At times a specific, physical thing points to a huge transformation in our world.

This is one of those moments. And that thing? It’s a chip.

It comes from China, and it has the delightfully geeky name ESP8266.

Ok, so it’s a chip. Big deal. There are lots of chips in the world. Why should you care about this chip in particular?

Because this chip provides everything needed to connect anything to WiFi, to connect to the Internet, to connect anything to everything else.

Before this chip came out — last year — connecting anything to WiFi required lots of chips, in a complex and expensive design that frequently added $20 to the cost of goods — or nearly $100 to the retail price. Connected things have always been expensive things because of the high price to connect them.

The ESP8266 changed all of that. In quantity orders from its manufacturer it costs less than $2. And it has everything you need — absolutely everything — to connect anything to the Internet. So instead of adding nearly $100 to the retail price, it adds less than $10.

This changes everything. And it hasn’t gone unnoticed. The ESP8266 is already changing the way product designers imagine the possibilities for their products. It’s already being copied by competitors, so the price will drop — ticking along with Moore’s Law. Next year this chip costs $1, and in three years, fifty cents, and so on.

Connected Functionalities

I co-founded a consultancy — the Digital Growth Partnership — to help clients invent new products that leverage the opportunities of cheap connectivity. One of those clients is a large manufacture of consumer appliances and whitegoods. For that client pitch, I invented a pair of connected products that I’d like to share with you here, so you can get a sense of how connectivity changes the functionality of a product.

I started with a gadget common to every home, and so old-fashioned we almost never think about it: the clothes iron. Cheap-and-cheerful or top-of-the-line, the major difference between models is how much steam they can put out on demand. Every iron has a dial to set its temperature. If you don’t set it just right, you can damage your clothes. Almost anyone who owns an iron has done this at least once.

An app for that

The solution to that problem seems obvious. Pop an ESP8266 into an iron, connect it to the Wifi, and then, via Wifi, to an app that links it to a smartphone.

That app uses the smartphone camera to scan the fabric care tags, recognising the symbols on the tags — which are standardised — and adjusts the iron appropriately. Every time a dress or dress shirt goes under the iron, the app adjusts the iron to the ideal temperature for that fabric.

You can already purchase a connected washing machine, and it won’t be long before we see connected clothes dryers, so that smartphone app will also set the temperature and cycle for both washing machine and clothes dryer based on what it learned reading the fabric care tag. Connected, everything behaves in just the right way, without being explicitly set.

This is a bigger deal than you may realise: as we get more connected things, we need to focus on how they manage themselves, because if they get too greedy for our attention they’ll simply overwhelm us. More on that in another post.

To make the iron smart and connected — giving it this incredible capability to automatically adjust itself to the needs of your clothes — would add $3 to the cost of goods, or around $12 at retail. Not much to pay for something that could prevent a fair bit of damage to clothing. Less than the difference between a bottom-of-the-line iron and the next model up on the product line. And given the points-of-difference, it’s a marketer’s dream — a product with a story, a product that saves you from yourself.

Security Blanket

Next, I took one of the absolute necessities of cold winter nights — the electric blanket — and again, slapped an ESP8266 into it. Today’s electric blankets feature a dial and thermostat, neither of which compensates for the fact that our body temperature, and need for heat, changes as we pass through each evening’s sleep cycle.

Again, the solution seems obvious. The electric blanket should sense the ambient room temperature, the temperature setting of the blanket, and the activity of the person beneath the blanket, using these signals to automatically adjust when and where heat is delivered across an evening’s sleep.

Many wearables can analyse our sleep patterns

Every night, the blanket would learn more about your sleep patterns, and before long you’d have a smart electric blanket — one that would never need adjustment. You wouldn’t even need to turn it on. After it had learned the particulars of its owner, the electric blanket would turn itself on at the right time, and be at just the right temperature — relative to the ambient temperature — to keep them comfortably warm. It would adjust its temperature to accommodate a falling body temperature in the hours toward dawn. It would do all of this invisibly and automatically.

An electric blanket would be hard pressed to do all of this thinking on its own. But because it’s a connected electric blanket, it doesn’t need to. As it takes its readings, it uploads them to ‘the cloud’ — which is just a fancy way of referring to computers located somewhere out on the Internet. In the cloud, sophisticated analysis would be run over that stream of data pouring in from the electric blanket, and adjustments would be piped back from the cloud to the blanket.

The Internet of Blankets

Of course, it’s not the only connected blanket in the world. Those readings can be compared to thousands of other samples from other electric blankets, helping to refine the temperature regulation for that blanket. The electric blanket listens to all its sensors, communicates with the cloud, and tunes its behaviour to always deliver the best possible night’s sleep.

Best of all, wherever that electric blanket owner goes, this information travels with them, so when they tuck themselves under a connected electric blanket in Melbourne or Moscow or Montana, they would get the very same great night’s sleep, because what’s been learned about how they sleep best lives not in any one blanket, but in the cloud, and can be downloaded to any connected electric blanket, anywhere.

To do all of this would add something less than $4 to the cost of goods for an electric blanket, maybe $15 at retail. That’s not a lot for a blanket that learns from you, and never needs to be set.

Electric-blanket-as-a-service™

This isn’t simply a product. This is a relationship. The connection to the cloud means the manufacturer is providing a continuing service to its customers — we might call it ‘electric-blanket-as-a-service™’ — and as a result, the manufacturer will continue to have a lucrative relationship with the customer long after the initial sale. Someone will pay a few dollars a year to make their blanket connected and capable. Over the lifetime of an electric blanket, that could easily double the revenue generated by a product sale.

Framed like that, connected products suddenly become very appealing. An appliance manufacturer can realise new profits as a service provider. More than that, it actually means the manufacturer isn’t selling products, they’re selling product-service bundles built around the idea of a continuing and deepening relationship with the customer.

And these hypotheticals aren’t the only examples of connected products.