How construction is getting smarter

8

October

2020

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We have all heard about smart homes. In the 21st century, people all over the world are talking to devices calling them names like ‘Siri’, ‘Alexa’ or ‘Hey Google’. Moreover, efforts are being made to use technology and AI in the daily operations of a home. By using a variety of data input, energy can be saved and people’s lives can be made more pleasant. But technology and data is not only being used once the house is already built.

Construction and the way we build our world affects almost every person living on our planet. The buildings we call our homes, the ways in which we travel and how we build our economies are all shaped by the way our infrastructure is made. Despite its importance, the sector has had a very slow start towards digital innovation. The way construction companies do their business hasn’t had any significant changes during the last 50 years (Buehler, 2018).

This is all about to change. The world’s leading construction companies are actively digitalising the building process. One of the main evolutions ‘smartening’ the construction industry is off-site manufacturing powered by large amounts of data. The planning, design, fabrication and assembly of building components is done in a factory that is not on the building site. During this process, advanced software is used to expose all possible risks and challenges associated with the construction project. Once the components are analysed and manufactured, they can be transported to the construction side. The building can then be assembled with astonishing efficiency, accuracy and safety while reducing costs. All generated data can then be used to further enhance the entire process.

Population is increasing rapidly and our planet is transforming at alarming rates. Off-site manufacturing is one of the ways construction companies are using technology to catch up on other sectors in the digital race, and many more will appear in the next few decades. I believe construction firms will have an important role to play in the future. Using technology, the industry can ensure a safe and healthy environment for everyone, in an efficient way.

 

Buehler, M., 2018. The Fourth Industrial Revolution Is About To Hit The Construction Industry. Here’S How It Can Thrive. [online] World Economic Forum. Available at: <https://www.weforum.org/agenda/2018/06/construction-industry-future-scenarios-labour-technology/> [Accessed 8 October 2020].

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How Amazon Web Services (AWS) destroys the retail industry

6

October

2020

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Tech companies like Amazon have gotten really big, really fast. In the past decade, Amazon has overtaken many long-established stores in terms of market value, now being worth more than twice the market cap of Walmart, despite having less revenue. (Tradingview, 2020). To understand how Amazon went from a regular online bookstore to a highly influential mega-corporation, we need to understand how they beat their competition.

The retail business has one of the lowest margins compared to other industries (Ross, 2020). Compared to that, other industries like cloud services have close to zero marginal cost, resulting in huge profit margins. Despite cloud services and retail not having anything to do with each other, Amazon decided to enter the cloud services industry with their platform AWS (Amazon Web Services). This service now makes up about 13% of Amazon revenue. More interestingly, on the profit side, a mind-boggling 71% of Amazon’s operational profits are coming from AWS (Levy, 2020).
This profit can be used to subsidize Amazon’s own retail business, keeping the prices low and the quantities high. This further leads to economies of scale, powered by the immense amounts of data Amazon can collect. Consequently, Amazon can outgrow retailers like Walmart by having more effective personal advertising, predictive stocking and the development of its increasingly omnipresent brand ‘Amazon basics’. Moreover, it allows Amazon to enter different markets with concepts like Amazon Fresh, Amazon Prime, Amazon Video and many more. Amazon is not the only company making use of this strategy. Other corporations like Samsung and Apple are also moving towards a conglomerate strategy, offering more than just one product/service in one industry.

This non-conventional strategy currently flies under the radar of most anti-trust policies, resulting in a new form of competitiveness. Firms like Amazon, Samsung and Apple are using their power to become even more powerful, leaving little room for other competitors.

References:
TradingView. 2020. Large Cap (Big Cap) Stocks — USA — Tradingview. [online] Available at: [Accessed 6 October 2020].

Levy, N., 2020. Amazon Web Services Approaches $9B In Quarterly Revenue, But Growth Slows Again, Missing Analyst Expectations. [online] GeekWire. Available at: [Accessed 6 October 2020].

Ross, S., 2020. What Is A Good Profit Margin For Retailers?. [online] Investopedia. Available at: [Accessed 6 October 2020].

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