of staff delivering better service, which is the recipe for staying in business when you're competing with these pure play online retailers.
But that's kind of the story of one set of customers that are putting tags on plastic crates, and then another set of customers that are putting tags on apparel and then eventually, we'll put them in apparel.
Erik: And maybe the question that then arises is this question of data management because a lot of the companies that you're working with are not the most sophisticated in terms of their IT infrastructure. My first job was working in a grocery store. And maybe it's evolved since then. But there's a lot of paper and maybe Excel if you are particularly sophisticated. And so this value proposition of having real time visibility into all of the goods that are moving through your store means that you need a new way to actually access and visualize and act on that data. So how does that work? What is the solution here for helping the customers then to make sense of this tremendous amount of data that you're providing to them?
Steve: What we're seeing is the first movers in this space typically are the giants of retail, so small retail or medium sized retailer, they're really struggling with operational issues. But you look at the largest retailers, these companies are almost indistinguishable from tech companies. They have massive R&D resources. They've figured out how to write apps. They have more radios in a grocery store than you can possibly imagine. And they're very sophisticated about data ownership as well.
One of the underlying questions is who owns this data? In our case, because it is a computer, we actually encrypt the data before it's transmitted over the Bluetooth channel, which anyone can tap into. So whoever owns the tag owns the data. And so, what we're seeing is actually a bit of a race between the very large retailers and the very large CPG brands and pharmaceutical brands to who puts the Wiliot IoT pixel on the product.
And anyone's guess how it's going to turn out, I kind of favor and hope that the brands get it together first because it's in their interest to share the data with everybody with the retailer, with the consumer. But that data, the unique ID and the sensing data is all encrypted and whoever owns it is the recipient of it, even if the reader is a Bluetooth radio in on a phone or in a WiFi access point and it gets relayed to the cloud. I mean, one of the aspects of this is okay, well, is it the retailer that owns it? Is it the brand that owns it?
But then of course, there's also the consumer and they have a major say on that. And to be frank, that's an issue that hasn't been solved yet because most of what we're doing is still B2B use cases. But eventually, these tags will live on as part of the products that end up in people's homes. And it'll be essential that people then opt in and decide if they want that data to then flow through their smartphone or the radios in their WiFi access points, the smart speakers. Do they want to be able to talk to Alexa and get advice on recipes and get warned that they've mixed their red shirt with the white shirt and get offers on buying back or replacing clothes that they haven't owned? And what happens to a tag on a product that gets returned when that product was maybe stolen?
Because suddenly, if you have this encrypted ID that's built into the computer that is built into the care label, then you can start to streamline returns and look at fraud in different ways. There's so many fascinating issues in terms of the data ownership and you could get lost in it. And basically, what we're seeing is that both brands and retailers have something to gain from this data. And my hope is that they ended up deciding to share it. And I think they will when the tag is owned by the brand because they want to use the retailer's infrastructure to read the tags. And the only way that's going to happen is if they share the data.
I do think it will work out, okay. And then there's the law is on the side of the consumer with GDPR and so forth and other privacy regulations. But there's a lot of pieces that still need to fall in place to really join those dots in the picture.
Erik: Let's get into the tech stack here a little bit. So you've already explained what the IoT pixel is. But I think it'd be interesting to get into the specs because most people I imagine are still even though you've described it as the size of maybe a postage stamp, I think. Still, it's a bit hard to wrap your mind around what kind of technology can fit into that form factor. So what are we looking at in terms of sensors, in terms of compute, in terms of transceiver, in terms of battery life? Well, I guess no battery it's a passive, what does that look like?
Steve: If you look at the camera, you'll see that. When I put this sideways, you can't even see it, it's so thin. There's basically a chip. So it's a single chip design. And we're really standing on the shoulders of a few industries, the RFID industry and the Bluetooth industry. And these computers are actually made using a process that was pioneered by RFID companies like Avery Dennison and Identive and Checkpoint systems who make billions of RFID tags. They're the ancestors is this, I guess. So we assemble the tag using these machines that are made. They're incredible machines, actually.
But they cost about a million dollars each and you feed chips and some materials in one end and out the other end become tens of thousands of tags an hour come out that are fully assembled. Though it's basically the chip is glued on to the antenna and it's all wrapped up in paper and very, very small amounts of plastic with some glue. And the antenna harvests energy from Bluetooth, the end other frequencies, sub-gigahertz frequencies that can actually get energy from legacy RFID infrastructure but also LoRaWAN devices, the kinds of things that are in all of your Alexa smart speakers and your ring doorbell. So we can harvest all of that Bluetooth and sub-gigahertz energy using these antennas. And there's normally a couple of harvesting antennas.
And then another one that's packed into this postage stamp size thing is the broadcast antenna. And wherever the energy comes from and it can actually come from any number of radio frequencies, what we always broadcast is a standard Bluetooth advertising packet. And these advertising packets are the things that flow all around you, and it's the protocol that your phone and your laptop and your car radio and your earbuds used to tell each other they exist. So it's like a lighthouse broadcast protocol.
And we then take the data that's normally transported using those beacons. And we have our own secure packet that we layer on top of that. And that then gets forwarded on to the cloud. And so the readers are literally phones, WiFi access points and in the future, smart speakers and washing machines and fridges which all have Bluetooth radios.
In terms of where the energy comes from, that can come from Bluetooth devices. But at the moment we're kind of on the edge of what can be harvested from a unaware Bluetooth device. In order to get predictable performance, we have an intermediate tier, which is like a stepping stone between the tag and the WiFi access point, that might be 30 meters up in the ceiling of a huge warehouse. And these things are called Bridge devices. And they cost anywhere between $10-$44. And they basically read the weak signals that we transmit that will go up to 10 meters, maybe a little bit longer with the latest versions. And they selectively rebroadcast them up to the WiFi access points, which are typically infrastructure that the retailer or the manufacturing organization already has there and they've already gone through all the IT and security.
So that's existing read infrastructure that can be augmented with these little bridge devices that are the size of a small tin of mints. And these can be plugged in to all sorts of things. And you can scatter them around to mark points of interest that might be like a cash register or a changing room or the front of store display or the back of store display. And so when the tags get energized and read by these bridges, you automatically know where they are because the bridge is associated with point of sale number one, or locker number three, and you can get incredible information.
This going back to the apparel use case that I touched on, we started to be able to measure which clothing was taken into the changing room was bought, which is actually very difficult to track. Otherwise, if you have cameras, it's very difficult for them to tell one black sweater from another black garment. But when you have a Bluetooth beacon, and you can get right down to the SKU, and even the serial number associated with an item of apparel, and we started to see amazing patterns, some products would have a conversion rate of 90%. So, 90% of the people that took them into the changing room tried them on would buy them.
And other products, it was a disaster, was 10%. And normally, you wouldn't really get that information and you'd see a high level of returns because maybe the one that wasn't selling was scratchy and uncomfortable. So those are the sorts of things that you can get from this infrastructure. But it's a three-tier architecture. It's the tags, talking to bridges, and the bridges talk to the WiFi access points or the radio in the container or the truck or whatever.
Erik: And then the tag to the bridge, what distance can the signal be transmitted?
Steve: It's up to about 10 meters.
Erik: You're harvesting energy, so no battery life constraints here? In terms of sensing, I know that temperature is possible. What else is either possible today? Or are you looking at for the future in terms of humidity, vibration, there's a lot of other things that would be great to understand around the status of the good?
Steve: So today, every Wiliot tag consents temperature. So it's sort of not optional, you get it, so you don't have to use it. But that's all done by the single chip that's at the center of this thing. We can also look at location changes, you can argue whether it's a sense or not. But that's kind of a signal that which is actually the basis of our business model. We'll get onto that later. We don't charge anything for the IP that's related to the chip. We give that away to where we license it to be more precise.
But back to the sensing, so that vaccine vial that I described that we made, that could measure dilution. So think back to the throes of vaccines when they were originally distributed. There are all sorts of stories about children being vaccinated. And I was getting vaccinated with an diluted COVID vaccine. And it's not good for you. But our tags could detect that because there's a frequency shift that occurs when the chemistry in the liquid changes. That actually was discovered more by accident than anything else.
We did the design of the tag with a proxy for the COVID vaccine because as you can imagine, in the early days, it was difficult to get. And then the real COVID vaccine came in and there's a different RF signature and we're like, well, that's not good. But then we found that we could keep track of and track that shift and use it to detect whether the vaccine had been diluted or not. So dilution fill level, so we actually, one of the things that we launched very recently is a starter kit.
Back in the early days of Wiliot, with the version one product, the only companies that could get hold of it were ones with deep pockets willing to pay $50,000 or $100,000 to get into our early access program. But we're now selling the starter kits for $500. And in that starter kit, we have a coffee cup. It's just a reusable plastic cup. There’s three tags on it, and we use those for temperature sensing, but also high and low watermark.
So just by looking at the tags turning on and off, which they do when liquid is in close proximity, you can start to do level sensing and replenishment sensing. And we can already do more sophisticated replenishment sensing. So you put these tags on a pill bottle or a bottle of herbs and spices, and you can see when the bottle becomes empty and trigger a reorder, or you can use it as proxy for adherence to a medical regimen: we can see whether people are taking their medicine or not.
And then in the further future, we'll have specialized tags that do things that are integrated with the mechanics of an insulin injector, so we'll be able to see whether the insulin injector is fired or not. And again, this is a future, we don’t have the shipping today. But we've done some R&D on being able to detect changes in chemistry in meat and fish. And so there'll be a freshness sensor that will detect the presence of ammonia, which starts to increase in a trace level so you can sense whether your pork chop is something that should be eaten or not eaten.
So there's many, many things. Humidity is another one that's on our roadmap. And the nice thing is that a number of these upgrades can be delivered over the air, a bit like Tesla, because a lot of the sensing is done in the cloud. So what we are actually sells is the cloud services that manage the flow of data and the ownership of the data and do a lot of the sensing that would normally be done on a high value device. That's actually done in the cloud and allows you to introduce and refine and improve the sensing, even after the tags are out in the field.
Erik: So is it then the case that you're licensing the technology? I think you said you actually don't charge for the licensee. You're licensing this to manufacturers who would produce the tags and sell the tags as part of their business model and then you are building your business model around the control of the data?
Steve: Yeah, exactly right. So, one of our investors is Avery Dennison. They're the largest maker of smart tags, RFID tags, NFC tags in the world. And they're also our preferred go-to market partner, although we actually are working with a number of their competitors. But the business model for tag licensed manufacturers, as we call them, we give them reference designs, and then they can make tags.
And at the moment, the number of designs of these tags are relatively small, we have specialized tags. We have the vaccine vial design. We have tags that are designed for plastic crates that are washable tags that are designed to go on cardboard boxes. But in the future, that ecosystem of tag manufacturers will be able to make tags that a flexible where it can be put into linen that is in a hospital is being washed and pummeled. So they don't pay anything for that. They can make money on these unique, innovative designs. And what we charge for is a set of cloud services.
And we actually announced an alpha version of an automation platform with pre-built connectors to enterprise applications and simple drag and drop conditional logic to allow you to put basic applications. But most people will want a whole stack of apps on top of products. So whilst we charge a subscription fee for use of this data, which is a small number of pennies, then those APIs can be built upon by companies that are creating a new generation of software to deal with this phenomenon of serialization.
Ralph Lauren announced recently that every polo shirt they make has been given a unique ID and that ID is being managed by a company called Everything, they make serialization software. So this is kind of a whole ecosystem of companies like them that can build and are built on top of our APIs. Or you can plug our automation engine to NetSuite or Slack or something like that. But in terms of what we charge, we’ll either charge that subscription fee, which again is like a very small number of pennies to the person that's writing the app. And they can either write their own apps if they're a sophisticated grocery store or they can use these other third party packages, and in which case, our pricing is just hidden and part of the broader fee that that enterprise had develop.
Erik: And then you mentioned that the pixels themselves are also, I think, you said pennies, but I guess that depends a bit on the form factor and with sensors you have and so forth. So are you looking from like $0.10-$0.50? Or what would be the range here?
Steve: Yeah, that's where they are now. Next year, we'll get less than $0.10. So they're on a course to be in the same ballpark as RFID tag or an NFC tag. But the difference is that, well, unlike NFC tags that require people to do things, either the consumer or the employee has to tap things. And what we found is consumers don't readily tap things, maybe for novel reasons. But the exercise of getting consumers to tap bottles of wine with their phone is a bit of a gimmick and tends not to happen.
And with RFID, you have to persuade employees to do things or make them remember to do things, and you just get these snapshots. Whereas in the case of Bluetooth tag, it's constantly broadcasting and the infrastructure is so low cost, it can be pervasive. So you're constantly getting this stream of data from the infrastructure that's already there or at least very low cost to put into place.
So tags, for all intents and purposes, less than $0.10 next year and then the cloud services are literally single digit pennies based on the tags that we see. So if you have tags on pallets that never get read, then you don't pay us anything, you only pay us for the tag when it's read and when it's delivering useful information.
Erik: This is such a fascinating business because you take this ecosystem approach, which means that there's a lot of companies that are exploring how to build their own businesses around this data. I'm primarily buying my groceries through an app called EpaMarket, which basically just functions in larger Chinese cities. And I can imagine if I could go onto my phone, and just know here's what you have in the house, you've got three bottles of red wine, you have whatever, here's what you have, and here's what you don't have, and then I could pretty much just automate that process of procurement for myself as a consumer. Whenever I get below a threshold of any of these products, order a new delivery.
I think we've covered the business pretty well to date, maybe it'd be interesting to look quickly at what the future looks like. So if you look forward maybe over the next three years or so, what do you see on the horizon for Wiliot?
Steve: I think there'll be a set of staple use cases like these plastic crates that just mean that you can't survive unless you're adopting them. Because why would you buy from a grocery store where the shelf life is half that of another one? And why would you run a grocery store if your waste is massively high when other people aren't? My hope is that these kind of very simple use cases really take off fairly rapidly. And I think there'll be competitive pressures that drive that.
But the thing that I'm looking forward to is when the operating systems in the phones and the smart speakers and the washing machines and the fridges start to get tuned for this technology. And they're not at the moment. I mean, you can run an app. There's a Wiliot app, you can download it and that's part of our starter kit and you can read things. But it's not really energizing the tags. But it could. The radios in your phone are actually very strong. They just need to be driven in the right way to energize these tags. So that's one of the things that I'm looking forward to.
There's a lot of very interesting ecosystems and businesses. I'm looking forward to being a consumer on the other end of what you described which is kind of the Amazon Dash button, was that what it was called, where you press the button and order more things. But it's actually just built into the packaging. So I think we'll see more and more of those use cases. I think we'll see the tags going from on the apparel to in the apparel, I'm looking forward to having tags on my passport, and important documents and even my record collections so that I can keep track of that.
And actually, the Holy Grail for me is when we have Wiliot IoT pixels in stocks, our work will be done because no longer loosing my stocks, not having the odd stock problem, just knowing where it is would be so awesome. And being warned that I'm about to ruin my favorite shirt. And that takes a while because the physics relatively easy. But there's some data plumbing that needs to go in if the cloud is going to know the washing instructions for every item of apparel that requires a lot of back end work by the apparel makers.
And it will require forward looking apparel makers who, as you pointed out, their innovation for them is about a new fabric dye or a new textile where a very few of them have cloud developers. And so it's going to be fascinating to see which ones jump on this first and what the dynamics are. I hope that this can be a major force for good. There's massive waste in our supply chains. And it's not just the food use cases. It's every product company getting visibility of what's on the shelves in the wholesale channel. And if they can do that, they could probably make like 25% less stuff because they wouldn't have to stockpile it.
And I think if we do that, then we actually have an opportunity to fight climate change in a meaningful way, which I'm actually quite optimistic about. Because if you do that, you save massive amounts of capital and your profitability goes up. So it's no longer the tree huggers shouting at the business people, it's actually the business people saying, yeah, I do want to reduce capital employed in inventory. And I want to reduce out of stocks. And I want to have my delivery vehicles with dynamic routing so they're not using up so much petrol.
So that's the future that I look forward to. It’s cleaner, safer, more efficient. And I think we can do that when we connect all these things to the internet that have been offline. And at the moment, most things are offline, and they don't have to be
Erik: So Steve, if there's anybody listening to the podcast today, who is interested in learning more about Wiliot and maybe exploring how they could be using the technology, what's the best way for them to get in touch with the team?
Steve: Well, unsurprisingly, it's all at Wiliot.com. We have an academy there, which is free. And we're going to be growing it. But there's a course called Wiliot 101 that actually teaches you a bunch of stuff about Bluetooth as well as about our products. So go there, graduate, and we have a community where you can share ideas and technical information. And then if you decide you want to play with this and actually experience it and innovate, then buy a starter kit. You can go online and you get a handful of tags, you get a coffee cup, you get cloud services, and you get access to our support forums to try things out. And we're actually going to be introducing some other kits that are use case focused. And so there's a lot there. And there's more to come.
Erik: Awesome. Thanks, Steve.
Steve: Thanks, Erik. And great questions, I appreciate the opportunity to chat with you.
Erik: Thanks for tuning in to another edition of the IoT spotlight podcast. If you find these conversations valuable, please leave us a comment and a five-star review. And if you'd like to share your company's story or recommend a speaker, please email us at team@IoTone.com. Finally, if you have an IoT research, strategy, or training initiative that you'd like to discuss, you can email me directly at erik.walenza@IoTone.com. Thank you.