Do Consumers Really Want an IoT? The most active market is B2B… IoT is commoditization Where is the value? Security is an afterthought…
Cedric Hutchings & Eric Carreel, CEO and chairman of Withings with Henri Seydoux, CEO of Parrot at CES Unveiled
At CES, the CTA organization said that the market for Connected Objects will reach $278 Billion in 2016…! Everything at CES was about connected objects… This number include almost everything because today, everything is connected.. TV, Smartphones, Hifi, Tablets, Wearbles, smart home, health, security, cars, glasses, perfume, toilets, etc…
What are consumers looking for when they speak “connected objects”.. So many things… ! IoT doesn’t look to be a market… and in fact it isn’t. We have to dig deeply in many different categories to identify real needs and to get real consumers who buy and use specific products regularly, most of them are already commoditized and many connected objects are no longer used. Doeas this mean most of the numbers are wrong…?
Consumers plan to cut spending on tech – IoT is not projected to pick up the slack.
Accenture, has completed a major consumer opinion survey and produced a report – Igniting Growth in Consumer Technology (28,000 interviews, 28 countries) – One of the results is: Technology consumers simply aren’t in gadgetry mood and when questioned offer two reasons.
First, they are happy with their tech pretty much as it is and aren’t yearning to buy newer/better smartphones, PCs or tablets. Connected watches and wearables might have looked like being the next big thing a year or so ago, but while there was an initial flurry of buying (Apple Watch, remember?) that has now faded away and only about 13 per cent of consumers think they might be in the market for one of those. It’s the same story with fitness gadgets and surveillance cameras. Nerdy IoT stuff like thermostats and personal drones stimulates even less interest and tends to languish down in single digit ‘buying intent’ territory.
Source: Accenture
So they’re not upgrading as quickly the ‘things’. Why?
It could be that there is still a perception that many (perhaps most) of those ‘things’ are in the ‘connected toothbrush’ realm and therefore are simply not worth buying at just about any price. But in fact one big reason (at N°2) as stated in the Accenture report is ‘security and privacy’. Put simply, consumers are worried about exposing their personal information and personal behavior to organizations primed to chase them.
How much more rapacious the activity will become when the entire house, the car, full of personal gadgets, are primed to report house and car owners’ behavior back to Samsung Amazon, Apple or Google?
Security and privacy…
Accenture says: “Price, security and ease of use remain barriers to adoption of IoT devices and services. For the majority of consumers, the lack of a compelling value proposition is reflected in concern over pricing. Security is no longer just a nagging problem, but a top barrier as consumers choose to abandon products and services over security concerns.”
The future success of IoT doesn’t just rely on connected homes and gadgets, but they are being factored in as an important component. “Growth in new categories will happen—and when it does, it can happen very quickly—but the industry needs to move NOW to drive [progress]” The value is not in the object. Generally it is related to a mix between service, usage, price, data and communities.
A new study, published by Harvard University and funded by the Hewlett Foundation, debunks the notion that surveillance agencies are struggling with a data blackout. On the contrary, it argues, the rise of connected devices (the so-called Internet of Things) presents massive opportunities for surveillance, bolstered by technology companies having business models that rely on data-mining their own users — providing an incentive for them not to robustly encrypt IoT data.
“In the longer term, the Internet of Things means ubiquitous surveillance. If an object “knows” you have purchased it, and communicates via either Wi-Fi or the mobile network, then whoever or whatever it is communicating with will know where you are. Your car will know who is in it, who is driving, and what traffic laws that driver is following or ignoring. No need to show ID; your identity will already be known. Store clerks could know your name, address, and income level as soon as you walk through the door.”
What makes a connected object?
Electronic components : Commodities. Sensors and microcontrollers. They are cheap, easy to build.. Connected Objects are already commodities. Many of them are sold on the internet or are bundled into existing products (appliances). Some of them like wearable and watches are bundled and connected to a smartphone. What value does the object alone brings to the consumer?
Networks : Commodity pipes. To transmit the data. There are many networks : fix, mobile 2G/3G/4G, WiFi, Bluetooth, Zigbee, Zwave, Thread, LoRa, SigFox… The issue is who owns them: Telco or not Telco? How much will they charge? It took 10 years for the Telcos to find a business model in mobile phone… Cellphones were a competitor for fixed lines and Internet created the smartphones. Wifi was hated by Telcos… (Typical silo approach).
Data : Commodity. They come from the use of the objects. Lots of data generated. They need to be gathered by someone to be stored, analyzed and used. What to do with the data?
Storage: Can be local or remote… Commodity. Who owns it? Who has access to it (the data) ?
Security: Ipso Alliance (an open, informal association that promote the value of using the Internet Protocol for the networking of Smart Objects) recently added security to its goals. “we are turning our efforts to ensuring that smart objects have identity, privacy and security attributes. Addressing these issues is critical to securing the IoT and all of its Data…”
How such an assemblage of commodities can make real and sustainable business models? Some answers are “collective usage”, “sharing economy”, “communities of users”, “industrial processes”, “data collection and analytics”, “security”, “remote and or automatic monitoring”, “optimization of processes” , “transportation”, “physical regulation”, “specific risk analysis” etc.
Another major unfulfilled promise is interoperability…Most of these IoT devices do not work with each other, they cannot exchange data, there data don’t have the same format, they work on different standards, they are triggered by different applications with different interfaces and they are connected with different networks… Demos show an idyllic perfect world where everything is working and interacting smoothly to the benefits of a happy reunited (even if dispersed) family in one click, now relying on artificial intelligence and data generated profiles to take care and solve their problems before they happen… A life in heaven…!
Industrial IoT before IoT for people…
In a 140 page report The Internet of Things: Mapping the Value Beyond the Hype report, McKinsey & Company is more upbeat, but mainly regarding the industrial developments of IoT (B2B), an absolute necessity before customers could reap the real value of it (B2C). It is projecting that the Internet of Things (IOT)—meaning sensors and actuators connected by networks to a computing system—will see between $4 tillion up to $11.1 trillion a year economic impact by 2025, most of it being developed in the enterprise market.
“Our central finding is that the hype may actually understate the full potential of the Internet of Things—but that capturing the maximum benefits will require an understanding of where real value can be created and successfully addressing a set of systems issues, including interoperability. Rather than just analyzing IoT uses in vertical industries, we also look at settings, such as cities and worksites. This shows how various IoT systems can maximize value, particularly when they interact.
We estimate a potential economic impact—including consumer surplus—of as much as $11.1 trillion per year in 2025 for IoT applications in nine settings: Factories (between 1 and 4 $ trillion), Cities(between 1 and 2 $ trillion, Human health monitoring (between 0.2 and 1.6 $ trillion), Retail (between 0.4 and 1.2 $ trillion, Outside, Work sites, Vehicles( between 0.2 and 0.7 $ trillion) , Homes (between 0.2 and 0.3 $ trillion), Offices.”
The report mentions also crucial points as: interoperability, data and intelligence, embrace data-driven decision making, B2B applications, IoT value in developing economies, capture the real benefits of vertical applications as health…incumbent should create new business models with IoT, continue to innovate in technologies, improve on privacy and security….
Collectiv-IT 