New from Kraft Foods: Vending Machines

Posted by: Michael Arndt on October 05, 2009

For years Kraft Foods has been supplying cookies, crackers, and other snacks to vending machine operators. Now the food company is getting into the business directly, with its own network of automated dispensers. And, I should add here, these machines are unlike any you’ve ever dropped coins into.

I’ve just learned that Kraft is about to expand into direct-to-consumer distribution with about 30 vending machines in the Northeast next month. The company is reserving 15 of the device’s 55 “spirals” for its own products, such as Oreos and Planters peanuts. It’s offering the rest to other snack or candy makers.

If results of the experiment turn out favorably at year-end, Kraft and its partners will install machines in transportation hubs, colleges and universities, and health-care facilities elsewhere, says a spokeswoman, Angela Wiggins. She calls the new machine “a mini-convenience store.” Actually, it seems more like a mini-electronic billboard.

Today's snack machines typically have a large glass window showing all the goodies inside. The new Kraft "diji-touch" equipment, created by Samsung, replaces the window with a 46-inch LCD touch screen. By tapping on icons on the screen, a customer can get a 360-degree look at any snack, find out its nutritional info, or its ingredients.

The interactive screen works the other way, too. Vendors can display ads for their products on the front of the machines. Other sponsors can buy screen time as well. A college, for instance, might use the vending machines to spread the word about upcoming events.

The computerized devices are linked so that vendors can see when and where goods were bought. That way, they can learn more about customers' habits—do people buy fewer Cakesters after looking up their calorie count?—and test ad messages to find out which trigger more purchases, just as they can on the Internet.

A third-party such as a transit authority or hospital will own and maintain the machines, which are made by Crane Merchandising Systems, while Kraft will manage the digital media. Kraft will have access to all sales data during the test, even from rival vendors. But after that, each company will get info on only their own products, Wiggins tells me.

The touch-screen machines will not stock soft drinks. Samsung has set aside its uVending technology for that market for Coca-Cola, which is rolling out its own next-generation dispensers in shopping malls in the U.S. now.

U.S. Slips to Second in Patents

Posted by: Michael Arndt on October 08, 2009

Guess which government agency received the most U.S. patents through the year’s midpoint. If you had answered the U.S. Navy, you would have been right in 2008. But in the fiscal year that ended on June 30, the winner in terms of both the value of its patents and sheer volume wasn’t even an American entity. It was South Korea’s Electronics & Telecommunications Research Institute.

Yep, according to a just-published report from the Patent Board, an intellectual property consultancy, the South Korean institute’s patents were the most valuable of all thanks to its high-tech patents. Its overall score: 212 vs. 135 for the second place U.S. Navy. The institute also was granted 286 patents over the 12-month period to the Navy’s 236.

The South Korean agency ranked third five years ago and second the past three years, behind the Navy.

There’s more comeuppance for We’re No. 1 chanters in the U.S. Five of the top 10 government grantees of U.S. patents in FY 2009 were not American, in terms of patent value. (Value is a combination of such factors as the number of times a patent is cited by others in their patent applications or in scientific journals.)

Here’s the ranking:

1. South Korea Electronics & Telecommunications Research Institute
2. U.S. Navy
3. U.S. Energy Dept.
4. U.S. Army
5. U.S. National Aeronautic & Space Administration
6. Japan Ministry of Education, Culture, Sports, Science & Technology
7. U.S. Health & Human Services Dept.
8. Singapore Agency for Science Technology & Research
9. Japan Ministry of Economic Trade & Industry
10. France National Center of Scientific Research

“E&TRI appears to pursue innovation aggressively during downturns. We would recommend that for all our clients,” Patent Board President Scott Oldach tells me.

This isn't the first indication of South Korea's patent prowess. It finished No. 1 in patents on a per capita basis, according to a recent United Nations report. The U.S. was third, with Japan in second on that list.

Tammy D'Amato, a Patent Board senior analyst who wrote this new report for Intellectual Property Today, notes that governments generally don't patent heavily. Altogether, their patents come to less than 1% of the total granted in any year. And, of course, patents are only one measure of a nation's inventiveness. But does that reassure you?

What Starbucks Has to Do with Wind Farming

Posted by: Michael Arndt on October 11, 2009

Over lunch with the top execs of Suzlon Energy, Andris Cukurs, CEO of the multinational’s U.S. subsidiary, brought up Starbucks. Turns out there’s something called the Starbucks Rule when it comes to siting wind farms. He said Suzlon and its rivals plot where Starbucks are in the general area and then make sure their project is at least 30 miles away. Any closer and there’d be too many NIMBYs who’d object to having their views spoiled by a cluster of 265-foot-tall wind towers.

Who knew?

I also was told by Tulsi Tanti, chairman and managing director of the Pune (India)-based energy company, that the U.S. is a good place to build wind-turbine towers. The devices, made largely of steel, are simply too heavy to be worth shipping from low-wage countries. They’re also custom-made. But that is changing, he said. And I think that, in turn, could eventually shift production from the U.S. to China or India.

Suzlon, which ranks three in wind-power turbines, is now selling its gear boxes to other producers, with the aim of standardizing components, the way auto parts like batteries and tires are standard. If Suzlon succeeds, it could boost its output of gear boxes, lower costs and—though Tanti didn’t explicitly state this—centralize production. Other parts might be standardized, too. Once that happens, manufacturers could ship components rather than build a wind-power generator from scratch in each market.

Pay attention, policy makers.

Suzlon claims 12.3% of the wind turbine market globally, with operations in 21 countries and on every continent. Its largest markets by volume are the U.S. and China; by market share, they’re India, Brazil, and Australia, where Suzlon has more than half the market. Tanti predicted that Suzlon and its affiliates will build towers capable of generating 5,000 to 6,000 megawatts of electricity in 2010, up from 4,000 megawatts of new capacity in both 2008 and 2009.

U.S. Patents Up; Consumer Product Introductions Down

Posted by: Michael Arndt on October 15, 2009

Feeling blue about the state of innovation? I have some news that could cheer you up—and some that might make you even bluer.

The upbeat news first: The U.S. Patent & Trademark Office just showed me preliminary data for fiscal 2009, and it shows that 93,725 patents were issued to U.S. residents. While that’s 49% of the total 190,121, it’s up from 91,843 a year earlier. The rise might continue next year. Americans filed 264,197 patent applications in the fiscal year that ended Sept. 30, according to the office’s preliminary data. That’s 55% of the total, and up from 256,887 in fiscal 2008.

OK, now for the downbeat info. I also asked analysts at Mintel, a market-tracking outfit, for the latest numbers on product introductions. Mintel compiled data over the first three quarters for these categories: food, beauty & personal care, drink, household, health care, and pet. For the 2009 period, the total plunged 23%, to 28,473, from 2008’s first three quarters, when 37,203 new products came out. Down most: drink (-41%) and food (-33%.) Only pet product introductions rose.

Granted, many new food and drink items aren’t really innovations—they’re simply line extensions. And consumers genuinely seem to be craving traditional products today. These old brands recall a less topsy-turvy time, plus they’re often cheaper. But one of these days, we’re going to be hungry again for something other than a casserole made with Velveeta.

IP Video Brings Emergency Advisories Online

Posted by: Michael Arndt on October 15, 2009

By Venessa Wong of BusinessWeek’s Innovation and Design staff

With the Internet, we are instantly disseminating all sorts of media–videos, photos, tweets. Yet in emergencies, such as hurricanes, many people continue to rely on television and radio for information.

I spoke with former CBS meteorologist Bryan Norcross, who started America’s Emergency Network (AEN), a company that uses IP video technology for emergency communication. It streams live video and audio updates over the internet that can be accessed by anyone with an internet connection via a computer or mobile device. The content is automatically archived and can also be broadcast over television and radio.

AEN, which Norcross founded in 2007 with former National Hurricane Center director Max Mayfield in Miami, has been offering the service since 2008. It is owned by Miami-based Brampton Crest International. The hope is the service will give local governments an additional channel for communication in crises.

The model: government agencies, National Hurricane Center, emergency management centers, and other sources subscribe to AEN services for about $6,000 per year, plus the cost of equipment, to record, store and distribute video and audio files to AEN’s 300 media partners. News organizations stream this content live on their Web sites on a revenue-sharing basis with AEN for any advertising it draws.

The main advantage is speed. Government agencies and emergency management centers can get word out to the public in real time and bypass delay and scheduling constraints involved with broadcasting on television and radio.

Rick Hirsch, senior editor for multimedia at The Miami Herald, one of AEN’s media partners, writes in an email, “Our [site] traffic grows exponentially when hurricanes or tropical storms approach our area.” Being able to show advisories live and replay them on demand will be important to the audience, he adds.

Vince Graziani, CEO of VBrick Systems, a company based in Wallingford, Conn., that provides the technology to AEN, says the benefits of IP video in emergencies are that it’s live, unlike YouTube, and sites can make the content available to view any time. VBrick’s technology is already used by government offices and large corporations including Vodafone and by schools offering remote distant learning.

It will take some time for people to turn to the Internet, rather than traditional broadcast sources, for emergency information. This additional channel can prove valuable, especially as increasing smart phone penetration enables people to access information from anywhere.

Putting GE Smart Power Meters to the Test

Posted by: Michael Arndt on October 19, 2009

General Electric has been testing what it calls the smart grid, using smart meters and smart appliances to push and pull consumers into being smarter about consuming electricity, as my colleague Vennesa Wong wrote here some time back. Soon at least 131,000 customers of ComEd will get to take part in a bigger pilot program in metro Chicago. And one of the electric utility’s partners is, you guessed it, GE.

In early November, ComEd will begin installing GE smart meters in homes and businesses in 10 Chicago suburbs and the city’s Humboldt Park neighborhood. The test could expand to 310,000 customers if the utility, a subsidiary of Chicago-based Exelon, gets $175 million in federal stimulus money. As it is, the test will cost $69 million, which will be paid for by all of ComEd’s 3.8 milllion customers in 2010. (That’s roughly $5 per account.)

ComEd’s test is one of only a few big ones. But it seems tentative compared to efforts by some of its peers. Pacific Gas & Electric, for instance, is spending $1.7 billion to install roughly 5 million electric meters by 2011. It began the rollout in 2006. AEP Ohio, a unit of American Electric Power, also plans to install 110,000 smart meters, about a month or two behind ComEd, under a $150 million project. (Their partner? Who else but GE.)

The meters in Chicago will be smart, but they are not quite geniuses. They will collect usage info every 30 minutes, which will be relayed to the utility with the help of another vendor, Silver Spring Networks. Customers could then get a daily report by looking up their account on the Internet. It seems to me, though, that constant, real-time data would be better carrots and sticks in changing behavior.

Still, it’s a smart move, don’t you think?

Bruce Mau's Latest Design Is BS

Posted by: Michael Arndt on October 28, 2009

I’m sitting on a stool watching an info-video at the Dairy Management booth at the Worldwide Food Expo in Chicago. The stool, designed by Bruce Mau Design, is a bright red box. It is lightweight, yet sturdy. It also is made from cow manure. So, too, is the exhibit’s video-display case, kiosks of stacked milk cartons, and work tables.

And no, the material doesn’t look or smell like cow poop. And no again, you can’t buy it in stores—at least not yet.

The booth is a public showcase of adairy industry initiative to reduce its greenhouse gas emissions by 25% by 2020. For a new product, it came together fast. Erin Fitzgerald, Dairy Management’s director of social & environmental innovation, tells me she decided to enlist Mau after hearing him speak about sustainable design in May, as she was prepping for the sustainable-themed trade show.

Contractor and client quickly agreed that the booth itself should carry the eco-message. But how? While researching dairy farming, Tom Keogh, Bruce Mau Design’s project director, says the Toronto-based team came across experiments by a scientist in Madison, Wis. The scientist, John Hunt, a general engineer with the USDA’s Forest Service, had been testing alternatives to wood pulp in making paper and particle board. Among them: fiber-rich cow manure.

“There’s a moment during the creative process,” adds Paddy Harrington, a Bruce Mau Design creative director, “when someone says, the whole thing could be made of cow manure.” And so it would be.

In early September, the designers asked Hunt to see what he could make. Hunt tells me he got a truckload of manure from a nearby farm. He then basically cooked it, driving off the methane which, in a commercial process, could be used to power the machinery. "We took the stink out of it," he says. What was left was a slurry which could be used as fertilizer and what Hunt calls "digestive solids."

On one of the kiosks—each is a stack of crates in a primary color—there are a few small bowls of this dried material. Sure, it's gone through a cow, but it feels fluffy like tufts of lint. And, I swear, it is odorless.

Hunt blended a 50-50 mixture of manure and pulped corrugated boxes and pressed them into particle-board panels that measure two feet by eight feet and 3/16ths of an inch thick. The Bruce Mau Design team—there were five full-time employees on the project, plus another five or so occasional participants—then cut them into shapes to form stools, milk crates, and tables that can be flat-packed and assembled on site.

To make sure conventioneers get the message, they stamped the booth material: "Made of Manure" and "Powered by Cows."

The cow-manure booth isn't cost-competitive compared to conventional materials. Fitzgerald won't tell me what Dairy Management spent, but she says the setup cost less than the booths all around hers, which are way fancier. And its price could come down if Hunt can pique some business to start making industrial-size batches of the stuff.

Dairy Management intends to use the props again in other displays, Fitzgerald says. It seems durable. Hunt hands me a small sheet. I can make it flex, but can't break it. And once they've done their job, the material could be tossed into a field, where, like cow poop, it would break down and become an all-natural fertilizer.

Mau chuckles about the project. Talking with me on a cell phone while on a client visit, he says his daughters, ages 15, 11, and 9, wouldn't allow him to bring the bovine furniture home. "They reacted the way we all do when we first hear about this. But it is pretty amazing," he says. "What you do and the way you do it is part of the image. The team set out to demonstrate a new way of thinking. I think it got the job done."