Peggy and Sam George, corporate vice president Azure IoT, Microsoft talk about the state of the IoT (Internet of Things) space, where it’s headed, and how the cloud, the edge, and AI (artificial intelligence) are impacting several vertical markets. They also discuss how partnerships spark digital transformation for companies and advance the industry as a whole.

Below is an excerpt from the interview. To hear the entire interview on The Peggy Smedley Show, log onto www.peggysmedleyshow.com, and select 11/19/19 from the archives.

Peggy Smedley:
For you, what are the most interesting trends that you see? You and I have talked in the past about the IoT (Internet of Things) and I know that you have a lot of vision, a lot of examples that you look at when you think about cloud and edge and we talk about manufacturing and all these things in vertical markets, but for listeners right now, based on investments you guys [Microsoft] are making, what do you see are the most interesting trends?

Sam George:
Well, I think if you zoom the telescope way back out and look at the very big picture, what we’re seeing across all of these vertical markets, whether it’s manufacturing or agriculture, smart cites, smart energy. If you take a look at what’s happening with all of these, there’s a set of disruptive technologies that are fundamentally transforming how those industries function. Cloud was a big catalyst for that and I’d say, very well established at this point. And then IoT, a couple of years ago, really started hitting the scene, building on top of cloud and giving these businesses unprecedented visibility if they were able to take advantage of it back in the early days. Virtually all aspects of their business are able to sense things in the physical world, in realtime, that they weren’t able to before.

And then while the IoT was happening, edge computing started happening too, which was a normal and natural optimization, where as I connect and start collecting data from these billions of devices that are sensing across all of these different industries that are sensing things that are happening, it’s natural to start taking some of the computing that you were doing in the cloud and some of the services that you were taking advantage of and pushing those right out and distributing those right out to the devices themselves for a variety of reasons, whether that’s latency concerns or security concerns or anything else.

We see this wonderful trend of AI that is powering really new breakthrough capabilities across all of these industries. AI is a great example, where as it takes advantage of those proceeding waves, edge computing and the IoT and cloud. AI can now run in a distributed fashion as well. Looking to the future, we see as more and more of these solutions are created within a business, you need some organizing structure to keep track, harness, coordinate, all of them. Because what we’re really starting to see is the fusing of the physical and the digital as a baseline for how businesses operate. And as we get to that, what we see just over the horizon is using techniques like digital twins to not only take advantage and find insights from physical assets, but from entire environments themselves, whether that’s a smart stadium or an entire manufacturing plant or a set of manufacturing plants worldwide to know everything that’s happening in depth. So, we think it’s an incredibly exciting time to be in business with all these capabilities that are now becoming easier and easier to use.

Smedley:
And when you talk about a smart stadium, a manufacturing plant, and you look at digital twin, we’re going to be going on to mixed reality when we talk about AR/VR. Talk to me about how you’re looking at it, the IoT, in the long term, because we’re really talking about how we take AI and machine learning, and then we’re going to be talking quantum because there’s just so much, for you thinking about it, what do you see long-term?

George:
In addition to being incredibly exciting for businesses, the other thing that we see is that these technologies, whether it’s IoT or edge computing or AI or all of the things that follow on from that, for many established businesses, any enterprise that we’ve partnered with, they’re undergoing their own digital transformation. And digital transformation winds up being part based on technology and a lot based on organization and the actual people in a business. And so, this is something that Microsoft is spending a lot of time on with our enterprise partners and customers as well, is their own digital transformation. We’ve gone through our own digital transformation at Microsoft, going from years and years ago selling boxed products to primarily selling online live, always up to date, 24/7 services. That might not seem like a big difference between those two, but it’s massive. Everything from how we plan and build and operate, all of our software has fundamentally changed. And so, we have a lot of lessons learned that we share with all of our partners and customers to help them on their digital transformation journey.

So, quite frankly, most of the technology like IoT and edge computing and increasing AI is relatively straight-forward at this point, but it’s the organizational viscosity that can often prevent a customer from taking advantage of them.

Smedley:
When companies are trying to say, “Look, I don’t know, I’m afraid to do this.” You could say, “Look, we know it, we lived it, we experience it ourselves.” Does that help in making Microsoft more approachable? Because you’re able to say, “Look, we want you to experience this because we understand the transition, the digital transformation you’re going to make. And we’re not just telling you to do it. We understand how you need to do it and what the strategy.” You can help people understand the challenges of IoT adoption.

George:
Yep, that’s exactly right. And it is something that we did go through ourselves. I’ve been at Microsoft now over 20 years, so I’ve lived through that transition and it wasn’t an easy one. There were fits and starts along the way, but ultimately, we prevailed. That journey really resonates hearing all of the lessons learned, hearing how, for example, years ago we went from running our central IT on premises to now being all cloud powered. That journey is an eye-opener or hearing how our own manufacturing as we go and manufacture things like certain laptops and HoloLens devices. Our own manufacturing went through a journey from being disconnected to being fundamentally connected and taking advantage of all of these technologies. So, hearing that first-hand, Microsoft is a very humble place. Under Satya’s leadership, we’ve really adopted some great practices. Number one, having a growth mindset, number two being very humble and partnering. I think that really lends itself well to this digital transformation that’s transforming the world right now. We don’t see that as a zero-sum game as a winner-take-all market. We see that as a place that requires deep partnerships and a rich ecosystem and we’re really here to help those customers and partners transform as well.

Smedley:
So by doing that journey, you actually now developed a complete portfolio. Is that not correct? You understand it by taking the journey, you are able to help your customers and partners understand exactly what they need and again, perhaps maybe better than the competition for what you’ve had to go through because of all the years of experience.

George:
That’s exactly right. We did not start out being what you can think of as a modern digital maiden. We earned that right. And so we’re able then to help customers that are struggling with doing the exact same thing themselves.

Smedley:
We’re all trying to figure out in some ways what the IoT really is and the focus now becomes less about in our four walls and we’re talking about going from the cloud to the edge and now there’s conversations of do we turn to the edge, do we turn to the cloud, and what Microsoft’s discussions are as IoT Edge and really the opportunities for customers and partners. What does that really mean? Because I think that’s where a lot of people get confused and understanding yet what that really means for them.

George:
The first thing that I love to highlight is that a couple of years ago our CEO Satya (Nadella) started talking about how Microsoft’s mission was to empower an intelligent cloud and an intelligent edge. And to me, the most important word in that sentence is the “and.” It’s both. It’s not edge only, it’s not cloud only, it’s actually both. And that is the fundamentally new, and we think revolutionary compute paradigm where cloud and edge are working fundamentally together where you’re able to take advantage of services that formerly only ran in cloud and are able to now distribute those beyond the data center and have those work on the edge as well. We think that this represents, really, the next wave of computing and all of these things that we’re talking about, the IoT, or edge computing or AI or digital twins need to run across both of them.

Like I said earlier, what we’re really embarking on is enabling businesses to basically fuse the physical and digital worlds of their business to have unprecedented visibility across that whole spectrum from physical to digital. And that provides huge amounts of benefits. I think we’re all fairly well-versed in all the early benefits of IoT like optimizing operations, predictive maintenance, and things like that, but there’s something really profound that happens when you’re able to have realtime visibility across your entire business that frankly wasn’t available to you before.

Smedley:
And you know this better than anyone, especially when you think manufacturing. I mean there are so many islands of automation that it changes. Let’s really go into the idea right now because you know what’s going to come out right now is, in addition to the edge, we think about all these things, customers are just talking about security. That’s the first thing that comes to mind because everybody is nervous about security. We’re thinking, as we do all these things, the nefarious guys are out there. Talk to us about it, because that is top of mind for customers today.

George:
Absolutely and it should be. We did a research report ourselves called the IoT Signals Report and where we surveyed about 3,200 different companies worldwide. 97% of them reported concerns related to security and the interesting part about that survey was that the majority of them said that wasn’t holding them back, that they were doing it anyway. And what that really told us was that we need to provide turnkey security that creates a pit of success because it’s beyond the reach of most companies to get the Ph.D. level of understanding of cybersecurity that’s required to keep all these devices secure.

So, we’ve done that in a number of ways. Number one, securing all of our services and using all of the industry’s best practices and building on all of the cloud security and compliance. What we introduced this year was a new product called Azure Security Center for IoT. It’s a single service that monitors all of the different Azure services that you’re using, as well as your IoT and edge devices. And so it manages all of that and it provides recommendations. It might notice, “Hey, you’ve got open ports on your VM’s. And hey, you’re not taking advantage of 509 certificates or IT whitelisting and blacklisting and things like that.”

So for example, we run one of the largest security operations worldwide. We’re monitoring everything that happens worldwide, just as Microsoft from a security perspective. So for example, we know where all the active botnets are at any given point worldwide. So for example, if one of your IT devices is being monitored by Azure Security Center, suddenly starts acting in an anomalous way and opens up a network port and starts communicating with a known botnet, something that we know in the cloud, we issue an immediate alert. We quarantine that device. We alert you immediately and so you’re able to get an unprecedented view of your security posture across both Azure in the cloud and Azure on the edge.

We did a demo recently at our night conference where we took an IoT device and just Raspberry Pi and it was in a disconnected network, so it was connected up through Azure Security Center, and we infected it with a pretty viral virus and we showed in real-time how Azure Security Center detected it. But there were for example, multiple log-on attempts and then it had opened up a connection to a botnet, or it was attempting to, and we were able to provide that visibility. So, that’s a really important part of IoT. It helps create that sort of pit of success.

And on the other end of the spectrum, what we’ve been doing, if you look down at the very tiniest of devices, these microcontrollers and of the 20 or 50 billion or however many are eventually going to be connected to cloud devices, the vast majority of them are these very, very tiny devices, typically the size of your pinky fingernail that are running realtime operating systems and are running on microcontrollers. And we looked at that about four years ago and we said, “You know, four years from now, there’s going to be a lot more of these connected.” It’s kind of a problem because all of the innovations that have happened in higher-level operating systems like Linux and Windows never made their way down to these micro-controllers and a couple more years ago we started working on Azure Sphere and Azure Sphere is now ready to go general availability.

We just announced it will be generally available this coming February, tons of hardware partnerships from Qualcomm, NXP, and Media Tech. And what Azure’s theory is it’s a brand new take on security for these tiny micro-controllers that bring all of the security techniques from modern operating systems and brings them into a tiny, tiny, tiny device. So, that’s just two of the things that we’re doing on security.

Smedley:
It’s so exciting to hear what you’re doing there. I think that goes on to what we were saying back in 2018 when Microsoft released Azure IoT Central with the goal of simplifying IoT.

Smedley:
I think it’s not only saying we’re taking more steps toward security and doing all these things, but I think all the new features you keep doing. Talk about that because what I like is you got the IoT Central and you got all these latest innovations. But I think that’s what’s great about the IoT and AI… It’s the constant evolution and you have to, when you talk about security and you talk about innovation. It’s the constant evolution. That’s what makes what you guys do so exciting.

George:
Yeah. This is very true that we are moving very fast. But something that I want to highlight is that we’re doing so in a very intentional way and we’re doing it in a way that layers on in accrues. So, let me explain. So, when we first started IoT, one of the first things that we realized is, number one, we have to build incredible cloud scale capability for connecting those billions of devices sending trillions of messages. We have to make sure to provide bulletproof security. We have to make sure to provide the scalability that’s required and the availability and all of that. That was foundational. If you don’t have that, you don’t earn the right to play. And in the early years of IoT, that layer, we kind of think of those as Azure services for IoT, for example, IoT Hub for connecting and managing those billions of devices sending trillions of messages. Time series insights for finding insight into petabytes of time series data that’s being omitted from these IoT devices.

If you look at that level, the Azure Services for IoT, the customers that came and the thousands that are now in pre-production on top of that, they really fall in the technology adoption lifecycle into the innovators and the early adopters. And we have an eye on what comes next. And if you look at the technology adoption lifecycle, you see right after the early adopters comes the early majority and then the late majority. And that’s quite honestly one of the biggest areas under that bell curve, early majority and late majority.

And so, we realize that at some point IoT was going to go mainstream. We realized this three years ago. And when it did, the customers that were going to be taking advantage of IoT were not going to be like the innovators and early adopters. They were going to want turnkey solutions that just worked provided by partners. But even the partners, what we were finding, whether partners or customers, is that there’s a worldwide shortage of cloud solution developers that can assemble IoT solutions or really any cloud solution. And IoT is a great example of a cloud solution. And we looked at that as that’s a fundamental problem that’s going to slow IoT down. And we could either take one path, which is the hope that more cloud solution developers make their way through school, or we could simplify and democratize technology. And that’s something that, quite frankly, plays to Microsoft’s strength. It’s something that we’re very passionate about. It’s about taking complicated technologies and simplifying them and making them broadly available. We did that back in the day. We had C++ for developing Windows applications and if you wanted to build a Windows application with C++, it was tough.

Then we invented Visual Basic. Visual Basic made it so that a broad number of developers were able to produce Windows applications. So, if I take that same example, the Azure Services for IoT, all those highly capable hyperscale programs, you can think of that as the C++ of IoT and IoT Central is the next layer up that we build on top, where we make IoT mass market available. So, IoT Central is like the Visual Basic for IoT. And what we mean by that is IoT Central uses all of those Azure services for IoT, every one of them. But what it does is it provides a SaaS-like experience where we manage all of those services. It all runs in your subscription. It’s all private and secure, but we manage all of those individual services. All you do is worry about connecting devices to it, finding insights from those devices and then triggering business processes. In that way, you can add IoT to your own solution.

Smedley:
Is there a specific time or place when you should use IoT Central verses IoT Azure platform services? Because when I hear you talk it sounds like it’s such a promising product that help me understand because maybe I’m still trying like everyone else listening, it sounds so exciting.

George:
Well, the way we think about it is that we think about the Azure services for IoT are very powerful platforms. We’re going to be doing that forever. There’s tons and tons to do there.

Smedley:
Forever, that’s exciting to hear that because you know sometimes things get discontinued.

George:
This is a big deal and when you start connecting devices, many of those devices are going to be around for 30, 40 years. And there’s this layer on top that we’re doing with IoT Central. We think that’s durable as well. If you go back to my analogy of C++ verses Visual Basic, we supported both and quite frankly, still do. We supported both because they were different developer personas with that targeted. So, we think the same is true for IoT Central. So, to answer your question, what we generally recommend now is for general IoT needs, take a look at IoT Central first. We’ve been very visible about what a road map is and what’s coming soon. If it meets your needs or if it’s about to meet your needs, quite frankly, we’d recommend that because it takes care of so much for you.

Under the covers it does high availability and disaster recovery. It does auto-scaling. It has security built in. It takes care of a lot of things that you’d normally have to go. But, if you are focused on building a highly customized solution or if you’re a large company with your own software practice or if you just want the power of that layer then we’d recommend the Azure services for IoT.

Smedley:
Let’s think a little bit about artificial intelligence, because you talked a lot about IoT and all these things, but everybody now is thinking AI is like the rage, right? Everybody’s thinking, “Wow, I got to do AI.” I know the difference and I bet you there’s a lot of people that confuse the two and they have a struggle with understanding. In your opinion, what’s the difference? Help me understand the difference between AI and IoT and how your customers should be approaching this and how you as Microsoft view AI and IoT.

George:
We think that AI and IoT are highly complementary. In fact, we think AI layers on top of IoT and on top of cloud. Let me give a really concrete example because that can help move from theory and philosophy to practicality. So, let’s say, for example, that I want to sense something that’s happening in my factory. I’m sensing temperature and vibration of a part, of a motor for example. I might use some off the shelf sensors for something like that, obviously industrialized, hydrate and all of that, and then I’m getting back temperature and vibration. I’m able to correlate that with the machine breaking down and do predictive maintenance. That’s using a fixed sensor. That’s IoT.

If for example, I wanted to do something like sense process due facts that are happening, let’s say for example, I’m making some product and I’m typically visually inspecting whether or not it’s coming out right as I’m manufacturing it. There’s no sensor that will then go visually inspect something like a human does. But if you have an IoT device running an edge platform like our Azure IoT Edge and then, if you have an AI model, that’s running on that edge device, and that edge device is connected to a camera and that camera is pointed at the process that you’re monitoring, now I can build AI that’s going to sense things. And so AI over video at the edge, in many ways, winds up being the ultimate sensor because you could train it to stop almost anything and you can re-train it as you get new data. And so you can increasingly make it more and more accurate at sensing that thing.

Smedley:
So, when you look at these things that you have right now, can you give me some examples? Because you just described one there, I love the idea that you talk about manufacturing, because I love looking at AI in that sense. I think people can now visualize, right? Let’s talk about the customers and partners because I know you’re doing a lot in manufacturing and discuss retail. There’s a whole host of things. If I’m not mistaken, you have at least 11 different industries. So, talk about some of those because I think the verticals are the most exciting because it’s never ending. We’re only limited by our imagination with the things we can do?

George:
That’s right. While we sort of bridge these two topics, let me take that example that I was just giving about AI on the edge and tie it into one of our customers in the process manufacturing space and that’s a company called Buhler. They’re a company from Switzerland and they have food processing equipment that they wanted to ensure had no contamination in the food supply using these machines. So, let me give you an example. So, these food processing machines that Buhler has, tons and tons of grain, I think 15 tons per minute or per hour go through it. And these are sorting machines and what they did is they wanted to detect the present in grains of our carcinogen called aflatoxin. And aflatoxin is obviously very bad for humans and if it gets through these sorting machines and into the food supply, that can cause people to get sick that can cause recalls like massive recalls in food because once something gets into the food supply it goes into all sorts of different places and then you have to trace it back.

And so, what Buhler did is taking advantage of Azure IoT and Azure IoT Edge as well as Azure Machine Learning. They actually built an AI-sensing camera into the food sorting machine and what it does, it uses light that’s omitted through the grains as they’re going down. It gets sampled at 60 frames per second and they built an AI model that would detect the presence of aflatoxin in real-time as the grains are going through the machine. Now what’s detecting that is AI connected to a camera that’s sensing the light going through those as the grains are coming through. And they’re able to, with very high accuracy, detect the presence of aflatoxin. So, as they detect it, they can simply stop production at that point. Right? Now they’ve prevented people from getting sick, better for everyone. They’ve prevented very, very costly food recalls and it’s a great example of AI and IoT and edge computing all working in harmony to produce a better outcome for everyone.

Smedley:
So, as we look at that, one of the things that comes to mind is, as consumers, we want to know where things come from and you talk about a toxin, so that’s even more important. I think that’s the most important when we look at all of the ability for what AI and IoT is going to be doing. And one of the things I think that’s important is companies, like yourself, are going to have to be able to help customers understand all these things. More importantly, they’re going to have to be able to use the technology for the future. And that’s going to be extremely important, correct?

George:
It is. One of the things that I love most about my job and about this industry is the tremendous benefits that IoT, edge computing, and AI are having on society, on the planet, on the environment. So, you see companies like one of our partners, Schneider Electric, that has built and deployed solutions in New Zealand that’s helping farmers reduce the amount of energy that they’re using to farm, the amount of water that they’re using to produce even better results with their crops, by being able to selectively water in places, to reduce the amount of pesticides that they’re applying because they know exactly where the insect infestations are verses “I have to spray the entire field,” dramatically reducing the environmental impact, and, at the same time, increasing food production. That’s incredibly important. And so much of what we see in IoT is being used to reduce natural resource usage to provide better, safer working environments for people to reduce the amount of energy and pollutants that we’re emitting. And so, I think that’s an incredibly important thing that quite frankly, everyone needs to be aware of, is that these technologies are already commercially available to power those things.

You touched on something earlier too that I just wanted to come back to, which is the vertical industries. We see that so much of what we do either at the platform level or IoT Central level is really horizontally specific. It can be used in any industry. But a big focus of ours over the last few years has been to focus on specific industries and manufacturing was the very first one that we focused on. And over the years what we did, of course, when you go in manufacturing, you’re very rarely going to a manufacturer direct. There’s those wonderful established channels, whether that’s with Siemens, ABB, or Schneider Electric, Rockwell, Honeywell, Emerson, and PTC, all these wonderful companies. And so what we’ve done over the last many years is partner with them. And we’ve been able to find a really nice relationship between Microsoft providing all these hyper-scale capabilities. But then these companies like Siemens with MindSphere and all of their solutions or ABB with ability and all their solutions or PTC with their support for the digital thread everywhere from designing to monitoring equipment.

And each of these have been building on top of what we do and then we have this really nice relationship where we actually engage with something we call co-sell, which is that these companies produce their solutions that ultimately wind up going to manufacturers.

Smedley:
And isn’t that when we talk about the future and building all this, that’s what’s so important because as I mentioned earlier, no one company can do it all and you have to find partners. And that’s why I think you get positioned on all of these analyst things. You were a leader on the Forrester Wave. I think you were in one of their software platforms. I mean, when you get in those quadrants it’s not easy to get there. You have to prove yourselves in doing things. You know when to partner, you know when you have to do things on your own. Isn’t that why it’s so important for you guys?

George:
It’s exactly why. And like I said in the beginning, we do not see this as a zero-sum game winner-take-all market at all. We are going to transform every business on the planet and that calls for the biggest ecosystem, the biggest partnerships, and we think there is so much opportunity for every partner. And quite frankly, that’s what’s been resonating with all of these partners and I’ve talked about manufacturing. There’s also partners in energy and smart spaces and smart cities all across the board. That’s what’s been resonating about partnering with Microsoft is that we don’t look over their shoulders and say, “Wow, that looks like an interesting business we’re going to go do now.” We empower them to ultimately win more business with their customers. Because we find that the sort of approach creates a rising tide that lifts all boats.

Smedley:
And I think, Sam, that’s so very important. So for our listeners and customers who want to learn more about what Microsoft is doing in IoT efforts, where can they go? Where do you guys have a lot of information?

George:
Yeah, we’ve got a bunch of information out on www.Azure.com/IoT and you can also follow me on Twitter @SamJGeorge.

Smedley:
When you see what’s happening in the future, what really excites you the most right now? I know there’s a lot of things happening. What really keeps you going? You’ve been there 20 years, you’ve seen so many things happening at Microsoft. What’s really been exciting you?

George:
I think the thing that really excites me the most and, frankly, excites our team the most as well is the profound impact that this is having. Not just for businesses but that it’s having for the environment, for the planet, that the benefits it’s creating for society at large, that’s something that just makes us feel so incredibly fortunate to work on in this industry at this time.

Smedley:
And it’s important to get companies to know that waiting isn’t the answer. They really have to start making the move toward IoT and realizing and recognizing the importance of that, right?

George:
That’s right. One of the things that we do recommend is that companies, whatever you do, start now. And we always recommend to start small. Pick something that’s high value, that’s relatively low complicated technical requirements. Build it, deploy it, go to production. It will give you the confidence to take the next step. We always encourage companies whose part of their digital transformation to work iteratively. Right? Build on success.