Latest on the Internet of Things – Part 2, The Market

Goneywell LyricYesterday I wrote about the security issues that are present in the first generation of devices that can be classified as part of the Internet of Things. Clearly the manufacturers of such devices need to address security issues before some widespread hacking disaster sets the whole industry on its ear.

Today I want to talk about the public’s perception of the IoT. Last week eMarketer released the results of a survey that looked at how the public perceives the Internet of Things. Here are some of the key results:

  • Only 15% of homes currently own a smart home device.
  • And half of those who don’t own a smart device say they are not interested in doing so.
  • 73% of respondents were not familiar with the phrase “Internet of Things”.
  • 19% of households are very interested in smart devices and 28% are somewhat interested.
  • There were only a handful of types of devices that were of interest to more than 20% of households: smart cars – 39%; smart home appliances – 34%; heart monitors – 23%; pet monitors – 22%; fitness devices – 22%; and child monitors 20%.

The survey highlights the short-term issues for any carrier that thinks they are going to make a fortune with the IoT. Like many new technology trends, this one is likely to take a while to take hold in the average house. Industry experts think the long-term trend of the IOT has great promise. In a Pew Research Center survey that I discussed a few weeks ago, 83% of industry technology experts thought that the IoT would have “widespread and beneficial effects on the everyday lives of the public by 2025”.

I know that carriers are all hoping for that one new great product that will sweep through their customer base and get the same kind of penetrations that they enjoyed with the triple play services. But this survey result, and the early forays by cable companies and others into the home automation and related product lines show that IoT is not going to be that product, at least not for now.

This is not to say that carriers shouldn’t consider getting into the IoT business. Let’s face it, the average homeowner is going to be totally intimidated by having more than a couple of smart devices in their home. What they will want is for them to all work together seamlessly so that they don’t have to log in and out of different systems just to make the house ready when they want to take a trip. And eMarketer warned that one thing that concerned households was the prospect of having to ‘reboot’ their entire home when things aren’t working right, or of getting a virus that would goof up their home.

And as I mentioned yesterday, households are going to want to feel safe with smart devices, so if you are going to get into the business it is mandatory for you to find smart products that don’t have the kinds of security flaws that I discussed yesterday.

The eMarketer report predicts that more homes will embrace IoT as more name brand vendors like “Apple, Google . . . The Home Depot, Best Buy and Staples” get into the business. And this may be so, but one is going to expect most such platforms to be somewhat generic by definition. If a carrier wants to find a permanent niche in the IoT market they are going to need to distinguish themselves from the pack by providing integration and customization to give each customer what they most want from the IoT experience. Anybody will be able to buy a box full of monitors from one of those big companies, but a lot of people are going to want somebody they trust to come to their home and make it all work.

But the cautionary tale from this survey is that IoT as a product line is going to grow slowly over time. It’s a product today where getting a 10% customer penetration would be a huge success. So I caution carriers to have realistic expectations. There is going to be a lot of market competition from those big companies named above and to be successful you are going to have to stress service and security as reasons to use you instead of the big names.

2 thoughts on “Latest on the Internet of Things – Part 2, The Market

  1. Dear Doug:
    I consider myself a pretty forward-thinking person… not bad for a 50+ old fat guy… (some think I am on the cutting edge, my 19-y.o. son thinks I am Stone-Age material).
    The “Internet of Things” marketplace has me in a quandary —
    (1) Do I really need Internet access to my home thermostat and appliances? Just because we CAN have the capability, does not mean we NEED the capability, nor does it mean we should have the capability…
    Friends of ours own two homes. They have it so rigged that lights turn on/off automatically, to act as if someone is there. It works great, until someone forgets to take the system off automated mode when they are actually there…
    (2) And more importantly, in giving myself that kind of IoT access, do I really want to also enable some hacker in (pick a far-off unnamed country…) to have that same access? What happens when (… not if!) a hacker gets into the on-board systems of a car and causes an accident? Would this be the driver’s fault? the manufacturer’s? the hacker’s? And who’s at fault when (… not if!) someone is killed?

    To be brutally honest, I do not trust the manufacturers’ promises to keep my home thermostat and appliances, nor my car’s on-board systems, safe from prying hackers.

    And unless someone can prove to me that there is burning need for such capability – beyond user forgetfulness, which as you know, is one of my loveable “issues” – I’ll go without, thank you very much.

    Ron Isaacson

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    • You just put your finger on the reason that there is not going to be universal acceptance of smart homes until people feel good about the security issues. I know I would never even consider putting in smart door locks or other devices that could give some smart person easy physical entry into my home. I can just picture some person with a little device walking up to my front door and standing there for a minute while the device in their hands figures out my door code and pops it open for them (as is done in many many movies).

      These things can be made pretty secure if that is what people demand before they will buy this stuff. Unfortunately, I fear that many homes will be sold on the convenience of this stuff and never even realize that they are opening themselves to risks. I prefer a world where the risks are disclosed so that I can make an informed decision. I am in the camp of loving the idea of what the smart home can do, but also in the camp of seeing all of the existing security issues.

      I don’t think you are going to have a choice with smart cars and that is all that you will be able to buy.

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