Transcript:

- [Announcer] You are listening to the IoT For All Media Network.

- [Ryan] Hello everyone. And welcome to another episode of the IoT For All podcast on the IoT For All Media Network. I'm your host, Ryan Chacon, one of the co-creators of IoT For All. Now, before we jump into this episode, please don't forget to subscribe on your favorite podcast platform or join our newsletter at IoTforall.com/newsletter to catch all the newest episodes as soon as they come out. So without further ado, please enjoy this episode of the IoT For All podcast. Welcome Hardy to the IoT For All show. How are things going?

- [Hardy] Good. Thanks for having me on.

- [Ryan] Yeah, this is like a welcome back. You were here, I think it was like 50 some episodes in. And we're now into the hundreds. Back, you were talking about some other stuff way back then. So it's great to have you back, looking forward to this conversation. Let's start off with kind of giving a quick introduction to our audience a little bit, you know those who may not be familiar with you with who you are. Talk about your background experience and how you ended up at Kudelski. And then we'll get more into kind of the Kudelski side.

- [Hardy] Sure. Thank you, it's a pleasure to to be back and yeah I'm Hardy Schmidbauer. I'm the Senior Vice President of the Kudelski Group and specifically of the Kudelski IoT division. My history in IoT, I started, you know, designing back cordless phones a long time ago and doing a lot of those chip sets designs. Moved into the sub gigahertz wireless space targeting a lot of applications which are considered now IoT and smart metering and consumer products and garage door openers. Then I moved over to, to Semtech and worked a lot on the early strategy and definition of LoRa. Built the original LoRa ecosystem which eventually became the LoRa Alliance. I did a startup for two years, from 2016 to 2018 and that was acquired by Semtech in the startup we were developing IoT solutions for asset tracking and lot management, as well as a consumer solution for tracking and for home security. I joined Kudelski last April, and very excited about the tools and the company inside of Kudelski and the potential that we have within the IoT market as it emerges.

- [Ryan] Fantastic. Let's dive in a little bit more to the Kudelski side and talk about the role you all play in IoT and kind of how you're offering at least from the IoT side. Cause I know it's a large organization kind of across the security landscape, but on the IoT side kind of how your approach differs and your offerings differ than other security companies in the market and just kind of, you know, general philosophy behind how you guys handle working with customers.

- [Hardy] Sure, you know, I joke that Kudelski is the biggest company that nobody's ever heard of but it's a super interesting company and a super interesting history. And I think it's important to share a little bit about that history, to understand, you know where our expertise comes from in IoT. So within Kudelski, there are four main divisions. We have our digital television business unit, which is a leader in conditional access systems for TV networks. So we secure a lot of the large global TV networks and the content over those networks. Dish is one of our largest customers today. So if you use Dish at all, we have technology in that setup box and is securing the entire network. We have a cybersecurity division which does managed security services or many large corporations and governments and utilities. And then we have our public access division which does access control solutions for large venues for stadiums, for parking and for ski resorts. So if you've skier and you've gone to any Vail resorts you're typically going through Kudelski systems and the technology behind how your ticket is generated is also coming from Kudelski. So with those, you know, that history, we have, you know a long history and an expertise in security, you know we've been fighting piracy and hacking in the TV industry for over 20 years. And really, you know actively having to fight that and have countermeasures and deal with issues I think has given tremendous expertise to the team. And on now a lot of that team and a lot of the R&D focus is now shifted over to IoT and we're applying those same concepts that we've learned and had to develop over the past 20 years. And in those other divisions, now applying that to IoT, and I think, you know we're really on the forefront of large volumes in IoT. And I think also in needing, and then having, you know much tighter security standards within IoT to ensure that the IoT solutions can scale and be secure as the volumes ramp up.

- [Ryan] Yeah, that's fantastic. I appreciate kind of the insights there on how you all work and operate. One thing I, you know we've had a bunch of security experts on the show recently and I do want to get into more of a kind of a Applications conversation. Cause I know there's something, you know, some interesting or an interesting application that you all are bringing to the market that you want to talk about here in a second. But before we do that, I wanna ask a couple of high level questions that just to get your opinion and take on that are kind of commonly asked from a lot of the IoT people that I'm speaking with but one of them is, when it comes to security on the IoT front, there seems to be a general lack of kind of concern for security. And I wanted to ask you kind of why that's an issue and how do companies really stay on top of kind of the latest security threats on the IoT front?

- [Hardy] Yeah, I mean, I think that's one of the challenges with security is depending on who you ask you you get a different answer or you're you're guaranteed to get a different answer. And a lot of it really depends and that's, you know our philosophy inside of Kudelski. It's not a one size fits all approach, right? There are gonna be different security requirements for a cat tracker, you know versus a smart meter or a medical device. So you really need to look at each application individually, define, you know what is needed for a security, threat assessment, you know, for that solution. And then architect and design towards that. I agree there's kind of been a lack of, you know concern for security within IoT, but just since I've joined Kudelski I've seen that change rapidly and security is typically not an issue until it's a problem, but then it's too late, but we're seeing, you know a lot of, you know, good education across the market. A lot of people having a better understanding and requirements for security. And you're seeing, you know NIST and other organizations also, you know publishing a lot of new requirements or guidelines for security, which I think is doing a lot to educate the market on what is really needed for security within IoT.

- [Ryan] Fantastic, yeah. And have you seen kind of COVID play a role or have you seen, COVID kind of play a role in the security landscape as far as, you know, in the last year or so affecting things from your standpoint.

- [Hardy] Well, yeah, I think COVID is accelerating a lot of the IoT solutions or say some IoT solutions, you know it's kind of forcing that digital transformation in some industries more rapidly maybe than they would have organically done, you know, without COVID. And I think that, you know, that is, you know that transformation is also, you know raising up concerns and requirements about security as well. So yes, I think, you know inadvertently COVID is also kind of, you know helping to drive forward kind of the security importance within a lot of these IoT solutions that are maybe being accelerated due to COVID.

- [Ryan] Okay, great. Yeah, we've kind of, it's been an interesting kind of ride this last year. So getting everybody's kind of perception from their own viewpoints been interesting kind of piece to talk about. Now I do wanna kind of transition here quickly to talking more about Applications. We've kind of pivoted the focus of our show a little bit to focus more on, you know real life examples of how companies are adopting and implementing IoT. So I would love for you to kind of talk us through, you know, the most recent or the most exciting kind of Applications you have going on right now, a solution that you have out in the market or maybe is coming to the market and talk us through kind of what that is and how it works.

- [Hardy] Sure. So within Kudelski IoT we have three main product lines. We have our IoT services which we do security assessments and design services mainly around security. So we do a lot of assessments for the major semiconductor companies really evaluating their Silicon, as well as in evaluating the security of the entire solution. Then we have our IoT system, which is key stream which is really, you know, how to secure devices and IoT solutions from provisioning through remote feature authorizations to secure firmware updates over the air, the full security lifecycle of a device. So we have a solution for that. And then, you know, what I'm very excited to announce is we're also developing complete IoT solutions. And the first solution that we're just launching now is called RecovR and that's a dealership lot management solution and consumer theft recovery solution.

- [Ryan] So yeah, so take me through that. They sounds like there's two pieces there, the consumer side and the dealer side. So how does that work in together and then how do they work independent?

- [Hardy] Sure, so we provide the dealer, the lot management solution. So while the cars were on lot and in inventory on the dealership, we provide them a free lot management solution. So they can be able to keep track of their inventory find cars quickly for interested buyers, you know be able to get reductions, off their insurance and also really become more efficient and optimize their workflow of when they receive cars to when they're sold through to the consumer, as the dealership sell the car, they will also sell to the consume the theft recovery solution. And then, so it kind of changes modes from a lot management solution to a consumer theft recovery solution. On the consumer side this solution can also be used to, you know, find my car. If you can't remember where you parked at the airport or if your car is stolen, or if you just want to basically lock the location, which is another way to basically geo-fence your vehicle. So if you're gonna be on vacation or you want any kind of alert, immediate text or email if your car is moved unexpectedly, you can get that kind of alert directly to your mobile or to your email.

- [Ryan] Could you technically set a large enough geo-fence that if you gave your car to say a child of yours and they drove outside of the geo-fence, you'd be alerted?

- [Hardy] So we're not doing that feature. The more and more the feature that we are focusing in on is the lock the location. So get immediate alert if your car has moved unexpected. So if you more go away for the weekend and you don't want your son to drive your sports car, right, you would put the lock the location into ensure that the vehicle is not moved.

- [Ryan] So take me through kind of the minds or I guess the thought process that went into the solution, you know, where did it come from? What is the problem that you know, is out in the market that maybe a lot of the people listening are unaware of? You can talk both sides, you know, the dealership side as well as the consumer side because obviously people are familiar with other theft recovery solutions. Like they've heard of LoJack and things like that. But from when you all kind of started venturing down this path of building the solution what was the opportunity that you saw, you know what was a problem that you kind of saw an opportunity to solve and how does it really compare to other available options in the market?

- [Hardy] Sure, so, you know, when we started to look at this market and we kind of identified a few things you know, a lot of the solutions that are available today are rather kind of old from a technology standpoint, and also the business models we didn't really see were efficient, for the dealers or for those companies. So we really wanted to disrupt on the technology side and also disrupt, you know, on the business side to make it you know, much more profitable, much more efficient for the dealers, as well, as well as a solution I think that can scale, you know much easier across the market. So, you know, on the dealer side, LoJack which has been in the market for a long time and everybody knows, you know, they have announced that they're shutting down operations, but that solution was developed a long time ago and it uses a proprietary network. So there's a big cost to, you know keeping that network up to date from, you know installing the equipment in police cars and having power leases and keeping that up-to-date there's a big infrastructure costs, you know and that made sense, you know, back when cellular coverage, you know, wasn't good and wasn't reliable, but now with cellular coverage really that the cost of a proprietary separate network is really unnecessary overhead. Also, you know, most of the solutions today are wired in, and we felt that we could do a very efficient very cost effective standalone device which is battery operated, you know not connected at all to the car system. When you wire the existing trackers into the vehicle, there's of course a cost associated with that. It takes some, you know 30 to 45 minutes of labor to install those. And then a lot of times they don't have time to remove them when the consumer buys the car. Typically when you buy a car you've been there longer than you wanna be, and you're ready to leave. And so a lot of times they don't sell the solution to the consumer. They end up just leaving the device in the car and disabling it and taking a loss. So I think, you know, our goal was to, you know have something battery operated that can be provisioned and installed, you know, in less than a minute and also remove if it doesn't sell to the consumer in less than a minute. So you avoid that kind of burden in overhead of doing the wired in version. A lot of the car manufacturers now are also voiding the warranty on anything that is wired in, and they're also super concerned in electric vehicles about anything being wired into the battery. So they actually don't allow it. Most car manufacturers won't allow a wired in solution on electric vehicle or a hybrid vehicle.

- [Ryan] Interesting. So how long does this device last, if, you know you're saying it's not wired in, so it's not pulling from the battery of the vehicle. It's obviously a standalone, you know, power source what's the life expectancy of these devices. And I would assume it's relatively easy to change the battery in and out if it dies.

- [Hardy] I mean yeah. So that's critical. And I think, you know, that's where our you know, expertise and history, you know gives us a big advantage as well as, you know, the really both from the dealership and the consumer the user experience with devices, you know everybody kind of expects, you know very instantaneous feedback from apps and from devices now, you know, I think thanks to, you know what Apple has done over the years. So yeah, we've designed the device for a five-year battery lifetime, but we still check in very frequently with the network so that we can have that proper user experience, you know for the consumer and for the dealers. So with the dealers, it's really from their perspective, it's real time tracking. You know, we update the position, you know, every time the vehicle is moved. So from their perspective, whenever they go to look for a location, it'll show basically real time from their perspective, you know where that vehicle is. On the consumer side we were very conscious about privacy, you know in our consumer interviews, you know, privacy. And the fear of being tracked is very high on consumers concerns. So we only update the position when requested by the consumer. So if they request the position of their vehicle if they forgot where they parked, or they put it into theft recovery, then we start to update the position. But outside of that, we still check in very frequently, you know, with the network so that we can have that proper user experience and set that expectation when the consumer of how long it's gonna take before their position will be updated. And I think that's critical to, you know not having the wired in solution where you have essentially, you know the battery lifetime, the very large battery to draw from but still being able to deliver really the user experience needed to be successful in the market while having the engineering capability to design something that has a very long battery lifetime and is extremely low power.

- [Ryan] So in your conversations during your research phase with customers, what were their thoughts on kind of the current offerings in the market? And I guess what were the big takeaways from that caused, you know certain decisions to be made on the RecovR solution?

- [Hardy] Sure. So, I mean, there are a lot of, you know from our consumer surveys, you know a lot of consumers are concerned about theft and I think we've seen, you know a big increase in theft, you know, in the COVID environment for various reasons. So it is a rising kind of a demand from consumer for theft recovery solutions, you know within the market, you know, most important things for them, you know, were the usability, you know, of the solution, the theft recovery, you know being able to, you know, work easily. And with law enforcement, you know through the RecovR call center, the, you know financial benefits for insurance and for the warranty if your car is stolen, also ranked very high. And I think the other features we have in there to make it very simple and easy to use are also gonna be, you know very attractive to the consumers compared to what they have today in the market.

- [Ryan] So what are those extra, you know, I guess what are the insurance and kind of warranty benefits that you get as a consumer? I guess what I'm trying to get at is aside from obviously the functionality of it, what are the other reasons people would purchase this solution?

- [Hardy] Sure, so if their car is stolen and not recovered we provide them, you know, $5,000 cash towards a new car. And we also pay a $1,000 towards their deductible on their insurance.

- [Ryan] Okay, interesting. That sounds fantastic. So basically the way this works is if you were to purchase, when you buy a car, a newer user I assume it could be either one and you would then disconnect the tracking ability of the dealer. So the dealer has no insight into where this car is or any kind of data collected after it is sold. And then as a user, when there's no tracking being done until I go into the mobile app and click okay find my car or my car is stolen and then alerts authorities and kind of goes through that process, it goes up to you know, basically reaches out and tries to find the actual vehicle. But other than that, it's not tracking where you are driving and then if for some unfortunate reason the car is stolen. There is a $5,000 cash kind of warranty applied to this, and then also covering the a thousand dollars of the deductible on the consumer side. Okay, interesting. And I guess let me ask kind of a question a little before the sale when you're talking to dealers and obviously a free lot management solution sounds fantastic. How are they viewing the potential of this being a sell through item? Through you know, I assume it happens kind of after the car is sold more in the, when you're working on the financing and those pieces of the car buying process, how are dealers kinda responding to this solution and seeing this as something that they also can, I'm assuming, you know obviously they care about making money off of it. So that to be something that they offer to their customers.

- [Hardy] Yeah, so, you know, dealerships are making a lot of their profit off of the products that they sell in F&I, and through service. So they're very interested in products like this, cause it can have a big impact on their profitability and their financial performance in the dealership. So pretty much we see, you know all the dealerships are interested in these types of solutions and they're also extremely interested in lot management and becoming more efficient but typically don't want to pay for it, right. You know, they're really trying to optimize their financials and having to pay, you know, for another, you know basically a management software is hard for many of them to accept. So we think we found a very disruptive business model where you know, we help them, you know, provide, you know lot management and make the dealership much more efficient, really at no cost to them. And they get a revenue source by when they sell it through to the consumer. So we're getting, you know, great feedback and great traction already, you know, from the dealership community about our model. And also, I think it's a welcoming, you know to have Kudelski a billion dollar technology and security leader, you know, standing behind the solution and having 24/7 support in call centers. And I think a top quality product that consumers are really gonna, like, it makes it much easier for them to, you know, also feel comfortable with us developing the solution and being their partner and making sure that the consumers are happy with the solution as well.

- [Ryan] And so what's the, a general kinda go to market approach from your roles and, you know, kind of just going to from dealer to dealer, dealer groups, you know group organizations that represent lots of dealers and just pushing it out and getting into as many dealers as possible.

- [Hardy] Correct. So, yeah, we're in the process of, you know, contacting, you know individual dealers and in many dealer groups as well as setting up channels, as well as companies that offer services and products into dealers. So we're in the process of setting all that up. We're gonna announce the solution at NADA and then we'll start to deploy dealerships at the end of March and, you know, already have a high volume of parts with our contract manufacturer through the end of the year secured to help ramp up the solution.

- [Ryan] So, and then from a consumer side of things, is there a cost to use this outside of the initial purchase? Or is it something that is basically play flat all in cost and then it's good and then forever? Or how does that work?

- [Hardy] Yeah, great question. I meant to mention that earlier. So thanks for asking that. No, it's, it's, there's no monthly fees, it's an all-in cost and that comes with three years of service for the solution. And once that's over, they can go back to the dealer and repurchase a new device to be placed in their car.

- [Ryan] Okay, okay. Gotcha, well, that's fantastic. And by the time people are listening to this I assume this will be, it'll probably be out, but is there when is the event the, NADA event, is that coming up soon?

- [Hardy] Yes, that will happen next week. NADA is the North American Dealers Association show which was supposed to happen in person and in New Orleans but this year it's virtual as is most trade shows are.

- [Ryan] Fantastic. And I assume this works in any vehicle, any kind of you know, anything they want, any car that needs to be tracked. And is there in your mind, I guess, where the team's mind, you don't have to go into too many details here, but is there kind of a feature rollout plan down the line that these devices would then be able to kind of get over the air updates on? Or is it something that it would need a new device in order to get a new feature set if you decided to kind of do a version 2.0

- [Hardy] No, so, I mean, I think that's, you know one of the, you know, the benefits of Kudelski is the engineering talent and especially the software engineering talent that we have within the company is, you know better than I've seen anywhere else in the technology industry and in my career. So, you know, we are utilizing, you know all of our own kind of products and solutions. So we're using our key stream solution in the design. So we really have security integrated from the beginning. We have firmware over the updates you know, everything is already integrated into the design so that we can, you know make adjustments and do remote feature authorization or change our ownership and a zero touch provisioning. You know, all of those kinds of features are already you know, designed and integrated into the device.

- [Ryan] Okay, and last question, I guess it's more of a opportunity to kind of give a final push for what this is to the audience. If I'm a consumer out there about to buy a car and I get presented with this opportunity, why should I consider putting the RecovR tracker in my car and on my phone? Why is this something that I should strongly consider?

- [Hardy] Well, I think it's a great solution just to give you peace of mind as a consumer. And then I think, you know if you're in the event that your vehicle is stolen or you occasionally forget, you know, where you parked you can immediately determine the location of the vehicle. And then of course the financial benefits, right. If your car stolen is right as I think is a good insurance policy right? That's well worth the cost to the solution to the dealer.

- [Ryan] One thing I just thought about as you've been kind of explaining this is how big is the kind of the theft recovery theft you know with automobiles, how big of a deal is that? Cause obviously, you know, some people live in areas where maybe it's not as much of a concern for them, but I'm sure it's obviously a big enough problem for a company of your size to take on and launch a solution to the market. Can you put it into perspective, how big of a problem this actually is?

- [Hardy] I mean, I think it's a very big market, right? I mean, if you look at, you know, how many cars are sold in the US you know, how many cars are stolen in the US you know, it's a very big problem today. And I think a very big market, when you look at you know, the volume of you just looking at the US market alone and not even considering other geographies, y