Interview with David Rose, CEO of Ambient Devices

Ambient Devices develops a new generation of consumer electronic products. Our orb allows users to understand different metrics in a dynamic way. Based upon the color of the orb, it gauges whatever metric they wish to measure. For example, an orb can turn green when the stock market is up, and red when it is down. The user can then determine if they should investigate further.

The insight came from looking at the waves of the Internet. Ambient Devices is what I call part of the Third Wave of Internet devices. Initially the goal was to make information available within a browser, next came wireless and convergence devices like Palms and PDAs, and Ambient Devices is forging the way for devices that are characterized by their extreme simplicity, ease of use, and the way they integrate into daily life.

Most of us feel overburdened by information, although I would say the overloaded feeling comes more from coordinating all of the information and responding to it. It is hard to check five email inboxes, three voice mail systems, or five blogs that you are tracking. Many times when you do any of these activities there often isn’t anything remarkable that you need to be aware of.

Ambient provides a class of devices that allow you to monitor those situations which are difficult to track otherwise. Our system allows you to respond to the information that is important to you. It allows you to sense and be attuned to more streams of information in parallel.

If you think about a couple of streams of information that you’d like to know more about such as traffic home from the office. You always want to know if there going to be remarkably bad traffic on the way home so that you can change your route home or change your schedule. Rarely do you take the time to go to traffic.com until it is too late. An Ambient Devices orb, which is tuned to a specific traffic commute allows you to see whether traffic is better or worse than you would expect.

The devices are optimized to be read quickly by the user. There are already a lot of devices in our lives that have rich text or the ability to handle graphics. Our devices are designed to be understood in less than a quarter of a second. Your brain has an amazing ability to do that with certain types of stimulus. These include change in color, change in pitch, change in angle, etc.

We realized early on that our team wasn’t going to come up with the best or the different number of uses for our devices. We created the ability for people to insert enterprise or personal data.

One customer in New York is tracking his personal energy use compared to similar Manhattan apartments. Some people are using it to track the progress they are making in losing weight. A company called Sports Brain makes a pedometer that tracks the steps that you walk everyday. That information is uploaded to a website, which another customer is scrapping and uploading it into their personal orb.

In the earlier instances, color indicates either power usage or steps walked. The orbs create feedback loops that can influence either personal of employee behavior.

Our criteria for good data feeds are that they need to be dynamic enough to be interesting, something that users want to attune to throughout the day, etc. They shouldn’t be anything similar to fire or smoke alarms, which are one-time binary events. The orb allows for constant dynamic feedback.

They need to be able to be reduced down into a single dimension of data. For a stock portfolio, you can measure the entire portfolio’s performance, or it’s performance against the Nasdaq composite, etc.

As a small company our fastest way to market was going to be by working with other retailers that were known for pioneering new technologies and categories. Originally we were in the Hammacher Schlemmer catalog, which sells overpriced boy toys. That relationship helped get us into Brookstone stores, the Brookstone success helped us get into Discover stores, etc. Based upon some of the earlier successes we were able to penetrate the higher end department stores likes Saks 5th Avenue, Neiman Marcus, etc.

We have recently gone a little broader by creating a new product line that will be available in Radio Shack stores this summer.

All of the devices work out of the box without any subscription fee. We knew that was an important thing to engineer. Integral to the orb is our low cost long-range wireless radio data system and a protocol that allows us to send this data over 90% of the US population every 15 minutes throughout the day. We are compressing the information in such as way that there is no cost to the end user.

Unless they want to track very specialized things, such as their personal portfolio. In that case there is a $7.00 monthly fee and we are seeing about a 20% conversion. The conversion will most likely decrease as we go after a larger and larger target market.

We’ve been a little surprised that the product has sold a lot better through catalogs than it has through stores. The orbs have probably sold better through catalogs because they can be categorized unlike at most stores. This is such a new product that there is a bit of education involved. People understand the product when they see it in the CEOs office and in context and it has been widely successful via word of mouth.

Microsoft recently entered this ubiquitous computing space with the MSN direct watches (http://direct.msn.com/). Their hundred million dollar advertising budget is great for the category because it shows people that you can take Internet information, communicate it over long distance wireless networks, and have it work with watches or digital orbs.

There will be hundreds of new companies that will be created to develop these very simple data devices. They will provide services that simplify online information and present it in ways that are compelling and fit into peoples homes. We’ve started to license our technology to other providers. Our technology offers the cheapest and most effective wireless protocols to distribute information out to customers.

That certainly has been true when we talk to retailers. If they know about the Microsoft product they now know which category we fall under.

We initially targeted pager networks, which have been suffering for the last decade due to cell phone sales. Pager companies are very much looking to provide new services to help them regain some of their customer base. We are extremely attractive to page companies, because we significantly increase their user base.

We target people who understand that relationships are the lifeline of a small company. Those lead to partnerships and revenue, which are critical to survival. Every time we bring someone in we ensure that they are a strategic thinker, but even more important that they understand that if the products aren’t successful and the products don’t sell that there won’t be anything to strategize about.

I think one of the most important attributes is perseverance. You have so many people who tell you your idea is crazy, because they haven’t seen anything like it before that you need to trust in your gut, telling people respectfully that they are wrong, and be willing to continue with what you are doing for months and years before you see success.