Chatbots and conversational UI are among the most hyped technologies of 2016.

Early excitement about chatbots has given way to the realization that many challenges remain in both technology and understanding of what users are looking for when chatting with computers. In the words of Fred Wilson, a prominent venture capitalist who invested in Kik, a popular messaging platform:

“New user behaviors take time to develop and sometimes require a breakthrough app to get things started. That’s where we are with chatbots. The hype phase is over and we are now into the figuring it out phase. …

These days everyone and their uncle is talking about chatbots as the next thing after apps. But ‘Chatbot’ is a rather poor name for explaining the changes taking hold in mobile. ‘Chatbots’ are a mental model suited to developers. The term means very little to users. Besides, ‘chatbots’ represent only a small part of what is happening in the messaging space.

The tech media and blogosphere usually focus on one of three things when talking about ‘chatbots’:

• the merits of the conversational UI
• the promise and reality of AI-based natural language processing, and
• messaging platforms as an alternative to app store distribution. …

(An earlier version of this post was published on TechCrunch)

We recently published a report showing that e-commerce doubled in popularity as a business model for Internet of Things (see Commerce of Things report for details).

But what does an ecommerce business model really mean in the case of Internet of Things? Broadly speaking, a business model describes the rationale of how an organization creates, delivers, and captures value. We add to that the question of how an organization creates a sustainable competitive advantage (a barrier to entry that is difficult to replicate by competitors).

It’s simpler than it sounds. Let’s take Oral-B, a toothbrush maker, as an example. (This example works well in our strategy workshops.) The toothbrush maker creates value by improving dental health. The value is delivered through, well, a toothbrush. The value is captured by selling the toothbrushes through retail channels. Ability to put the product in front of as many shoppers as possible is of paramount importance. Therefore, access to the retail shelf-space becomes the key competitive advantage. …

Conversational UI and messaging bots are becoming one of the defining tech trends of 2016. The idea of mobile messaging as a B2B2C channel has been proved in China by hugely popular Tencent’s Weixin/WeChat messaging platform. Messaging dominates time people spend with their phones. Why not use messaging to connect users and businesses? This approach is being imported to The West by Facebook, Telegram, Kik, and now Microsoft, all competing for the leadership of the post-app era.

The lessons learned from the iOS and Android platform wars can help us see future winners in the brewing battle of messaging platforms. Mobile platform war was won by the halo effect between users and 3rd party developers. Users attract developers. Developer create apps. Apps attract more users, which attract more developers. …

The fact Donald Rumsfeld is now in the app business is not the only reason to believe that mobile apps have reached a plateau.

The mobile app industry, it seems, is settling down: Android and iOS have formed an entrenched duopoly, the same few familiar publisher names dominate app store rankings, while the rest are fighting for every app install. But…

Just as mobile app industry starts to mature, things are about to turn upside down again

The days when almost every mobile use case required a dedicated mobile app may soon be over. …

There is growing consensus that fully autonomous cars will become a reality by 2020. Google self-driving cars have driven over 1.2 million miles. Elon Musk, Tesla CEO, predicted in September 2015 that Tesla cars will have fully autonomous capability in 3 years. Zvi Aviram, CEO of MobileEye, a supplier of self-driving systems to many car makers, expects their technology will support fully autonomous driving by by 2019.

Most traditional car makers still see autonomous driving as a feature of the car, rather than a market shift that will open the path to the creation of a completely new winner-takes-all industry. It’s just like PC makers focusing on adding connectivity to their products and missing the transition to the Internet platforms (Google Search, Amazon, Facebook). …

Back in 2008, Nokia sold 468 million phones making the company the undisputed king of the mobile phone market with over 40% market share. This same year, Apple sold little over 10 million iPhones and launched iPhone App Store with just 500 third party apps. By the end of 2010, when Apple App Store had over 300,000 apps, it became clear to all including Nokia that the number of apps is much more important than the number of devices. Apps drive demand for phones creating network effects between users and 3rd party developers. Smartphone users attract developers. Developer create apps. …

Facebook is now starting to hit physical limits to its digital growth. Facebook’s average revenue per user in the “rest of the world”, where most user growth is coming from, is 10 times lower than the average revenue per user in North America ($0.80 vs. $8.32 per user respectively). To grow its business Facebook needs to look into business models beyond advertising and app installs, especially in emerging economies.

Signs are that Facebook is preparing its next pivot. Piecing together Facebook moves and hires, we believe that Facebook will be launching a social marketplace combined with financial services. This will unlock new multi-billion dollar markets in the world’s fastest growing economies. …