By Sharon Bolding, VP of Product Development at BYNDL

Mobile devices of all types are rapidly becoming an extension of who we are.  The ability to capture native data around personal habits and preferences opens up new opportunities as well as potential pitfalls. Equally, legacy machines are increasingly being turned into smart devices by adding new connectivity to the Internet.  One example of this transformation is how Netflix and Hulu are enabling new service delivery and monetization models for television.  Bringing legacy machines online opens up new ways for traditional companies to innovate.

A New Way for Unattended Retail to Communicate with the Market

Kiosks, vending machines, parking meters, and other types of unattended retail are traditional representations of the most basic human-machine interactions: the simple act of dropping some coins into a machine and pushing a button.  Unfortunately, in today’s cashless society, over 30% of consumers don’t have the cash or coins on hand to complete even this basic transaction.  Surprisingly, among the several million vending machines in the US, fewer than 300,000 are connected to the Internet.  This limits the machine’s ability to take non-cash payments like credit or debit cards, or to offer services outside of traditional vended goods.

The key question is how best to take a single purpose machine and make it smarter and more useful. The first step is to enable communications. Hardware and communications are dropping in price, and becoming increasingly diverse and ubiquitous. As manufacturers make it feasible to outfit a large number of machines in a cost effective way, turning a legacy installed base of machines into a supply of smart devices no longer presents a barrier to entry into the mobile space.

However, communications between smart devices are hampered when they don’t speak the same language. It’s a Tower of Babel, driven by the conflicting intentions and goals of the different businesses that created the various services.   With foresight, it is possible to avoid these data silos and instead design innovative combinations of services that ensure value for all. From the data being exchanged between devices to the new markets being created, openness is the attitude that prevails.

As more and more devices are brought online, technologists are enabling a richer ecosystem of machine-to-machine interactions, powering these partnerships through application programming interfaces (APIs).  Single-function devices are smarter, able to interact with each other through connected managed services. Business enablement now occurs in an integrated service-layer ecosystem, where the whole is greater than the sum of the parts.

Internet of Things

Taking a step back, it’s useful to reiterate that the vision of smart devices is based on human laziness: “Normally, if given the choice between doing something and doing nothing, I’ll do nothing. But I will do something if it helps someone else do nothing. I’d work all night if it meant that nothing got done.” – Ron Swanson (Parks and Recreation)[1]

We humans are adept at creating tools and machines to do our work for us. And when those machines can talk to each other and leave us alone, all the better. Whether it’s to replace manual labor or facilitate communications, ‘things’ are now expected to become active participants in business, information and social processes. According to ABI Research more than 30 billion devices will be wirelessly connected to the Internet of Things by 2020.[2]

Smart devices interact and communicate amongst themselves by exchanging data, and then running processes that trigger actions and create value.   None of this requires direct human intervention. Interfaces, in the form of services, facilitate exchanges between these ‘smart things.’ In the cloud, smart devices check and change their functional status, updating any associated information as needed, while taking into account security and privacy issues.[3]

In vending, for example, machines are connected to back office systems through telemeters, enabling cashless transactions while also sending technical and sales data to the operator.  Connected machines communicate status and environmental details into ERP and operator management systems.  Inventory and accounting systems communicate with the machine to then alert a technician that service is required, or a particular product is running low. Just-in-time replenishment and dynamic scheduling decrease overhead and increase efficiency at the operational level. This machine-to-machine interaction ultimately delivers a better consumer experience since their favorite pop machine is always stocked.  All of this “machine-to-machine” goodness takes place through APIs.

 APIs as Communications Tunnels Between Smart Devices

APIs are the secret sauce that make things possible in the broader “Internet of Things.”  The use of APIs provides a way to communicate based on a common understanding or definition of terms, entities, and concepts in the form of objects, properties and values. In other words, APIs solve the Tower of Babel problem by acting as translators.  And what’s shared through APIs is data – lots and lots of lovely data about products, prices, what people buy, when, where, and how. Just think about how Amazon knows what you want to read before you do: It’s not mind reading, it’s data mining. Amazon analyzes data related to aggregate shopping trends, compares the results to your purchase history, and generates a personalized set of recommendations.

But having the raw data is not enough. You need context. While many are talking about Big Data, it’s important to remember that data is only as good as its context. That context is mediated through APIs, where the end points are just as important as what’s transmitted in the packet. An analogy is found in banking, where sending funds to the right account number is as important as sending the right amount of money. In other words, it matters where your data ends up.

The cumulative effects of Big Data are enhanced in an open API environment when companies cooperate to create new value propositions. An example of this type of environment can be seen with the commoditization of data in the guise of analytics services.  INRIX provides services around geography and traffic analytics. Marketfish has taken a traditional commodity (mailing lists) and wrapped it in an easily digestible service for marketers looking to segment and analyze prospecting databases.  And there are many more local Seattle companies diving into the data pool.

In the competition to be the ‘next big thing’ in the Internet of Things, it is no longer feasible or even desirable for a single provider to own every portion of the technology stack. Using APIs, businesses build partnerships between payment processors, retailers, content providers, and location services companies.  This will create an intersection of trends and a new service paradigm that disrupts existing services industries (like advertising and market data research firms). The Weather Channel is a case in point, taking a meteorological service and turning their data into predictive shopping algorithms.  These are keyed to environmental shifts by integrating a geo-location service, weather info and shopping trends.[4]

As more devices come online and make their own contributions to the data explosion, managed APIs in the cloud will emerge as a new service and grow in importance. Companies such as Mashery.com, Apigee.com, or Layer 7 offer throttling, routing, key management, security and other managed services. Managed APIs smooth out scaling issues and ensure that traffic through your service is reliable.  Best Buy uses managed APIs through Mashery, providing 3^rd-party developers access to their product databases to develop applications, including new shopping web sites that feature their products. This increases Best Buy’s sales without cannibalizing their own site or interfering with site performance and traffic.[5]

Essentially, by moving the computing processes and data management to the cloud, APIs (at the local level) only have to receive the final bit of data they need to perform the local function. No real computing power is resident in the machine onsite.  This means that operators don’t have to add computing power to their legacy install base of machines. Businesses simply have to hook machines to the internet and deliver the desired input. Whether that be money to fund a purchase on a vending machine, or confirmation of tickets at the airline kiosk, the machine does not have to be able to process logic or have much memory. In a strange sort of way, technology has come full circle:  In the Internet of Things, legacy devices can be treated as dumb terminals, if you wish.

Consumer Behavior

How does all of this affect the consumer? After all, the whole point of machine-to-machine communications is so that humans won’t have to be bothered dealing with the poor usability designs of outdated hardware. Essentially, consumers want the convenience and the ability to interact with machines on their terms. They decide when, where, and how to engage with your business. And they decide when they want to intervene and change business as usual into a customized personal service.

At BYNDL, we’re working on smart technology initially focused on vending, that will combine personalized services with information on demand. This creates a new type of relationship between brands and consumers in unattended retail, built on value exchange at all levels of interaction. Brands can now see the behaviors of their consumers, allowing them to promote and reward consumers for purchases.   For consumers, this sharing of information will enable offers to be delivered at the right time ensuring that the consumer isn’t spammed with unrelated offers.

Consider this scenario: A brand wants to create a loyalty program around a gaming app. In order to redeem points within the game, the consumer follows an in-game treasure map to a real-world vending machine. At the machine they can get a free snack by ‘purchasing’ it with their game points.  Branded games and loyalty apps only have to integrate mobile transaction functions in order to connect the virtual game to a real world reward.

By innovating around new paradigms like gamification, brands open up new marketing channels. Instead of pushing one-way messages or risk being seen as cyber busybodies, brands and companies can provide alerts and just in time, personally relevant offers. At every point in this value chain, APIs enable the communication between smart phone apps, vending machines and cloud services.

Implications for Mobile Companies

In conclusion, APIs create an agnostic approach to systems integration within technology service companies. They add powerful intelligence to many devices and machines while supporting all hardware, operating systems and communication methods. As mobile applications evolve, and more machines are converted to smart devices in the Internet of Things, companies who support the seamless exchange of data will be better equipped to support consumer choice and will therefore gain more market share.

So, can you really teach a vending machine to dream? We think so, but it will take a while. Just don’t ask about our Electric Sheep initiative…