Why Software-Hardware Decoupling is a Game Changer with Brian Dewey and Andre V

Hello, my name is Andre V and I'm the founder of Parserlocker Central. And today we are wrapping up 2024 with Brian Dewey from Colony. Hi Brian, how are you doing?

Good, Andre, how are you?

I'm absolutely fine. Waiting for the year to end and have the new and very interesting year because the, the Last part of 2024 was extremely interesting and I think it's going to continue next year or what were your impressions about 2024?

Yeah, it feels like there's a lot of.

Things brewing in this space, I would say over the last quarter or even half of year.

As I said maybe around the parcel and post show, I think we'll start to see maybe some continued decoupling in certain areas like software and hardware, but then also consolidation of acquisition, merger and acquisition as well. So I think there's a lot of interesting things from the business standpoint, from the technical standpoint and just product and solutions at large. So I think there's a lot of moving parts that are interesting to follow.

This is very interesting that you mentioned this decoupling point because exactly a year ago I made a prediction for 2024 and this was one of my thesis, that parcel locker software and hardware is going to decouple and there are going to be dedicated software companies and hardware companies. What do you think? Is it started or is it in full speed already or it's not a thing at all?

Well, I think it depends on who you ask. For us it seems to be kind of a little bit more full speed.

We're seeing a lot more and obviously the nature of our business naturally will see it, but we're seeing a lot more discussions on even existing locker networks wanting to decouple the software further from their hardware providers for a variety of reasons. So I think it's full speed ahead, but I think we're still in the very, very early stages.

Yeah, I might agree with you with that. But what I think is behind that is when companies start to parser locker network, then it's very obvious choice that let's do our parcel locker software by ourselves. How hard can it be? And if we do it, then we have it. But one thing companies and people doesn't understand is that this space is constantly evolving and also the backbone software needs constantly upgrading and upgrades and innovation. And this is not. The companies are not ready for that. In a sense they are able to do the first iteration but then sort of they. They are not able to do it anymore. That's why I believe that this decoupling is coming and dedicated companies will start to provide software.

Yeah, I agree. We challenged our team internally before the parcel and post show to.

Come up with reasons why hardware agnostic software is valuable. And I wish we could have gotten to a number of 20 reasons but we got to 16. We got to 16 reasons why. And.

I think all of those 16 are valid and weighted differently obviously, but are all valid and are all plays into the actual value of having hardware nostril software decoupled from hardware. It's just naturally, you know, technology connected to hardware in most cases are they provide the strongest product when they're, they're isolated companies. Only when you look at the largest companies like Apple do they execute at a very high level, both software and hardware collectively. But it, you know, it's very rare outside of that I think we just hamstring ourselves as an industry when majority of companies think they can do it all very well.

But yeah, you mentioned very, very important thing in the industry and this is the hardware agnostic part because why this is important. It's important that the integration costs with the new hardware is extremely high and sometimes even impossible. So we need a clearer space for that. We need maybe some standardization, some kind of.

Interoperability for sure, because.

This is not sustainable.

Yeah, agreed. Yeah, I mean there's a lot of components to it. One of the things that we look at on top of what you just mentioned is how does the industry locker networks in particular, how does the industry grow by a factor of 10?

As an American technology company we always look at big hairy, audacious goals and how can we.

Grow the industry collectively by a 10x and I think we have to look at all these different pieces together.

Yeah, for sure. I think this is definitely a must have changed in our industry for the upcoming years. But let's talk about the other issue that appeared very prominently 2024 and this was this networking, collaborations, mergers and acquisitions, different kind of joint ventures. It actually came sort of out of nothing during the summer and, and speed it up to the end of the year. So do you see that this is a continuous trend, the consolidation in our markets is going to be in the future also?

Yeah, I do. I mean this industry.

Colony initially got started in the micro mobility space and it's so interesting to follow the cycles, the ebbs and flows of the locker industry compared to the micro mobility industry where you see this.

Really change in the technology.

And how things are being constructed, reducing capex.

Different business models and then it becomes the partnerships and the partnerships in that case in this case as well. Partnerships turn into acquisitions, turns into mergers. It's just a way I think of.

Companies to kind of feel each other out, get to know each other and then you start to see.

Some of these acquisitions and then sometimes companies don't play well with each other and those partnerships get rather nasty and they don't turn into merger and acquisitions and they kind of fall apart. But, but a lot of times I think you'll see mergers and acquisitions happen out of this. What we saw in 2024.

And it's interesting actually that those joint ventures and collaborations are mainly based on partial locker networks, not the sort of home delivery parts of the companies, but especially partial locker networks. And this is.

Very promising because I do believe in in network effect, that the bigger the network the more useful it is for all the participants, not only the owners, but also the clients because of the better service. So I really saw 2024 as out of home breakthrough to the mainstream. So far out of home has been like a little brother and he has been there, he has been very kind and very n and promising. But now I feel that out of home is picking up, at least in Europe, the central part of the last mile delivery industry.

Do you feel that out of home is getting the central sort of central position in last mile delivery? Not home delivery anymore?

Ah, well, I kind of live in two worlds so my mind might be a little more.

Scattered on this than some. Because in the US out of home delivery is still non existent.

But in Europe obviously the business that we play in I ourselves as a software for smart lockers, we don't really participate in the in home delivery. So it's really hard for me to gauge. However I do think that there is.

Where we see, particularly with our industry, with our kind of position in the market, something that we see in this space of out of home delivery and locker networks is a growing trend is maximizing the usage of the locker location. And that is we're seeing a lot of applications where they're looking to utilize the lockers with multi tenant for local commerce along with, you know, couriers delivering to them. So we've worked with a handful of, you know, agnostic locker owners that are, that are going to be deploying that they're looking at maximizing their square footage in terms of revenue. And so that's.

I think in that case we will. We are seeing something new interesting happen where it's not only your parcel getting delivered, but it's a local transaction getting delivered simultaneously to that same user. So now the user has more use cases themselves than just a parcel getting delivered to that locker with local commerce.

Yeah, I do absolutely agree with that.

In that matter I very much rely my hopes are relying on the agnostic networks like.

MyFlexBox Yip Networks in UK.

Because they are not sort of parcel oriented only, they are agnostic networks and they have to find use cases for the compartments also outside the last mile delivery. But you mentioned very interesting.

Sort of thing and you mentioned locations. This is one thing I feel was very sort of. It's a rising topic in 2024 because the autonomous lockers, they are smaller, there are more of them. The location scouting and location monitoring and location strategy were sort of brought up to the limelight this year.

Yeah, I would say that.

From our side.

We have seen a few different things regarding this one, different ways of valuing location hosting as something that's.

Played into different markets of how do business owners that host a locker, how do they value that locker to increase the flow of traffic to their business.

How do things even like marketing and signage utilizing the locker.

We've seen a lot more creativity around.

That on our side. In the US in particular, we're looking at locker locations.

Since locker networks are still very young. Looking at just riding on the backs of existing large networks of storefronts, brick and mortar businesses. You're looking at retail chains that are standalone buildings, malls and those sorts of things to host these. So we don't have to necessarily always get into the public right away to get approval, but hosting them with with those existing businesses, but landing agreements with larger chains to, you know, bite off a large chunk. I think this is an interesting strategy, but it still doesn't necessarily provide you the density you need in a particular market to.

You know, to provide value to, you know, a specific neighborhood or community. So I think that's the problem that we're seeing early on in the U.S.

Yeah, but definitely we can conclude that parcel locker industry has been very, very in very good shape 2024 and at least my hopes are very high on the upcoming year also.