The Internet of Things…Hype?
The Internet of Things (IoT) is a broad term that applies to everything from smart thermostats and home speakers to driverless cars. IoT systems refer to a network of internet connected objects that use sensors and software to collect and exchange data. The ability to monitor and manage devices electronically allows users to make smarter data-driven decisions to optimize performance and improve quality of life. Though some parts of the IoT space like driverless cars are seeing acceleration in interest, investment and innovation, other areas that were once generating buzz have been disappointing. We’ve identified three things that have contributed to this, high costs, lack of standardization and utility.
The challenges of start-ups like Jawbone and Nest are symptomatic of a slowdown in the adoption of the IoT, particularly around the smart home. According to Forrester Research, only 6% of households have a smart-home device and its growth is expected to be modest reaching 15% by 2021. PwC recently conducted a survey in the UK that showed 72% of respondents don’t have plans to adopt smart-home technology in the next two to five years and are unwilling to pay for it. [1] The value proposition for many gadgets like Samsung’s $5,000 smart fridges that uses cameras to detect and alert the owner of rotten food has been challenging. In order to see broader adoption of IoT devices, prices need to come down to compete with incumbent offerings.
In order for IoT devices to work well, devices need to be able to communicate and speak the same language effectively. There are a number of industry groups that are developing standards for communication between connected devices such as the AllSeen Alliance (Haier, LG, Panasonic, Qualcomm, and Microsoft), the Industrial Internet Consortium (AT&T, Cisco, GE, IBM and Intel) and the IPSO Alliance (Broadcom, Dell, Samsung, etc). The various efforts are both competing and complementary with each group focusing and taking a different tack. [2] Another challenge with developing universal standards are not only the functionally of different products but also the sophistication. A standardized language needs to be simple enough for a smart lightbulb but offer enough functionality for a smartwatch. Finally, developing a universal language needs to suit the needs of today and tomorrow, it needs to be able to scale and be dynamic. As a number of competing groups continue to develop multiple different standards, the real problem may turn out to be too many standards are currently being developed. According to McKinsey, interoperability of IoT systems is required to deliver 40-60% of the value proposition [3], until standardization and communication between IoT systems is solved, adoption will be gradual.
The value proposition of IoT for consumers’ remains challenged, with the exception of a few products like the Amazon Echo consumers are not willing to spend the extra money to trade-up to smart gadgets. Functionality and benefits still need to improve. Smartphones have trained users to expect a level of quality and seamless ease of use that IoT devices struggle to replicate. [1] In the smart home, there are some bright spots, particularly around devices like smart smoke detectors and security systems that insurance providers financial incentives for.
Though we’ve highlighted challenges to IoT adoption, it’s important to keep in mind the industry is still in its infancy. The focus of this blog post has been around consumer applications as consumer applications such as fitness monitors and home speakers get the most attention. B2B applications arguably provide the biggest opportunity with the potential to generate 70% of the potential value of IoT systems and a total economic value of $3.9-$11.1 trillion per year in 2025. The deployment of sensors to provide real-time data to predict and prevent breakdowns can reduce downtime by 50 percent. [3] As the lines between technology companies and other types of companies continues to blur, the opportunity for IoT systems to disrupt the way companies and individuals operate is massive. The ability to capture data and make smarter data-driven decisions whether that’s being notified you left the tap on at home or a control valve actuator needs to be serviced, one thing remains clear, the opportunity is huge.
- https://www.economist.com/news/business/21700380-connected-homes-will-take-longer-materialise-expected-where-smart
- https://www.economist.com/news/technology-quarterly/21615067-more-and-more-devices-are-becoming-connected-will-they-speak-same
- http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/the-internet-of-things-the-value-of-digitizing-the-physical-world
- https://www.bloomberg.com/news/articles/2017-07-20/the-rise-of-smart-meters-promises-billions-for-toshiba
4 comments on “The Internet of Things…Hype?”
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I'm passionate about sports having played Varsity Tennis in University and lead an active lifestyle. I travel at every opportunity and have travelled all across the Americas, Europe and Asia. I completed one exchange at National Taiwan University (NTU) and one language exchange at Tamkang University (TKU).
I'm always looking for opportunities to connect with local business communities and entrepreneurs having previously been involved with the Hong Kong Canadian Business Association (HKCBA), Start-Up Calgary and the Canadian Youth Business Foundation (CYBF).
Hi. I very much enjoyed your article and the sources you cited about IoT growth. There seems to be a significant number of varying opinions about IoT growth and adoption. From my perspective, I have an Amazon Fire TV in every room of my house (3B, + Living Room and
Garage (iMan Cave)
I also have Amazon Dash Buttons (about 11) and an Alexa in every room. When my wife is downstairs, I just use Alexa Drop In on my Alexa App to talk with her through my Echo Dot when I in the bedroom on the 3rd floor and she is in the first floor office.
I also have an Echo Dot at the office and use Alexa in the car on a Samsung Tablet, which allows my wife to contact me through Drop in at her leisure without ever calling me on my mobile (Highlander Hybrid has a 4G uplink)
You might wonder, Why so many devices? It’s simple, I am a WiFi and Cybersecurity engineer. I love EE hacking topics. I already have a few of the AWS IoT Developer Buttons at home in my lab. The AWS IoT button is a programmable IoT device using the Amazon Dash Button hardware. The embedded electronics in the button utilize the AWS IoT Platform in cooperation with AWS Lambda, Amazon DynamoDB, Amazon Simple Notification Service (SNS) without writing any device-specific code. All you have to do is download the AWS IoT Buttons App and it allows you to provision the button for your own needs.
With regard to your quote:
“Nest are symptomatic of a slowdown in the adoption of the IoT, particularly around the smart home.”
I noticed that you did not mention Google. Like Amazon, Google is an innovative adopter of IoT and purchased Nest back in 2014 for 3.2 billion dollars. [1] [2] If Google was unsure of IoT adoption, that would have been a crippling investment.
Nest Labs also started a developer program so that IoT developers could utilize their SDK to build new solutions. [3]
1. http://spectrum.ieee.org/tech-talk/consumer-electronics/gadgets/google-buys-nest-labs-for-32b
2. https://abc.xyz/investor/index.html
3. https://nest.com/blog/2013/09/25/calling-all-developers/
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Hey Christian, first-off thank you for reading and providing insights…its very much appreciated!
I don’t know you personally but what I can tell is you’re clearly an early adopter and tech savvy. IoT is a broad term and can be applied to a lot of different categories and “things” I agree with many of the points you are making. There are some pretty great solutions being put out there, Amazon has done some great work as you have highlighted, Google as well. Apple re-launched HomeKit at their 2017 WWDC which has some incremental improvements as well and things are definitely moving in the right direction.
In all honesty Nest has been a disappointment, the price tag was huge (3.2 billion USD) and if it wasn’t for Google’s size and financial wherewithal…it could have easily been a crippling investment for a lot of smaller companies. Tony Fadell recently stepped down, Nest has failed to develop and sell any significant new products, after hitting 1.3M sales of their smart Thermostat in 2015 sales growth has been decelerating. They’ve done one acquisition to buy Dropcam which hasn’t yielded much in terms of growth to the Nest division. By most accounts…they haven’t lived up to their expectations at all.
One more angle that I wanted to highlight is the fact that IoT’s biggest opportunity is arguably in B2B and enterprise applications. One of the biggest flops in the last few years has been Google glass, it came out of the gates as a big PR move but didn’t gain much traction from consumers and developers and was eventually killed off. I’m not sure if you saw but Google announced a new version of Google glass that’s built for enterprise. They too saw a different opportunity where Google glass might not be ready for mass consumer adoption but could be ripe for some enterprise applications and has gained some traction. Check out the Bloomberg article below.
https://www.bloomberg.com/view/articles/2017-07-19/google-glass-gets-it-right-the-second-time
Anyways thanks again for sharing Christian, always looking forward to hearing the thoughts of my peers, cheers. Johnny
Great article on IoT. Lots of companies are investing in IoT due to the possibilities. I don’t think it is a hype as we have seen the transition from connecting places (landlines) to people (mobile phones) to connecting things (IoT). The industry has even coined the term IoE (Internet of Everything). If you just look at the connectivity of an average person – one has multiple devices, connected home (nest/thermostats, cam, doorbells) and sensors.
I agree with Christian’s comment on cloud providers like Google, Amazon and Microsoft are investing in enabling their platforms to enable IoT use cases primarily because the expected scale of IoT will require a standardized, scalable and secure platform.
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MSE238A
Very interesting post. I think your arguments make sense but I think the limits of multiple standards are not applied to all IoT applications; so the hype of IoT might not be valid. For example, IoT cloud service providers such as Google/Salesforce does not require a universal standard. It might even be beneficial to have different players in the market of IoT cloud (though there are dominant players such as AWS); competitive supplies drive the costs down and consumers benefit from it. Below is a link of IoT cloud companies.
https://www.postscapes.com/internet-of-things-platforms/
My point is that IoT will grow as long as data can be uploaded into the cloud. Would love to hear your opinion. 🙂