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The challenges of valorizing what we have termed personal infrastructure (the ability to create mashups between your home content/hardware/software and web services out on the Internet) are manifold. This goes well beyond what is conventionally understood to be ‘home networking’. At WGC we are attempting to enable the end-user to create new uses for the devices, software and hardware and personal content they already have in the home (and what they may add to it in the future) with two main goals:

First, for users to be able to access their resources from anywhere in thew world; and, Secondly, for them to be able to combine these resources with other capabilities they can ‘find’ around them at any given time to fulfill personal goals.

The big question (besides the technologies we are building to enable all of this) is how do you begin to valorise this personal infrastructure?

SYSTEM DYNAMIC MODELING

One starting assumption is that the value of this personal infrastructure is a function of one person and the aggregate utility of the content and functionality residing on all the devices owned by that person (and of every other person granted access to his/her infrastructure). The next step is creating the foundation for a dynamic model that can adjust and adapt to the fluid entry and exit of new devices, new or old created content, and new value resulting from innovative mashups of the existing personal infrastructure.

This raises a number of complex questions. To model this dynamically changing environment a distinction needs to be made between tangible and intangible value – the difference between the monetary value of a device and the content that is generated from it during its lifetime. While it is reasonable to accept the assumption that the physical value of the device will depreciate over time, the value of the content may appreciate over time, peaking at a certain point, or declining at others. To be less abstract. Take the example of photos of your children stored on a PC. As the PC depreciates over time, the value of the photos appreciates reaching a peak as the kids grow up. But what happens when your parents have their fiftieth wedding anniversary and you want to create a photo album/display recording their lives and that of their grandchildren? The photos will appreciate even more for that brief period. Being able to combine these pictures with sound and play it on any screen and sound system in your parents house, makes this even more valuable. Putting a monetary value on this is extremely difficult – but necessary, because the real value of the personal infrastructure lies in precisely fulfilling human needs or wants which are necessarily subjective, transitory and fragile. Hence the need for a system dynamic model.

PARTS vs THE WHOLE AND DISRUPTIONS TO THE EXISTING VALUE CHAIN

This is what we are currently modeling as the business opportunity underlying WGC’s personal infrastructure. We have some way to go to model this dynamic and complex relationship. But it is clear that there is a counter-intuitive dynamic at play here that promises a huge business opportunity for all concerned.

A rudimentary exercise begins to show this potential. If you add the dollar value of each device in a personal grid and subtract from each one its depreciation value over time, and then add to this the appreciation value of the content (and functionality depending upon how such a grid is configured) two curves are generated in opposite directions: depreciation value goes down while content value rises (exactly how high remains part of what needs to be determined by the system dynamic model we are developing). However, personal infrastructure is not just a static mix of devices and content. It is a dynamic environment where resources on devices can be reconfigured to create new valuable assets. For example, you could mesh together the microphones from all your old and obsolete cell phones to create a surround-sound recording capability that could be linked to a video taken of your child’s sixth birthday party. The devices may be obsolete and would have been gathering dust in a study drawer in the house. But now, new value is created by taking advantage of the functionality embedded in yesterday’s devices. Meshed together in this way means they retain some value, indeed, they create even more. The new whole is now far more valuable than the sum of the parts.

This has immense implications for the future: it highlights that existing valuation modeling will have to change. The lifetime of devices can be extended, indeed enhanced. While this may frighten OEM and mobile device manufacturers, this is an opportunity for them. Think about the brand value of bringing out innovative new devices that embed this kind of functionality and thus enable customers to extend the lifetime value of their devices. This would signal the end of designed obsolescence and make users more open to embracing new technologies. Lifetime devices can create lifetime customers. Does anyone know how to place a monetary value on such a goal?

This also means that the existing value chain around home networking will also be fundamentally challenged. But the clear implication of the above is that the total value of a personal infrastructured-future will increase over time. The pie will get bigger, not smaller, although how that is divide up will change. This is an immense opportunity not a threat. This is what we at WGC are aiming to make a reality.