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December 19 2012

Three lessons for the industrial Internet

The map of the industrial Internet is still being drawn, which means the decisions we’re making about it now will determine the extent to which it shapes our world.

With that as a backdrop, Tim O’Reilly (@timoreilly) used his presentation at the recent Minds + Machines event to urge the industrial Internet’s architects to apply three key lessons from the Internet’s evolution. These three characteristics gave the Internet its ability to be open, to scale and to adapt — and if these same attributes are applied to the industrial Internet, O’Reilly believes this growing domain has the ability to “change who we are.”

Full video and slides from O’Reilly’s talk are embedded at the end of this piece. You’ll find a handful of insights from the presentation outlined below.

Lesson 1: Simplicity

“Standardize as little as possible, but as much as is needed so the system is able to evolve,” O’Reilly said.

To illustrate this point, O’Reilly drew a line between the simplicity and openness of TCP/IP, the creation and growth of the World Wide Web, and the emergence of Google.

“The Internet is fundamentally permission-less,” O’Reilly said. “Those of us who were early pioneers on the web, all we had to do was download the software and start playing. That’s how the web grew organically. So much more came from that.”

A nice side-effect of this model is that you can easily determine its success. “A new platform can be said to succeed when your customers and partners build new features before you do,” O’Reilly noted.

The Hourglass Architecture of the InternetThe Hourglass Architecture of the Internet

“The IP protocol did the smallest, necessary thing: it specified the format of the data that would be exchanged between machines. Everything else could vary, from the transport protocols and transport medium all the way to the kinds of applications and services that were exchanging that data. Jonathan Zittrain refers to this as the ‘hourglass architecture’ of the Internet.”
— Tim O’Reilly, “Lessons for the Industrial Internet,” slide 6

(The “simplicity” segment begins at the 1:43 mark in the accompanying video.)

Lesson 2: Generativity

“Create an architecture of participation that leads to unexpected innovations and discoveries, and builds a new ecosystem of companies that add value to the network,” O’Reilly explained.

O’Reilly pointed to two examples relevant to this lesson:

  1. Google Maps — Online mapping services were already common when Google launched its Maps service in 2005. So how did Google push to the front of the line? When hackers started mashing up Maps data with external sources, Google embraced those efforts and launched APIs. The result is a mapping platform that’s achieved ubiquity through accessibility. It’s unlikely anyone within Google could have anticipated the innovations that would come once the doors were thrown open.
  2. Apple’s App Store / the rise of Android — The first iPhone didn’t launch with an App Store. Third-party development at that point was limited to web apps. But Apple plotted a new course when it saw jailbreaking grow, and the company now oversees a marketplace with more than 700,000 applications. However, O’Reilly pointed to the rise of Android as evidence that Apple didn’t completely embrace a participatory architecture. “Apple didn’t learn the lesson well enough,” he said.

O’Reilly also noted that the industrial Internet’s considerable upside makes the need for participatory architecture vital. “I think this industrial Internet idea is so powerful and so right, that everybody is going to want to get on board. It’s going to be really important to figure out how you create an open systems approach to this. That doesn’t mean you can’t create enormous value for yourselves, but it’s super important to think about that aspect of it.”

HousingMaps Google Maps mashupHousingMaps Google Maps mashup

“When Paul Rademacher reverse-engineered the format of Google’s new mapping app to create the first map mashup,, Google could have branded him a ‘hacker’ and tried to shut him down. Instead, they responded by opening up free APIs for developers. Other, more closed platforms were left in the dust, and Google Maps became the preferred mapping platform for the web.”
— Tim O’Reilly, “Lessons for the Industrial Internet,” slide 11

(This “generativity” segment begins at the 3:01 mark in the accompanying video.)

Lesson 3: Robustness

Build “the ability to tolerate failure and degrade gracefully rather than catastrophically,” O’Reilly said.

“Graceful failure” may sound like an excuse a parent uses to soothe a child’s bruised ego, but it’s actually a fundamental building block of the Internet.

As an example, O’Reilly said that one of the key innovations Tim Berners-Lee constructed when he developed the World Wide Web was the ability for anyone to create a hypertext link that didn’t resolve. A user would bump up against a 404 message if a link hit a dead end, yet everything would still function and the user could flow around the obstacle without the entire system crumbling.

Now, you may think an innocuous 404 failure is a far cry from the failure of a massive chunk of industrial machinery. That’s not necessarily the case. O’Reilly told the story of a Boeing engineer who addressed catastrophic metal fatigue in airplanes through a form of graceful failure. “The right answer wasn’t to eliminate all the cracks,” O’Reilly said. “You had to figure out how to live with them.”

Bottom line: Whether we’re talking about hypertext or airliner materials, an embrace of robustness and graceful failure expands a domain’s possibilities. “One of the big lessons from the Internet is if you don’t know how to fail, you’ll never be able to scale,” O’Reilly said.

De Havilland's Comet and Boeing's graceful failureDe Havilland's Comet and Boeing's graceful failure

“While it may seem that this philosophy of the Internet is inappropriate for the highly engineered systems of the industrial Internet, I’ll remind you of the failure of de Havilland’s Comet in 1954 and the rise of Boeing as the dominant provider of commercial aircraft. Over the course of three years, three Comets fell out of the sky for initially unexplained reasons. It eventually became clear that the problem was metal fatigue. De Havilland tried to eliminate all cracks; Boeing learned to live with them.”
— Tim O’Reilly, “Lessons for the Industrial Internet,” slide 18

(This “robustness” segment begins at the 6:40 mark in the accompanying video.)

Full video: “Minds + Machines 2012: ‘Closing the Loop’ – Lessons of Data for the Industrial Internet”

Additional insights and discussion are contained in this video. The first 13 minutes features O’Reilly’s presentation, which is then followed by a panel discussion between O’Reilly, Paul Maritz of EMC, DJ Patil of Greylock Partners, Hilary Mason of bitly, and Matt Reilly of Accenture Management Consulting.

Slides: “Lessons for the Industrial Internet”

This is a post in our industrial Internet series, an ongoing exploration of big machines and big data. The series is produced as part of a collaboration between O’Reilly and GE.

Related industrial Internet coverage

Reposted byRK RK

February 07 2012

December 28 2011

Five things we learned about publishing in 2011

Many of publishing's big developments from 2011 will continue to shape the industry in 2012. So with that in mind, here's a look at five of the most important lessons from last 12 months.

Amazon is, indeed, a disruptive publishing competitor

If it wasn't apparent before, Amazon's publishing intentions became plainly obvious this year. The wave started out small, with a host of expanding self-publishing tools for authors, but it grew to tsunami proportions as Amazon launched imprint after imprint, from romance to science fiction. Amazon also hired industry heavy-hitter Larry Kirshbaum, who "is charged with building something that will look like a general trade publisher.'"

Amazon imprints
Some of Amazon's publishing projects.

Amazon further extended its reach into publishing when it launched the Kindle Owner's Lending Library. The ebook lending waters already were murky and contentious for publishers — HarperCollins instigated a memorable dustup, as did Penguin — but Amazon's move into the space caused a full-fledged uproar among publishers as well as authors, and may have damaged the publisher-library relationship further.

O'Reilly's Joe Wikert highlighted one of the main problems from the publisher perspective:

As Amazon stated in its press release, "For the vast majority of titles, Amazon has reached agreement with publishers to include titles for a fixed fee." So no matter how popular (or unpopular) the publisher's titles are, they get one flat fee for participation in the library. I strongly believe this type of program needs to compensate publishers and authors on a usage level, not a flat fee. The more a title is borrowed, the higher the fee to the publisher and author. Period.

And Amazon may be encroaching on feature magazines like the Atlantic and the New Yorker as well. In a sign of possible things to come, freelance journalist Marc Herman took his long-form story, "The Shores of Tripoli," and expanded it into a $1.99 Kindle Single. According to his blog, he has plans to expand on the model, which would further sideline traditional publishing avenues.

Publishers aren't necessary to publishing

Authors have figured out they don't need publishers to publish books. The self-publishing book market saw quite a boom this year as the publishing format started becoming more mainstream and the services offered by self-publishing companies became more comprehensive — providing authors with platforms, sales, marketing, editing, etc.

Amazon has a role in this boom as well. The Wall Street Journal reported that " Inc. fueled the growth [in self-publishing] by offering self-published writers as much as 70% of revenue on digital books, depending on the retail price. By comparison, traditional publishers typically pay their authors 25% of net digital sales and even less on print books."

Another trend emerged this year to further sideline the publisher's role: the rise of the agent-publisher. This controversial and contentious business model allows agents to step in to provide expanded publishing services to authors. In an interview, Booksquare's Kassia Krozser explained that the new agent-publisher role emerged because of failings on the part of traditional publishers: "Traditional publishers need to not only rethink how they sell their value to authors and agents, but they also need to rethink the economic structure of their deals." Krozser also expressed concerns that the agent-publisher role carries a conflict of interest — see her interview here.

Readers sure do like ebooks

There good news is that people are still reading and they're embracing the digital transformation. The Book Industry Study Group (BISG) released a report in November that showed that readers are solidly committing to digital books. A couple highlights from the report:

  • Power buyers are spending more. More than 46% of those who say they acquire e-books at least weekly ... report that they have increased their dollars spent for books in all formats, compared with 30.4% of all survey respondents.
  • "... nearly 50% of print book consumers who have also acquired an e-book in the past 18 months would wait up to three months for the e-version of a book from a favorite author, rather than immediately read it in print."

The number of devices sold is telling as well. A Pew report found that "ereader ownership growth in the U.S. doubled in six months, from 6% to 12% of adults owning an ebook reader."


Though the new Kindle Fire is selling at a loss, Amazon reported that it is selling Kindles at a clip of "well over one million Kindle devices per week" — at least for the three weeks following Black Friday. Amazon hasn't disclosed the total number of devices it has sold, but one analyst estimates the sales to be 8% of total revenues in 2011 and predicts that amount will rise to 9.9% in 2012. So ... a lot of Kindles. Combine those numbers (vague as they might be) with the 40 million iPads sold, and the conclusion is clear: ereading is now mainstream.

HTML5 is an important publishing technology

HTML5 entered the publishing space in a big way this year — some calling it the "future of digital publishing." From storage to multimedia to content behavior (think shaking the iPhone or automatically sizing for different screen sizes) to geolocation to a host of other interactive features, HTML5 has squared itself up to become an important player in the industry. Amazon (mostly) embraced it in its Kindle Format 8, and HTML5 is supported in EPUB3.

HTML5 is platform agnostic and may even be able to save — or make — publishers money. In an interview early in the year, Google's Marcin Wichary explained:

It's very important to recognize that HTML5 fits all the devices you can think of, from the iPhone in your pocket to Google TV to the tablets to small screens and big screens. It's very easy to take the content you already have and through the "magic" of HTML5, refine it so it works very well within a given context. You don't have to do your work over and over again. Of course, all of these different means come with different monetization opportunities, like ads on the web or on mobile devices.

You can view Wichary's full interview below.

DRM is full of unintended consequences

It turns out DRM does more than provide publishers with a false sense of security — locking the content of books also locks those books into a platform (ahem, Kindle). This point was highlighted by author Charlie Stross in a November blog post in which he argued that DRM had become a strategic tool for Amazon:

... the big six's pig-headed insistence on DRM on ebooks is handing Amazon a stick with which to beat them harder. DRM on ebooks gives Amazon a great tool for locking ebook customers into the Kindle platform. If you buy a book that you can only read on the Kindle, you're naturally going to be reluctant to move to other ebook platforms that can't read those locked Kindle ebooks — and even more reluctant to buy ebooks from rival stores that use incompatible DRM ... If the big six began selling ebooks without DRM, readers would at least be able to buy from other retailers and read their ebooks on whatever platform they wanted, thus eroding Amazon's monopoly position.

So, to recap, we've learned that DRM doesn't stop anyone from pirating, nor does it come with the necessary data to support its impact. But it does give publishers one thing: a longer length of rope with which to hang themselves.

TOC NY 2012 — O'Reilly's TOC Conference, being held Feb. 13-15, 2012, in New York City, is where the publishing and tech industries converge. Practitioners and executives from both camps will share what they've learned and join together to navigate publishing's ongoing transformation.

Register to attend TOC 2012


  • Do agent-publishers carry a conflict of interest?
  • Publishers: What are they good for?
  • Book piracy: Less DRM, more data
  • What if a book is just a URL?
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