Put a Chip in It!

Thanks to new technology, nearly anything can be "smart." Are you smart enough to keep up?

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Someday, anthropologists will cluck over the fact that even into the early 21st century Americans had to wave at waiters and bartenders if they wanted a refill on their beer. That's because a research laboratory run by Mitsubishi has developed the world's first "smart" beer mug. It's equipped with a dishwasher-safe microchip in the bottom that senses when the glass is down to dregs and sends a distress signal to the barkeep.

Can't anything just be stupid anymore? Apparently not, and that's worth thinking about. Computer chips these days cost as little as pennies apiece and can perform an ever-widening range of tasks. There are credit cards with chips to track spending and prevent fraud and printer ink cartridges with chips to keep them from being used after the ink goes bad. Baseballs with chips can track pitching speed, and children's books with sound-effect chips talk to their readers. There are tire valves with chips to monitor pressure, globes with chips that spout geographic trivia, and shirts with chips for retail inventory. Chips have found their way into running shoes, vacuum cleaners, handguns, even paper. That's right, paper -- the next generation of U.S. passports will be printed on it.

Admittedly, some of this stuff -- the electronic beer mug, for instance -- seems a little goofy. But a cup that warned of excessively hot or cool contents would almost certainly be embraced by coffee drinkers -- at least those who aren't personal injury lawyers. And how about a video chip on your golf bag to help you record your swing for later dissection?

The logic behind equipping nearly everything with chips is pretty straightforward: Tack shiny new features onto your product, and customers who want the features will pay more for them. What's more, smart products have the ability to monitor themselves and gather data, which can help you reduce logistics costs and improve customer service. Grantex, a Grand Rapids company that supplies uniforms to clients such as General Motors and Steelcase, used to misplace 2% of the 50,000 garments it washes each week. Then Grantex sewed 70-cent radio-trackable chips into its uniforms' shirttails and waistbands. The error rate went to zero, and turnaround time went from three days to one. That, in turn, enabled Grantex to boost the number of color and style options from 50 to more than 300 without worrying about overwhelming human sorters; as a result, customers can offer their employees more individualized outfits. "The next step," says Doug Singer, the firm's president, "is to let customers have a garment-tracking station on their own premises." That way, customers will be able to know at all times where the uniforms are.

Of course, using technology to improve your product or service is nothing new. But this generation of chip-enhanced smart products has the potential to transform entire businesses by creating entirely new streams of revenue. As former Hewlett-Packard CEO Carly Fiorina has put it: "Anything with a chip in it becomes a platform for the delivery of services." A manufacturer of chip-equipped briefcases, for example, could offer a lost-briefcase tracking service, or an automatic replacement service should the chip detect excessive wear or damage. Lawn mower owners might appreciate a service plan that has a chip e-mail them when it senses their mowers need maintenance to head off an impending breakdown.

The emergence of chip-enhanced products is not just a potential bonanza for manufacturers; it opens up untold opportunities for service companies, as well. That's because many of the add-on features made possible by technology will likely be provided by outside vendors. Say a teakettle maker decides to add a sensor that can transmit a wireless alert when the kettle has been boiling for more than two minutes. Most consumers probably would find that a mildly interesting feature -- but not those who happen to be among the tens of millions of Americans concerned about the welfare of an elderly parent. For them, this would be an extremely interesting feature, given that an unanswered kettle whistle suggests a fire hazard or an incapacitated loved one. But to make the feature useful, the kettle alert has to be passed on through the Internet to someone who can follow up.

Soon, your refrigerator will tell your market to send more milk.

In other words, we're not talking about the water-boiling business anymore. We're now in a potentially life-and-death security service -- as well as one that the typical kettle manufacturer likely is not prepared to enter. But there are plenty of companies that are, and for the right one, getting a foot in the door via a wired teakettle could become a marketing and operations coup. In the same vein, you could imagine refrigerator manufacturers striking deals with supermarkets to have food automatically ordered and delivered; medical care facilities working with temperature-sensing bandage manufacturers to get fast care to home patients with spiking fevers; even law-enforcement agencies or private security firms working with sellers of video-camera-equipped mailboxes that provide views of the street.

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