Ep. 105: Wireless Connectivity Drives Construction Digitization with Marc Eisenberg of ORBCOMM

construction digitizationWith the emergence of the Internet of Things, artificial intelligence, machine learning, predictive analytics, and prescriptive analytics, wireless connectivity is the foundation that is needed to make all these connected strategies successful. Host Peggy Smedley and Marc Eisenberg, CEO, ORBCOMM, discuss how the industry is continuing to evolve, the different types of wireless connectivity available today and still emerging for the future, and trends that will continue to drive automation and digitization forward in construction.

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Show Transcript:

Announcer:                     

Welcome to CONEXPO-CON/AGG Radio, highlighting the latest construction technology and trends to drive your business forward. Coming up in March of 2020, CONEXPO-CON/AGG is North America's largest construction trade show. We bring you expert advice from your favorite brands, startups and industry peers. For even more news, sign up for our weekly 365 e-newsletter at conexpoconagg.com/subscribe. We've got another great guest on the show today, so let's dig in.

Peggy Smedley:              

Welcome to CONEXPO-CON/AGG Radio, brought to you by the Association of Equipment Manufacturers. I'm your host, Peggy Smedley. This episode is brought to you by the International Construction and Utility Equipment Exposition. Utility professionals, do you want to make your operations better, faster and safer? Join your peers at ICUEE, North America's largest utility and construction trade show, to discover and demo the latest equipment and products from top manufacturers, October first through third in Louisville, Kentucky. Learn more at icuee.com/utility.           

Today's episode is all about wireless connectivity. We are experiencing the rise of digitization and automation in a number of vertical markets. Advanced technologies such as the IoT, AI, machine learning, will change the way the construction industry does business. The introduction of predictive and prescriptive analytics gives the industry insight into data to help make key business decisions. We see predictions that use these technologies in how they will continue to grow in the months ahead.

However, there is a key component that is needed in order to enable all of this, and this is where wireless connectivity comes in. Connectivity is the foundation that is necessary to make all these connected strategies be successful. Today we will be discussing the topic of wireless connectivity. We will look at how the industry is continuing to evolve, the different types of wireless connectivity available today and emerging for the future, and trends that will continue to drive automation and digitization forward in construction.

Also helping me with today's discussion is Marc Eisenberg, CEO of ORBCOMM. Marc, let's begin looking at how the IoT industry is continuing to evolve. Welcome to the show, Marc.

Marc Eisenberg:             

Thank you so much. What a terrific ramp-up to the conversation. Gee, it feels like I've been in the IoT industry an awful long time. I joined ORBCOMM in 2001, and the IoT industry at that point was really struggling to hit price point. The utility that you got in that time frame was really around tracking and monitoring your equipment, mostly where is it and how much can I get out of my battery. It's really evolved over time, where it went from simply just a really expensive tracking application to being able to hold diagnostics, relevant data, and to pull breadcrumb trails and understand what drivers are doing.

We made those changes around 2010 and 2011, and then today I think it's gone less from where is my asset, so that I can go and take a look at it and get a feel for where it is, to what's going on with my asset. In other words, these are the issues that we're seeing, these are the fault codes, this is the stuff that needs to be fixed, to today, which is really, gee, when I look at my asset, what is it exhibiting? What is my driver exhibiting? As opposed to fixing stuff when it goes wrong, preventing stuff before it goes wrong.

In other words, whenever we get this particular behavior that my engine is exhibiting, typically it leads to some sort of failure in X amount of time. Or as opposed to this is the breadcrumb trail for my driver and he's been in an accident, these are the things that that driver is exhibiting. He's slamming on his brakes, he's driving too close, all of the things that the driver is exhibiting, so that you can prevent accidents before it happens. You know, a whole lot more of what you were talking about before, this predictive and prescriptive analytics.

Peggy Smedley:              

We're really talking about making these smart decisions that you call this breadcrumb kind of trail. When you talk about how ORBCOMM has kind of evolved, is really what you're describing, would you say that it's in response to or ahead of the IoT industry in all of this evolution?

Marc Eisenberg:             

I think it's ahead in a couple of places. We kind of went through this evolution that I'm speaking about, but we are knee-deep in not just crawling around on a machine and figuring out what the relevant data is, to put it in some web platform for a customer to understand, but more predictively to understand what's going to happen and how to maintain these better. How do you monitor your operators better?           

I think the part that ORBCOMM plays is two things. I mean, not only do we have scale. I don't know many other people in the commercial world that activate over 100,000 subscribers in a quarter, so we're unique in that, and what came along with that is the scale and the ability to hit price points, and that has been one of the changes. Where you used to pay $600, $700 for a unit that just did tracking, now you're paying a fraction of that for devices that have so many more sensors and can do so much more.

Then the second thing, there's other types of scale that you can benefit from with us. It used to be that a web portal was enough, but if you look at the IoT industry now, there's so much more integrations and customizations that customers are looking for that, if you look at the newbies coming into the market with their seven or eight engineers, ORBCOMM has over 400, working on all these customizations, which is why we really specialize in really large, complicated deployments.

Peggy Smedley:              

Is all this because of the industries, which we could get to in a second, or is it because of the type of wireless connectivity that's been emerging right now, the different types that we're seeing?

Marc Eisenberg:             

I think it's a little bit of both. There's good and there's bad with the emergence of the different connectivity. From a heavy equipment perspective ... I know this call is focused on heavy equipment ... 5G is going to be really cool because you have active power. Having this real-time data flowing there, this up-to-the-second data when you're moving earth, is really, really neat. I think from an in-cab perspective on a truck, it's really, really neat.

I think from a power situation on a cargo container or a trailer or something like that, then 5G gives you lots more data and it does it really effectively from a price perspective, but we'll see what they're able do in terms of power. You struggle to make your iPhone work for one day. I've got to make a trailer work for 10 years.

Peggy Smedley:              

When you look at that, that's an important point. When we see all of these things happening in heavy equipment and 5G right now, most people can't imagine the importance of 5G on heavy equipment. I mean, right now when they think about that, they're still sitting there thinking, "Well, I've just got to move dirt. Why is it so important to have 5G?" Because right now, they struggle about how things are moving in very remote locations, and there's a lot of confusion about is it really going to make a difference from what I think about things at the job site.

Is 5G truly going to make a difference? Help a construction company listening right now understand how 5G is going to make a difference, you can think about, or is the satellite going to make ... how it's made a difference, because fleets right now rely on you to do a lot, and you've done a lot for them.

Marc Eisenberg:             

Sure. I think the biggest difference is these assets that are automated, that don't necessarily even have drivers. You know, turn by turn, you can level land. You can do it perfectly. You could do it over the air from a real-time perspective, making real-time changes via software over the air. 5G can really do that for you. Where we're really focused on software in the past, you can really make real-time decisions over the air with a constant connection and transmit gigabytes of data via 5G. I think it's going to be a significant game changer. I think in the automated driving, it's a game changer.

Peggy Smedley:              

Are those the biggest trends you're seeing around digitization and automation in your markets, or are we still really talking about ELD and driver performance? What do we really need to be focusing on?

Marc Eisenberg:             

Yeah. Well, I think near-term, the ELD and the driver importance is important because there's really a timeline that you need to hit, and a sense of urgency. That certainly pushes near-term decisions, but longer-term I think we'll get past that. It's not just ELD, but there's all kinds of regulation. We deal with the refrigerated legislation, monitoring temperature, monitoring temperature of goods coming in, but I think it's going to transgress into more of what you can do and the return you can get, the assets you can monitor.

Let me give you an example. We used to monitor refrigerated containers, because once the container hits the United States, you're worried about the regulatory perspective. You're worried about losing loads and stuff like that. We're signing on with a customer now that imports bananas into the country, and literally they can make sure that the fruit ripens just as it hits the shore.

You start off in South America with green bananas, but you have to emerge in the United States with yellow bananas. Somewhere along the way, you introduce more nitrogen into the container and start to generate the ripening of the product. You can do that completely over the air. You could monitor that asset, even on a huge container ship that only has a handful of employees. You're just doing it from someone's desktop.

Peggy Smedley:              

In that scenario, are you really talking about safety in food, or are you really talking about prescriptive and predictive analytics, or are you talking about both?

Marc Eisenberg:             

Really I'm talking about both. I don't think there's one reason to connect to your container, I think there's lots. There's the regulatory aspect of it. There's the return in getting your products just right and turning them quicker, based on the ripening example I just gave you.

There's the, gee, I got a container of rotten bananas, and at what point did it fail? Is it a diagnostic issue? Is it a ship issue? Did they not supply power to my container? You've got the legal aspect of it. You've got the turns, based on, gee, I've got a container that's struggling. This is what it's exhibiting. There's a 90% chance that this is the fault that it's exhibiting. Let me send the parts there, so I can turn that container back on its next shipment.

Peggy Smedley:              

Help us understand how predictive analytics can be a game changer then for construction, if you're really thinking about it, because you've just described something where someone says, "Okay, I get it, if I've got bananas." Now help me understand that same scenario right in construction.

Marc Eisenberg:             

I think in a lot of ways it's really similar. The one thing that's unique about construction is the people that own the assets in construction are rarely the people that are using the assets. There's this distribution in that market where a lot of the small fleet owners, they lease it, so it may belong to a Caterpillar leasing company or a Komatsu leasing company.

There's a ton of rental houses out there, the Hertzes and the United Rentals, and these folks, the return that they get on their products are making sure that these things are constantly in service. How do you know if they're being upkept? How do you know what the service needs of the asset are? How do you even know how to bill for this asset? How do you know that it's working on the right job site? How do you know that there is a security issue? How do you know any of these things if you rarely ever see your asset? You can do all of that via the connectivity, right over the air.

Peggy Smedley:              

We're really not seeing right now, in some ways, the construction industry take full advantage of all the data that they have access to. There's still so much out there. It's not ripened yet, taking on your banana analogy. It hasn't fully ripened yet.

Marc Eisenberg:             

Yeah, I think that's right. I think what I'd love to see in the construction business ... which I don't know where we're seeing it perfectly ... but every OEM does their own thing. Caterpillar has their own thing, Doosan has their own thing, and when you're a fleet owner ...

Peggy Smedley:              

John Deere does their own thing, yeah.

Marc Eisenberg:             

Yeah. Everyone does their own thing. If you're a United Rentals, who, gee, has got 16 web portals, you know, "Can't I just get one format?" I think we can get to another level once we get there and once all the features are similar, but it kind of started on that road 10 years ago and I don't think it's really changed much. What we're seeing in our container business is there's certainly more standardization around seeing each other's product.

Peggy Smedley:              

Do you think when we look at this, and we look at industries right now compared to other industries as a whole, do you think that the construction industry is going to at some point be able to leapfrog the other industries when they have to take advantage of what's happening in leveraging data like some of these other industries?

Marc Eisenberg:             

I think so. I think necessity is the mother of invention, and I think the construction industry has the largest necessity. Other than monitoring locomotives, I can't think of anything that went quicker than heavy equipment in terms of achieving monitoring of assets. We started with Caterpillar all the way back in 1995, so they've been working at this for a long time, because they know that the return on a quarter-million-dollar piece of heavy equipment is clearly greater than a return on a $2,500 container.

There's more there, and there's more risk, right? If something goes wrong with the container, you replace it. It's just a few thousand dollars, but you can proactively, preventatively save an engine, just based on oil filters and driver usage in the heavy equipment space, but you can't anywhere else. I think maybe the next phase, where these guys who were early adopters can jump ahead and create a better user experience, would be some sort of standardization.

Peggy Smedley:              

Do you think when we talk about now we have sensors, there's so many sensors being installed ... we're not just talking about the hardware, we're talking about the sensors and we have antennas, we start coupling all of these things at a jobsite ... we are going to have to look at the way construction operates, gathers data, the way they deploy it on all these large-skill deployments, think about things differently in a tracking system, a state of the art like what you're describing a little differently going forward than what we have up to this point?

Marc Eisenberg:             

Yeah. I think to this point there's an awful lot of focus on an engine, and there's an awful lot of focus on a user of a piece of heavy equipment, and to a lesser extent on a work site. Kind of putting together some of the connectivity across the multiple vehicles there on the jobsite itself, helping with the actual construction implementation or helping with the work tools that are on site.

There's so much more that you can do, but it's not necessarily a focus of the OEMs. The OEMs give the products out basically with the cost of the unit, and they're not worried about saving a jackhammer. They're worried about, for the most part, making sure that their unit stays in service.

Peggy Smedley:              

When you look at the market today and you look at somebody like ORBCOMM, your position in the IoT market today, is it finding more partners? Because being a solution provider, you know, there's a lot of challenges. You have to find the right partners. You have to find the right customers. I mean, what's the biggest challenge in the IoT space, AI? You know, it's rapidly changing. There's a lot of challenges to be able to meet the needs of plight owners, heavy equipment, tracking, monitoring, communications. It seems like there's a lot you have to kind of juggle to make sure customers are getting their ever-growing needs in an ever-growing marketplace.

Marc Eisenberg:             

Yeah, there's no doubt about it. In the construction industry it's very unique, in that the construction industry it's really IoT is driven by the OEMs, because it is built into the pricing of the units. If you look at, let's say, trucking or transportation, it's the opposite. There is an awful lot less from the truck manufacture or the trailer manufacturer. There's an awful lot of third-party applications that get involved to direct service there, so it's a little bit different.

It started out in a situation where, for $1,000 of hardware, you could be on a locomotive. Then once you got down to $500, you can get to a heavy equipment asset, and when you got to $300 you can be in-cab on a truck, and when you got to $200 you can be on a trailer, and when you got to $105, you can be on a container. It was all about hitting price points to go from a $10 million asset all the way down to a $3,000 asset, and being able to get the return that's there.

Then we kind of shifted to a, "Gee, we just closed this large deal with JB Hunt. Well, what does JB Hunt have, and what can we do to help them?" In that case, you had all of these different types of assets that they control, and how many of the assets ... whether it's the truck, the trailer, the container, the chassis ... can you get there, so that they don't have six vendors running around, that they have one group for all these assets?

Then lastly, the latest change is, "Gee, we've got these customers, these OEMs in the construction space, with all these different assets. What can we do to deliver more value? What can we do to get them into the analytics business and not the `Here's my fault code' business?"

Peggy Smedley:              

Now, just like everything, it's a matter of making sure the applications are secure, that you've got the powerful back end to deliver for whoever that customer might be, right? You're still ... number one, you've always got to make sure whatever you're thinking about, whether it's a fleet manager, whether it's cargo, whatever it might be, you've got to be thinking about that first and foremost, right, still, to this day?

Marc Eisenberg:             

Oh, absolutely, and security is a plus. On the bright side, we started out as a satellite provider, so protecting our satellites and the data coming off our satellites was of such importance, you can't even imagine. We've never had a security issue in data that we've supplied, but it's clear that it has happened in the industry. You know, that's just table stakes.

Peggy Smedley:              

Detecting any kind of anomalies today when we're looking at data is critical, right, when we look at this? That's what the construction industry is trying to figure out. You know, how do they decide what data is the right data, when they're looking at all this and we're looking at machines. That's where, as they continue to grow, they're going to have to figure out what's the right data, who's the right partners, and that's going to be the biggest challenge for all of them, correct?

Marc Eisenberg:             

Oh, absolutely. We did a custom application for Doosan, and there were 11 or 12 different fields that were purely associated just with filters and the effect filters have on engine performance and longevity of the unit. It's incredible how precise these guys are.

Peggy Smedley:              

Well, I'll tell you, these are interesting times, and I think technology is going to tell us a lot. Marc Eisenberg, CEO of ORBCOMM, thank you so much for spending all this time with me today.

Marc Eisenberg:             

Thank you for having me.

Peggy Smedley:              

All right. As you've learned today, there are a number of different types of wireless connectivity that's emerging today, and it will be central to ensuring that digital transformation happens in the construction industry. As technology continues to evolve, consider how it might impact your construction business today and how wireless connectivity fits into the equation. That's all the time we have today. Join us next time. I'm your host, Peggy Smedley.

Announcer:                     

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