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The dark side of IoT – Internet of Things

The dark side of IoT – Internet of Things

What you should know about IoT and nobody wants to tell you

Whether in reference to IoT or not, everybody who has been exposed to some level of technological innovation, has learned about the innovation adoption model: in each stage of a product lifecycle, the group of consumers who adopt it have similar characteristics, in terms of functionalities they are interested in, risk-aversion and role the brand plays in the adoption process. Traditionally we label innovators the first adopting group, which is driven by “the latest and greatest”; and, for whom, risks are irrelevant while brands play little/ no reassurance role. As we move beyond them, we encounter early adopters, early and late majority and finally laggards, the ones adopting an innovation last, when they really have no other choice then joining the club. While early enough it was clear that not all products adopted by innovators can reach early adopters, only recently it was posited that there is a “chasm” between early adopters and early majority, whereby only products with specific characteristics are able to jump to the next level of adoption. George Moore in his book “Crossing the Chasm” analyzes and models this dynamic, both rigorously and by offering practical advice. In particular he highlights that consumers who have not adopted yet, are passively watching what is happening in the category, and whatever is happening is part of their adoption decision process:

“the rest of the herd […] gets a free look at how well the technology plays out without having to take any immediate risk.”

This is very important because, in these turbulent conditions, many companies behave like there is no tomorrow, and then wonder why consumers don’t trust them.

IoT and verticals

Let’s look for example at what is happening in the Internet of Things. Previously referred to Ambient Intelligence, and now often referred with the label “smart”-objects, IoT is a framework of networking among physical objects, which enables an infrastructure of objects, that can be monitored, remote controlled, automated and whose data can be collected and analyzed in the Cloud. According to Beecham Research, there are 9 verticals within IoT, depending on whether we refer to the Smart Objects in your Home, or your health system or your connected car.

IoT VerticalsOne of the largest, and the focus of this post, is the Connected Home vertical: the IoT space where your appliances and light bulbs, are connected and can be programmed and controlled for cosmetic reasons, for security reasons or, for example, to reduce their energy consumption.


Players in the connected home

The connected home vertical is expected to be one of the largest segments, and therefore is attracting players from all sorts of adjacent industries. Of course there are increasing numbers of start-ups and new ventures – actually in the thousands – but also very well established players. The big guys are trying to develop a vertical strategy, whereby they provide all the components: beyond smart appliances, they would offer smart controllers/ hubs, intra-objects connectivity and cloud services. From Samsung, to GE and Philips, from Apple to Google and Amazon, everybody is trying to take a piece of this cake, hence the excitement in the press and on-line about the “connected home”. This space is of course fun and very exciting.

Illustrative: Example of Connected Home/ Home IoT verticalWhat are they not telling?

Of course there are things which nobody wants to talk about. Some of those drawbacks are embedded into the development of new technological standards. Some of those, are purely related to the nature of Connected Homes.

First of all, security is messy. Most products – for reasons, which will be clear in the next paragraph – are obsolete the day they have been purchased in store. And because they are obsolete they represent a vulnerability. This is why a lot of devices require a firmware/ software update prior to the first use. Security is a dynamic game, the more updated your smart objects are, the more protect they are. Of course software updates only partially solve the problem, and represent a temporary patch. Just think of your old smart-phone whose OS is not supported any longer, and from which you need to remove music and apps to be able to execute a proper upgrade.

Moreover, right now, there is no standard. There are multiple standard, competing with each other. Which is also why large players Potential Standard in Hubs/ Connectivity in the IoT Home Verticaltend to have a vertical strategy: to ensure that what you buy, will work for at least a minimum time. To draw a parallel, this is the world where MiniDisc is competing with Digital Audio Tapes, Laser Disc and CD-Writable. There were multiple standards and devices for recording and replaying digital content. Then the iPod was launched, the USB become a standard, and everybody started to store digital music on hard-drives.

The lack of standard is a problem for the consumers, but also for the manufacturers. As a matter of facts, it also impacts products, which aim at having the largest possible penetration. So if you are launching a new Smart Lightbulb, you want to be connected to most standards possible. You want your light bulb to work with all possible hubs and controllers. Which means you will have to support a lot of these systems and protocols. This of course is inefficient, costly and it still does not solve the problem of updating your product to the latest version of the standard. Many Smart devices cannot be updated as fast as the standards develop. And after few years become disconnected: in terms of appliances this translate into a return to the past, whereby “smart and connected” lifecycle is shorter than unconnected equivalent. Furthermore, most people do not have the luxury of the time necessary to maintain all of those devices. So one day comes when you update your IoT Home controller, and then can’t switch on the lights in the bathroom any longer.

This brings us to the last element of darkness: privacy. In a nearby future, we will have an app installed in our cars, which recognizes from the navigator that we are driving home, and 20 minutes before we are in, sends a signal to our connected thermostat to pre-cool or pre-heat our apartment. This is possible thanks to platforms like IFTTT (If This Then Than), which are built to seamlessly integrate our smart devices. But this is mostly possible because of the Cloud, the interfaces and the APIs, which enable ubiquitous and tailor-built services. But the cloud also redefines the meaning of privacy. Especially because from the combination of big data, deep learning and AI, applied to the Smart Objects at home, a lot of current behavioral information can be inferred. How? Just look at this example, in which we describe smart objects activity; can you deduce what’s going on?:

  • Two smartphones connected to local WIFI in the apartment. Lights dimmed in the bedroom. Music on. Room temperature rising.
  • Two smartphones connected to local WIFI in the apartment. Two TVs on, one in the bedroom, one in the living room.
  • Several smartphones connected to local WIFI in the apartment. TV on. Smartphone receives SMS with pizza delivery status.

If you can deduce what is going on, don’t you think someone else could? And what about some one accessing your cloud and using any of those events to trigger an ad and/ or a promotion?


In Conclusion

While IOT is a reality, the market is far from being ready for crossing the chasm. Furthermore future consumers are watching and they realize that there is a dark side to Smartification. First of all, because of the cost and effort in maintaning security: most consumers are not ready to afford this dynamic, with no expert help, guidance or trusted mechanism. Moreover because of the lack of common standard, which makes products obsolete at purchase, and, therefore, it entails a high level of risk. And finally because of the privacy concerns related to the cloud and the emergence of big data, deep learning and AI.

Growth Adviser, Innovation Catalyst, Branding Architect, International Expansion Consultant. International change agent and leader, launched growth consulting boutique in 2012. We have four principal areas or intervention 1) Branding (e.g., positioning of new brands, re-positioning of existing brands, brand architecture and design) 2) Innovation (e.g., co-creation with consumers and experts, ideation, business planning, concept validation and fine-tuning) 3) International Expansion (e.g., countries screening and development of expansion plan, route to market strategy, portfolio) 4) Route to Market (e.g. marketing and commercial planning, portfolio analysis).