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What is the “New Normal?”

by Peter Sorgenfrei

A question we get frequently when discussing the future of the auto industry in the U.S. is: “Will this economic downturn have the same impact on the American psyche as the Great Depression?  Will the buying habits of the American automotive consumer fundamentally change?”  Our answer; yes and no.

First off, our current economic situation is nowhere near as severe as the massive market adjustment during the early part of last century.  While the double-digit unemployment rate, high rate of foreclosures and daily doom reports from the talking heads are not exactly great news, we are not experiencing sacrifice and shortages seen in the U.S. beginning with Black Tuesday in 1929.  While our relatives rationed gasoline and saved rubber bands our biggest shortage these days are a dearth of Eggos and canned pumpkin pie filling.  Hardly a comparison.

The American consumer, all things considered, is still consuming. He/she still eats out, still shops, still drives to work and takes the kids to soccer practice. The change that has happened in the last 18 months is how consumers talk about their financial lives. They worry more, they might cut back here and there, but net/net they are still consumers.

Car buying behavior has definitely changed – fewer new cars are sold today compared to last year and the types of vehicles purchased  is changing.  The volume story is one of consumers realizing that purchasing a new vehicle every three-five years isn’t a requirement so they are keeping their vehicles longer.  Most industry “experts” believe that the the sales volume will return, albeit to a “new normal” of 11 – 12 million vehicles per year.  The real question is what will the showroom floor look like?  Will the American consumer start buying only what they need rather than what they want?  Will the streets of NYC begin to mirror those of Paris? Probably not.

Our take is that yes, the garages of America will be populated with relatively smaller, more fuel efficient vehicles in the future but it isn’t because this economic hiccup fundamentally changed our values.  It is more a combination of less conspicuous consumption combined with manufacturers offering more efficient products mandated by law, not consumer desire.

Fundamentally, a 5-passenger hatchback cannot meet the needs of a family of 7.   There will still be a need for minivans, crossovers and yes, even SUVs that seat 7+ passengers.  The difference is they will be purchased by people who need them to schlepp the kids, carry the cargo or tow their boats.  The rest of us may downsize to more fuel-efficient Crossovers and sedans but the “new normal” will still feature the American consumer driving more car than they really need.

Filed under: Automotive, Market Research , , , , , ,

Customers drive change

Akio Toyoda spoke in Michigan yesterday. We’ve been part of this process for 10 years now and can testify to how it works making products, services and companies better and more valuable.

From Automotive News:
In his keynote speech at the Management Briefing Seminars, Toyota Motor Corp. President Akio Toyoda challenged the auto industry to reinvent the automobile and told the gathered executives that they are not in charge of deciding how to to do it.

“All of us in this room might think we are driving change in our companies and in our industry,” Toyoda said. “But we are not.

“It is the customer who is driving change. And if we want to make something happen, we’d better listen and learn the customer’s habits.”

Doing so could allow the industry to discover “a need so big that it calls for a true breakthrough idea,” Toyoda said. “Something bigger than just worrying about how many cupholders our competitor has in their new model.”

‘Contribute to society’

Toyoda said his vision for Toyota follows that of his grandfather, Kiichiro Toyoda, who founded the company in 1937. His grandfather insisted that the automaker should “contribute to society through manufacturing cars,” Akio Toyoda said. That calls upon Toyota staffers “to aspire to a higher cause than just building cars and making money,” he said.

Toyoda admitted, though, that “the severe drop in the economy and auto market has created some of the most challenging times Toyota has ever faced.” Toyota posted its third-straight quarterly loss in the three months that ended June 30 and is on track for its second-straight fiscal year of operating losses.

Toyoda also noted that General Motors Co.’s decision to withdraw from the two automakers’ joint venture in Fremont, Calif., New United Motor Manufacturing Inc., “has created some extremely difficult issues for us to resolve.”

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Toyota’s Bill Reinert – tremendous commentary on future of Green Vehicles

From Automobile Magazine:

Bill Reinert, Toyota’s in-house energy guru and resident contrarian, looks like he’s just taken a whiff of a long-expired container of milk.

Reinert is serving on a future-of-the-car panel at a high-powered green-think conference sponsored by Fortune magazine and featuring heavyweights such as President Bill Clinton and Bill Ford. Although the symposium is being held in a button-down bastion of Orange County, the ambience is totally Silicon Valley, all iPhones and Aeron chairs, with lots of clever but undercapitalized tech entrepreneurs sniffing around for angel investors. At the moment, Shai Agassi, the charismatic founder of Better Place, is making a dynamic pitch for creating vast networks of battery-charging stations to support electric vehicles that will, he claims, be cheaper than the equivalent gasoline-powered cars. While executives from Ford, BMW, and Fisker Automotive listen with polite smiles, Reinert squirms in his seat, crosses and recrosses his legs, and generally behaves like a schoolkid who can’t wait for the bell to ring so he can escape for recess.

When it’s his turn to speak, Reinert bites his tongue. He mildly questions the viability of Agassi’s wildly improbable plan to create battery-swapping stations for the coming wave of EVs. He lobs a few gentle barbs in the direction of the ethanol lobby, which he privately regards with unalloyed scorn. He outlines his genuinely radical vision of a future where publicly owned and shared cars are used to complete urban mass-transit systems. But by and large, he’s on his best behavior, showing the benevolent public face of the world’s greenest car company. Until the mics are turned off.

“That’s the first law of Disney at work–wishing will make it so,” he mutters shortly after bolting out of the conference room and yanking off his tie. “Using ethanol for fuel is like electing the dumbest kid in school as class president. As for plug-in electrics, they’re just not plausible right now. Lithium-ion batteries are too expensive by at least an order of magnitude. They’re not energy-dense enough. And we generate a lot of our electricity from coal. I don’t think Shai is being disingenuous. I think he really believes what he’s saying. I see it all the time from those Palo Alto types. They think the whole world is like a computer company, and they’re always trying to recreate the dot-com economy. You see exactly the same mind-set with Tesla. It’s all going to work out. It worked out with eBay. It worked out with SAP. But transportation is a different world. I mean, Shai’s bragging about driving an electric RAV4 with a seventy-mile range. How many of your friends are going to buy that car?”

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Filed under: Automotive , , , , , , , ,

Apple granted patent for sports sensors

Think Major League Baseball’s stats and live video iPhone app is cool? Imagine what Apple could do with technology it was granted a patent for this week: a network of sensors that deliver real-time velocity, impact, rotation and other data from sporting event participants to the web. Imagine your iPhone’s accelerometer placed inside a boxer’s glove, a snowboarder’s snow suit or a NASCAR driver’s car – with the information captured delivered to your iPhone or Apple TV while you watch the competition either in person or remotely.

Would you pay a premium for an event ticket that includes real time stats like that delivered to your iPhone? I would. Of course Apple is granted all kinds of patents all the time and only some of them amount to anything – but this one is very cool.

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Filed under: Innovation, Science , , , , , , , ,

Technologies that will turn the world upside-down

Flying cars, personal jetpacks, holidays on the moon, the paperless office – the predictions of futurologists are, it seems, doomed to fail. The only thing predictable about the future is its unpredictability.

But that has not stopped edge.org – the online intellectual salon – asking which ideas and inventions will provide humanity’s next leap forward. In its traditional New Year challenge to the planet’s best thinkers it asks, “What will change everything – What game-changing scientific ideas and developments do you expect to live to see?”

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Filed under: Innovation, Science , , ,

40 Years in the future

From Mechanix Illustrated November 1968

By James R. Berry

IT’S 8 a.m., Tuesday, Nov. 18, 2008, and you are headed for a business appointment 300 mi. away. You slide into your sleek, two-passenger air-cushion car, press a sequence of buttons and the national traffic computer notes your destination, figures out the current traffic situation and signals your car to slide out of the garage. Hands free, you sit back and begin to read the morning paper which is flashed on a flat TV screen over the car’s dashboard. Tapping a button changes the page.

The car accelerates to 150 mph in the city’s suburbs, then hits 250 mph in less built-up areas, gliding over the smooth plastic road. You whizz past a string of cities, many of them covered by the new domes that keep them evenly climatized year round. Traffic is heavy, typically, but there’s no need to worry. The traffic computer, which feeds and receives signals to and from all cars in transit between cities, keeps vehicles at least 50 yds. apart. There hasn’t been an accident since the system was inaugurated. Suddenly your TV phone buzzes. A business associate wants a sketch of a new kind of impeller your firm is putting out for sports boats. You reach for your attaché case and draw the diagram with a pencil-thin infrared flashlight on what looks like a TV screen lining the back of the case. The diagram is relayed to a similar screen in your associate’s office, 200 mi. away. He jabs a button and a fixed copy of the sketch rolls out of the device. He wishes you good luck at the coming meeting and signs off.

Ninety minutes after leaving your home, you slide beneath the dome of your destination city. Your car decelerates and heads for an outer-core office building where you’ll meet your colleagues. After you get out, the vehicle parks itself in a convenient municipal garage to await your return. Private cars are banned inside most city cores. Moving sidewalks and electrams carry the public from one location to another.

With the U.S. population having soared to 350 million, 2008 transportation is among the most important factors keeping the economy running smoothly. Giant transportation hubs called modemixers are located anywhere from 15 to 50 mi. outside all major urban centers. Tube trains, pushed through bores by compressed air, make the trip between modemixer and central city in 10 to 15 minutes.

A major feature of most modemixers is the launching pad from which 200-passenger rockets blast off for other continents. For less well-heeled travelers there are SST and hypersonic planes that carry 200 to 300 passengers at speeds up to 4,000 mph. Short trips between cities less than 1,000 mi. apart are handled by slower jumbo jets.

Homes in Mi’s 80th year are practically self-maintaining. Electrostatic precipitators clean the air and climatizers maintain the temperature and humidity at optimum levels. Robots are available to do housework and other simple chores. New materials for siding and interiors are self-cleaning and never peel, chip or crack.

Dwellings for the most part are assembled from prefabricated modules, which can be attached speedily in the configuration that best suits the homeowner. Once the foundation is laid, attaching the modules to make up a two- or three-bedroom house is a job that doesn’t take more than a day. Such modular homes easily can be expanded to accommodate a growing family. A typical wedding present for the 21st century newlyweds is a fully equipped bedroom, kitchen or living room module.

Other conveniences ease kitchen work. The housewife simply determines in advance her menus for the week, then slips prepackaged meals into the freezer and lets the automatic food utility do the rest. At preset times; each meal slides into the microwave oven and is cooked or thawed. The meal then is served on disposable plastic plates. These plates, as well as knives, forks and spoons of the same material, are so inexpensive they can be discarded after use.

The single most important item in 2008 households is the computer. These electronic brains govern everything from meal preparation and waking up the household to assembling shopping lists and keeping track of the bank balance. Sensors in kitchen appliances, climatizing units, communicators, power supply and other household utilities warn the computer when the item is likely to fail. A repairman will show up even before any obvious breakdown occurs.

Computers also handle travel reservations, relay telephone messages, keep track of birthdays and anniversaries, compute taxes and even figure the monthly bills for electricity, water, telephone and other utilities. Not every family has its private computer. Many families reserve time on a city or regional computer to serve their needs. The machine tallies up its own services and submits a bill, just as it does with other utilities.

Money has all but disappeared. Employers deposit salary checks directly into their employees’ accounts. Credit cards are used for paying all bills. Each time you buy something, the card’s number is fed into the store’s computer station. A master computer then deducts the charge from your bank balance.

Computers not only keep track of money, they make spending it easier. TV-telephone shopping is common. To shop, you simply press the numbered code of a giant shopping center. You press another combination to zero in on the department and the merchandise in which you are interested. When you see what you want, you press a number that signifies “buy,” and the household computer takes over, places the order, notifies the store of the home address and subtracts the purchase price from your bank balance. Much of the family shopping is done this way. Instead of being jostled by crowds, shoppers electronically browse through the merchandise of any number of stores.

People have more time for leisure activities in the year 2008. The average work day is about four hours. But the extra time isn’t totally free. The pace of technological advance is such that a certain amount of a jobholder’s spare time is used in keeping up with the new developments on the average, about two hours of home study a day.

Most of this study is in the form of programmed TV courses, which can be rented or borrowed from tape _ * libraries. In fact most schooling from first grade through college consists of programmed TV courses or lectures via closed circuit. Students visit a campus once or twice a week for personal consultations or for lab work that has to be done on site. Progress of each student is followed by computer, which assigns end term marks on the basis of tests given throughout the term.

Besides school lessons, other educational material is available for TV viewing. You simply press a combination of buttons and the pages flash on your home screen. The world’s information is available to you almost instantaneously.

TV screens cover an entire wall in most homes and show most subjects other than straight text matter in color and three dimensions. In addition to programmed TV and the multiplicity of commercial fare, you can see top Broadway shows, hit movies and current nightclub acts for a nominal charge. Best-selling books are on TV tape and can be borrowed or rented from tape libraries.

A typical vacation in 2008 is to spend a week at an undersea resort, where your hotel room window looks out on a tropical underwater reef, a sunken ship or an ancient, excavated city. Available to guests are two- and three-person submarines in which you can cruise well-marked underwater trails.

Another vacation is a stay on a hotel satellite. The rocket ride to the satellite and back, plus the vistas of earth and moon, make a memorable vacation jaunt.

While city life in 2008 has changed greatly, the farm has altered even more. Farmers are business executives running operations as automated as factories. TV scanners monitor tractors and other equipment computer programmed to plow, harrow and harvest. Wires imbedded in the ground send control signals to the machines. Computers also keep track of yields-, fertilization, soil composition and other factors influencing crops. At the beginning of each year, a print-out tells the farmer what to plant where, how much to fertilize and how much yield he can expect.

Farming isn’t confined to land. Mariculturists have turned areas of the sea into beds of protein-rich seaweed and algae. This raw material is processed into food that looks and tastes like steak and other meats. It also is cheap; families can have steak-like meals twice a day without feeling a budget pinch. Areas in bays or close to shore have been turned into shrimp, lobster, clam and other shellfish ranches, like the cattle spreads of yesteryear.

Medical research has guaranteed that most babies born in the 21st century will live long and healthy lives. Heart disease has virtually been eliminated by drugs and diet. If hearts or other major organs do give trouble, they can be replaced with artificial organs.

Medical examinations are a matter of sitting in a diagnostic chair for a minute or two, then receiving a full health report. Ultrasensitive microphones and electronic sensors in the chair’s headrest, back and armrests pick up heartbeat, pulse, breathing rate, galvanic skin response, blood pressure, nerve reflexes and other medical signs. A computer attached to the chair digests these responses, compares them to the normal standard and prints out a full medical report.

No need to worry about failing memory or intelligence either. The intelligence pill is another 21st century commodity. Slow learners or people struck with forgetfulness are given pills which increase the production of enzymes controlling production of the chemicals known to control learning and memory. Everyone is able to use his full mental potential.

Despite the fact that the year 2008 is only 40 years away as far ahead as 1928 is in the past, it will be a world as strange to us as our time (1968) would be to the pilgrims.

Filed under: Information, Innovation, Science , ,

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