The Internet of Things (IoT) is taking the world by storm. Gartner predicts that 25 billion objects will be connected to the IoT by 2020. Both Cisco and McKinsey Global Institute have calculated that the IoT market will cash in more than $10 trillion in the next 10 years, while Cisco goes further to foresee a market that may reach a head-spinning $14.4 trillion by 2025.
A report that came out earlier in 2016 states the IoT market will have a 43 per cent compound annual growth rate (CAGR) through 2019. So why isn’t the IoT becoming part of our daily lives, despite being such a hot topic? Today, let’s look at the direction the IoT industry must take to become a mass production staple in every household.
The current situation
In order for IoT to become a mass product, many factors have to come together. First, the product needs a very attractive and never-done-before element, providing an instant “wow” effect (like the infamous apps Pokémon GO, Msqrd and Prisma) exciting people to buy it. Second, the product has to bring real value. Today, IoT, especially the most successful projects, is either focused on pure fun or on day-to-day applications like remote video surveillance.
Beyond smart homes, smart cities, cars and industrial plants are also in fast development. However, more serious projects are often stalled because IoT has proven to be very expensive with a bad reputation for slow ROI, taking years to pay off. If products bring real value and ROI becomes more predictable, it would make investors more comfortable to take action. But so far, there are few IoT inventions that peak as fast as they are launched.
When it comes to marketing IoT, it’s sometimes very hard to explain to customers why they need this product. Right now users are playing with small applications that, frankly speaking, make tiny changes to one’s life: you can open and close doors, or turn lights on and off remotely. But can you survive without these add-ons? Of course. A regular person doesn’t really need such gadgets, so the market is mostly limited to a small niche of geeks in need of every new toy, perhaps those with OCD, the government and the military, as well as wealthy folks with cash to burn (who, by the way, can achieve the same results using more traditional methods).
When marketing, you also have to remember that video surveillance and alarm systems already exist, and in order for people to substitute those with newer IoT gadgets you have to convince them with a very tangible “wow” effect. When that happens, demand will certainly push the market. If marketers can minimise the current lack of knowledge about the IoT-related products, services and tech, things will move faster.
Cost. IoT development is always expensive and always customised. There are systems you can adopt on the cheap, but most of the time it has to be customised and specific to the product in question, making success difficult to predict. Finding ways to bring down the cost of IoT development and maintenance will make products more affordable and therefore, customer-friendly.
Security. With high profile hacker scandals (with Barbie dolls and Jeeps on the road controlled by criminals), it’s easy to see security and privacy leaks are a huge problem for IoT. Development can be delayed since users need guarantees, with more time needed on certification and testing. At the same time, as an owner, you are always pressured to lower costs while cutting time to market.
Besides being secure themselves, IoT systems have to be controlled outside all the time, in an ongoing war between developers and hackers. Legally, products have to be ready for security certification, adding red tape. Companies who conceal the fact their product is not secure enough, win short term by lowering prices and making gadgets more readily purchasable, but are always in danger of suffering backlash because of privacy leaks and poor quality.
Security isn’t something apparent to the naked eye, and people get seduced by amazing features and telltale stats, so companies abuse this opportunity putting their users at huge risk. Security in IoT also means giving up some privacy rights to the product owner when installing the gadget. Most regular users are clueless when it comes to installation, having to let in the company to compromise their privacy.
Since not everyone is ready to do that it slows down market growth. One solution to this problem is to move this segment into areas where privacy is generally not a major concern.
Besides not rushing products to market without proper security, carefully selecting trusted vendors, utilising good token-based authentication and choosing security tools specifically created for IoT, marketing should never override genuine security policies, which should become standardised and controlled on the government level.
Watches, smartphones and automotive IoT gadgets are already popular. Tasks they help with are pretty simple: remotely do something inside the house without being in the house. Turning on the kettle without going to the kitchen brings real value, but there are obvious limitations: you can’t put water in the kettle; in order for the device to work it has to be ready for being heated up. This limitation is another factor that slows down the growth of this market. Theoretically, it’s possible to make a fridge with a web camera to show you the products you have inside, even going as far as those contents being weighed and measured, so you know exactly what to get at the store after work.
But it would be very expensive and have to overcome the following limitations: if you want to measure a certain product, say a stick of salami, you have to place it in the fridge in the correct way (user training is necessary), specify what type of salami you have and so on. Because you can take a picture of the fridge on your phone in the morning, use kitchen scales to know exactly how much product you have and a calculator for calorie count, the only actual difference is you cannot do any of those things remotely. But how critical this competitive advantage is for a user to pay the hefty price depends on the user. It still looks like a gimmicky product for wealthy customers or owners of successful restaurants.
Maturing of the market
The realistic future of IoT is in small improvements to life that are inexpensive to develop, secure and yet make a real difference. Apple is doing it already with its ecosystem that allows for seamless, gradual installation of add-ons and new gadgets. With the advantage of easy setup within the same ecosystem, it may prove to be the right direction for IoT to take as well. Warm up the car from inside your warm home, find objects you’ve lost, turn on the iron, lock the doors – all these actions save time and money, if they can be performed remotely. There is always a possibility a hacker can turn on your iron, but that would be a rarity and no personal sensitive data is involved.
Immature technologies are a secondary factor in IoT development. As soon as the market sees a need, the tech will leap forward to meet demand. It’s possible there are many products that already exist that will become a mass market staple in the future, but marketing departments are waiting to launch them when the moment is right and they can reap bigger benefits by having a gadget that is both the next hot thing and affordable.
As the market grows, the available infrastructure is more mature, IoT-specific solutions and ecosystems will be more readily available, clearing up current development issues.
A leap in robotics is a leap in IoT
On an industrial level of, say, automated cars, budgets are generous and security can be top notch. And, value is achieved through mass production. Services are the most expensive economic sector, something you cannot outsource to developing countries; so if something can be automated, it brings costs down significantly. Of course, there are spheres where automation cannot be adopted. Whole cars are currently being built by robots, but certain areas where dexterity is a must, the work can only be done by humans. Still, it is clear that all of the economy is moving towards automation and IoT is a huge part of this shift.
Robots are tireless, exact and unbiased. Cars without drivers are possibly more secure, and you don’t have to listen to their favorite songs, make small talk and fear for your safety in the worst case scenarios. Perhaps all transport can be automated, but there is a psychological factor that also has to be overcome. Robots are great for implementing IoT, and one day they will probably be cheaper to implement than to hire people.
As soon as there is a leap in robotics, there will probably be a leap in IoT, translating into a real market need and investments flowing in.
Luckily, as a global market there are some tech-forward nations like Japan, happy and wealthy enough to test new gadgets and products as soon as they are available, pushing everyone else forward.
Let’s not forget the Internet itself is a military invention, adopted for civil life. In all times, army innovations pushed science and technology as a whole forward, and the same is true about IoT. Autopilots were used in the military long before self-driving cars in the streets became a reality. Because these inventions are thoroughly tested and perfected by the best minds in the world (whether all of us like it or not, the army is never short on budgets), they are more than ready for mass adoption, and many of them trickle down to general society, boosting the development of IoT, its quality and popularity. Interoperability concerns, legacy systems, getting devices to work together without common standards, unclear workflows for product development – all of these bottlenecks may be overcome thanks to the positive trends coming from the military sector.
When industry-level and military inventions push the market forward, the next step for IoT to bloom is to cement industry-wide standards for adoption, production, legal issues, security and implementation.
Since the industry is a bit immature at the moment, a clear roadmap for IoT businesses may help investors place their bets more readily on these projects and make the rest of the world ready to embrace IoT in their everyday lives.