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Second Halftime

It seems undisputed that the first half of the digital transformation of companies in hubs such as Silicon Valley, Shenzhen, Tel Aviv or Berlin has been won.

In the second machine age, however, it is not simply software and computers that can calculate and store that will be decisive, but rather the question of who can best implement the industrial Internet of Things. This is about the integration of software into machines, intelligent things or the domisticization of technologies (in a humanistic world view) or the symbiosis of man and technology (in an animistic world view). Leading hubs in industrial technology are not exactly the hubs mentioned above, however, but traditional industrial clusters in Europe, the Boston area and Japan. The central question in this development will therefore be whether it is the computer and software industry that brings intelligence into the machine and things or whether it will be machine and robot technology that integrates the algorithms and AI into its technology.

To get an answer to this question you have to think about what is more difficult to understand. How quickly can an ecosystem (or a hub) acquire the relevant know-how regarding one world or the other? Where is a major investment needed? Where can we find qualified personnel with decades of experience in one technology or another? The answer seems obvious: Building a high-tech machine requires more experience, more collective knowledge, a well-functioning ecosystem with suppliers and distribution channels as well as vast amounts more investment capital than a software product, which mainly consists of algorithms, can be developed somewhere in a student house and then sold globally via existing virtual distribution channels (app stores).

Against this background, the following thesis does not seem to me to be risky:

"The second half will be won by traditional industrial regions."

Hubs such as Silicon Valley, Tel Aviv or Berlin and the emerging regions such as Shanghai or Shenzhen have neither the infrastructure nor the know-how to develop, produce or market an industrially manufactured technology product (e.g. 5-axis nano milling machine, sensitive service robot arm, laser-assisted microscopy at atomic level, full-range spectrometers or the entire new applications around photonics). These hubs are typically service-specific economic areas specializing in design, human-centred usability and virtual functionalities (except for companies such as Tesla, SpaceX and Hyperloop). The largest industrial centres in China could still play a role here, as they have been the production site for industrially manufactured products in recent decades and now pump large amounts of capital into the AI industry (according to CB insights, 50% of Chinese VC capital currently flows into AI start-ups). Nevertheless, the entire robotics technology comes from countries such as Germany, Japan, Italy, Boston and Switzerland. The USA is currently pursuing an onshoring process which, while protecting its obsolete industry in the short term (see e.g. washing machine manufacturer Whirlpool or the completely outdated steel industry), tends to hinder innovation and competitiveness. The largest industrial investments in the USA are made primarily in weapons and espionage technology, less in everyday and useful things. With BREXIT, Great Britain has pushed itself to the sidelines with regard to top European research and cannot continue to be used as a technology transfer nation for the USA. There are therefore good reasons to assume that the currently rather weak industrial nations will be given a chance to win the second half in the "Digital Transformation Game". Thanks to its animism, Japan still has a cultural advantage, since it accepts intelligent things because of its all-soul nature (embrace), since the "uncanny valley" is so to speak irrelevant to it. So it was not surprising that at the launch of Sony's Aibo 1 in 1999, despite the relatively high price (approx. 2500 €), the 3000 copies kept in stock in Japan were sold out within 2 minutes, but the 2000 copies in the USA only within four days. When Aibo 2 was launched on 25 April 2018, the first batch was also sold out in 20 minutes at a price of USD 3,000 each. Note: Thanks to a hit in a lottery three weeks after the launch, I still have the right to place an order.

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