Here is a fun game: put the word smart in front of pretty much any object you use during the day, and you get an idea of the potential of smart things. You also understand the expectations problem such potential also implies: should everything become a smart device?
The Internet of Things. Smart Devices. Home Automation. Smart Things. Connected Devices. There seems to be an increasingly problematic and vast vernacular for the new product category which takes non-connected devices into a state of connectivity. (Indeed, the problematic naming conventions the industry has for this kind of product is discussed later).
The category is young, vulnerable, and after some tribulation, becoming more and more viable. While the technology has some substantial obstacles ahead of it, the Internet of Things has a societal momentum that will reach a tipping point, at which time the proliferation of the technology will come to dominate both the consumer and business marketplace. Until such a tipping point, early adopters can use the Internet of Things to their strategic advantage.
This paper will cover the four different types of Smart Things, each reflecting a state of the technology and where the market for the products will fail and succeed. This includes past state, current state, alternate state, and future state.
Past State // The Connected Appliance
The current state of smart things focuses on hero devices that seem to deliver the beginnings of a promise of a ‘smart home’ that has been promised since the 1950’s. But it got there in a funny way, and that was through the smart phone. Most of the the successful ‘Smart-Home’ products in the era of the ‘Internet of Things’ were born out of a connection to the iPhone. If the problem was that the smart home of the home of the future was too infeasible to build, then the solution was to build out the smart home one piece at a time. A device that you have on your person at all times makes such a strategy very appealing to normal people.
There was a secondary problem with smart home adoption, one of technophobia. People are intimidated by technology and when people thought of it in their homes, it made them uncomfortable. Certainly, a new found love for that little piece of technology in your pocket helped alleviate this fear, but you’ll see the most successful products in this category adopt a product design that de-emphasizes the technology of a smart device in favor of a emphasis of blending into the home.
The first major test case for ‘Smart Things’ in your home was the Nest. A team of former Apple engineers and designers thought about the hurdle earning a spot in the home in a new and exciting way: they set out to transform all the boring boxes that populate the home and ask the user of their device to love their them. The Nest thermostat was certainly beloved for it’s ability to connect to the internet, set schedules for heating/cooling, detect when you were home and away, and even save you money on your energy bill; but perhaps it’s biggest selling point was the way it looked on the wall. Nest was a runaway success.
This opened up the possibilities of a market for devices that integrated into the home to automate daily tasks. Phillips released it’s line of smart lightbulbs, Hue, similarly designed for integration into your current home. After the success of the Hue, the company released a suite of lighting products that integrated into the Hue system. Soon, the Apple Store’s accessory section featured smart cooking thermometers, smart scales, smart cameras that detect motion, and smart wall plugs,etc. New companies like Dropcam formed, existing market leaders in appliances began working on smart products, like Honeywell and Maytag, and current technology makers began work on products in the category, like Belkin. It seemed that the possibilities for the category where endless and optimism for the product category was unabashed.
The term, ‘the Internet of Things’ became a buzzword. August Lock, a smart home deadbolt, went up for pre-oder. Nest followed up their thermostat with a smart fire detector. Refrigerator and washing machine manufacturers announced new connected products. But the market seemed to falter, Nest Protect was received with lukewarm reviews and had to eventually be recalled. August Lock is still yet to ship to it’s customers, and Mayatg and GE let many of their ambitious smart home products wither on the vine.
While the market for smart appliances stalled, systems for controlling current smart home setups seemed to thrive. IFTTT, an automation platform gained popularity in circles of nerds who hooked these devices up to existing services and platforms. Nest developed such a power efficient cloud based system of energy usage, the product has become popular for many businesses to use to cut energy costs.
The potential for the category still seemed clear, but the immediacy of the category seemed far less so. It was apparent that smart appliances would continue to play a role in the lives of consumers, and companies assumed the value in these products was in their appeal to the consumer looking to slowly build out their connected home. But a secondary audience had emerged, those interested in systems that could easily connect many small data points in service of the overall systems they existed in. For example, Nest gave the consumer a clear benefit of controlling the energy usage in their homes, but it also gained popularity from utility companies as a way to manage power and eliminate waste.
This is current state of smart appliances, as novel items that consumers adopt slowly over time. There are problems with this model. For instance, people who rent housing or have network bandwidth limitations. Most of these devices are also married to a smartphone, some of them only work exclusively with the device. There is also clearly a line that consumers draw between devices they deem worthy of internet abilities and those that are not. While the thermostat might be something people are willing to buy to automate their life, a toaster might not.
Current State // End-Around to the Smart Home
Because the the smart home has begun to take form as a fragmented accumulation of devices designed from many different companies, there is a tremendous opportunity for a single player to build a framework within which these devices can communicate and standardize. Major technology companies like Google, Apple, and Samsung are not rushing to produce their own versions of these smart home products, but are vying as platform builders for existing devices. Apple seemed to have an advantage with it’s stores because of the popularity of the smart devices on their accessory walls.
In a escalation of the promise of a smart home, Google bought Nest, and subsequently Dropcam, perhaps the two most popular automation products offered in the Apple Store. Apple responded to the purchases with an announcement of Homekit, which allows the iPhone to set up a home automation system from desperate ‘smart’ products. (Not so coincidentally, Nest was not on the list of Homekit’s launch partners.) So far, Google has left Nest to operate independently, and Apple has left the Nest products on their Apple Store shelves. Not to be outdone, Samsung purchased the company called ‘Smart Things’, which offers a complete home automation product line, but has also claimed that it would allow the company to operate independently.
This ‘Smart Things’ stockpile strategy seems cold-war-esque, as none of the major players have begun development of their own product offerings, but see the area as a way to support the sale of their current products through platform lock-in. The thing to watch for in this space is when the platform makers decide that the market is mature enough to actually use these investments against each other, and ultimately, aid in the creation of their own first party versions of these product lines. For now though, Google seems content to let Apple sell their devices in-store and Apple seems content on not actually making it’s own smart home devices. (And as usual, Samsung’s moves in the space are not forward thinking as much as they are reactionary.)
What does seem inevitable now, is that consumers expect these technology companies to have some sort of home automation solution, and this signals the viability of the smart home through connected devices market. The home will indeed get smarter and smarter through sure attrition of the current offerings. But this is damning praise for a market that might have promised more, and has become somewhat of a disappointment from what seemed endless possibilities.
The ‘Internet of Things’ became a buzz word for a reason: it represented a whole new market for manufacturers to make products that consumers would want to buy. This buzz and excitement grew out of the technology and product sector, and service providers bought into the idea of the smart and connected home, To home security systems, the new market represented an existential threat. To ISP’s and Cellular providers, the market seemed a easy way to expand their portfolio of offerings. When the product side of the market seemed to saturate and industries moved on from the original ‘Internet of Things’ fad, the service providers doubled down on the idea. This seemed bizarre, as the market was trending away from the idea, but the service providers had a new product and the promise of higher margins, so they barreled ahead.
Overnight, home security companies turned into home automation companies. AT&T began selling home automation as a feature of their cellular network. ISPs and cable providers began work on their own smart home systems, which they eventually began pushing in bundle packages. Capitalizing on the promise of the category was a callous way to improve margins and push product, but these companies had made up there minds. In the case of Vivint, a home security systems company, the entire company pivoted towards home automation.
It’s yet to be seen how successful these programs have been with return on investment, I suspect the companies saw reasonable returns. But the category suffered as a result, with consumers suspecting the whole promise of the ‘Internet of Things’ to be merely a ploy to re-sale the services they already have. Technology companies should be concerned that the category has been hijacked by industries that would see little benefit from the category’s progression.
The general sense is that the smart home has seen it’s first golden age. What comes next is a dormant phase for new products in the smart home category, while platforms arise around the existing offerings. The rejection of service providers version of the smart home would be a matter of when, not if. Beyond the congregation of existing technology and repackaging in service bundles, we wait for the smart home renaissance.
It also turns out that the whole product category seems ill-served by the naming conventions of the technology. ‘Smart Things’ is a bad category description because it is now, not accidentally I’m sure, the brand name of a major player in the industry. The ‘Smart Home’ represents an era of the technology which over-promised and under-delivered on it’s hype. The ‘Internet of Things’ seems to become indistinguishable from corporate jargon. ‘Home Automation’ now stinks of a scam. If this area of technology becomes more prevalent in the future, it will be interesting to see how these all players involved decide to adjust the naming conventions. With the addition of wearables and beacons in the future vernacular of the category, it becomes difficult to accurately describe the field these products live in.
Alternate State // Smart Complexity
A bifurcated offshoot of the idea of smart things has had unintended consequences and implications in other fields beyond the consumer space and smart home of the future. One of the areas where connected devices has become prevalent is in the automation of vast industry systems such as public utilities, agricultural sprinklers, and energy consumption. Disruptive technologies have a funny way of finding their way back into the industries they disrupt, and the internet of things movement is no different.
The aforementioned trend of businesses or utility investing in the Nest thermostat has to do with the ability to not only control a switch, but also in monitoring its analytics in real time. Utility companies spent years developing systems which would load bear usage, create complex maps or grids based on historical consumption data, and make models of how to adjust services during peak usage times. Suddenly, with Nest, utility companies had the ability to receive live feedback data from a vast amount of users. The nest leaf system can adjust energy consumption for tax breaks for individuals, and the effect of entire utility companies being able to adjust their consumption based on peak usage times, weather, and energy costs is only compounded as adoption grows. Nest is allowing complex systems to essentially self correct in response to changes in a economies of scarify and cost, and is allowing companies who adopt the technology to functionally crowdsource system management.
There are familiar systems which could be further effected by the specific scaling effect. Consider, for instance, the way traffic lights function. They are usually centrally controlled and based on imperfect models of traffic and road congestion patterns. Smart technology could enable traffic systems to consider real time data and road conditions, and eliminate the need for centrality and eliminate complexity. Letting the objects govern themselves through sensory data is transformational, and the benefits of such systems are both appealing and cost-effective.
Adoption of such systems is the obstacle to the overall viability. Nest had a consumer adoption effort that helped the optics of it’s solution. The odds that the space can produce another immediately appealing device to consumer that can also transform massive scale systems are low. An encouraging example are new smart sprinkler units that allow for reporting and usage based on weather, and are available for both consumer and commercial needs.
It should be the aim of these massive scale operators then, to find products which can scale through easy installation and simple use. Manufacturers of smart products need to anticipate this need and design products that fit into these systems. The more energy related the product can be, the more the interest of the consumer and the system manager can become, and the more likely that the resulting product can address the problem from both the consumer and commercial space.
Future State // Single Sensors, Stupid!
The future of the ‘Internet of Things’ looked bleak for a while. The maturation of the smart appliance market cooled the enthusiasm that was generated when the field was emerging. Eventually, the market saw the smart ovens, the drone delivery programs, the home automation as security system sales, as they were: technology for technology sake. One by one, each new area of the market for smart devices faltered. There was one category that only seemed to grow more and more popular as the category grew. The idea of the simple sensor represents the direction this category of products will adapt to in the coming years.
The idea is that many of the dumb things around us can be made smart very easily. Once a device can communicate with the internet or with your smartphone through BTLE (Blue Tooth Low Energy), that device becomes more valuable to almost all of it’s potential users.
Many device makers made the mistake of believing that because Nest asked it consumer to interact with a digital interface and Nest was successful, that they must also enable a user interface for the user of their smart product to interact with. This kind of thinking is what results in a smart refrigerator which requires the user constant manipulation. This is a misunderstanding of what the user finds valuable in a smart thing. The Nest isn’t beloved because it has an interface to interact with (in fact, deep interaction with the screen can be somewhat of a chore.) The Nest is beloved because it enabled the user to control their physical surroundings in a better way than they could before. People can turn down the temperature remotely, and all other features the device offers are expansions on the idea that the Nest is aware of the situation it is being used in. Perhaps the most overlooked part of the Nest is it’s ability to sense motion. This simple sensor technology enables the device to adjust itself based on current conditions. People will tolerate more interaction with the device as long as the interaction is convenient.
Since the market cannot expect a majority of consumers to adopt more and more smart things that require interaction, the opportunity in the field is to create devices which do not require interaction, but keep the ‘smart’ benefits of a connected device. Leaders in this field are not immediately obvious, but firms like IFTTT and Estimote may understand the possibilities of the single sensor product. “If this” is enabled by the single sensor device, like an iBeacon or Nearable, and the “then that” can be carried out by non-connected devices simply plugged into a Wi-Fi or BTLE enabled outlet, like an oven or a refrigerator.
Marketing cannot underestimate the power of this kind of ‘dumb’ smart device. The advertising industry seems to have a crush on the idea of ‘just-in-time’ content delivery. The approach to using sensors to help determine advertising messages is powerful, but I can’t help but feel that advertisers misunderstand this power. With multiple sensors in people’s everyday lives, advertisers can make better and offer users easier ways to interact with their situation. It has already begun to shape how advertisers think of reaching consumers, but its implementation has been primitive and inelegant and will only get better over time.
Imagine that billboard advertisers began installing iBeacons in billboards. My iPhone can detect it’s in the car, and the iPhone begins looking for iBeacon signals from billboards you pass while driving. The iPhone sees that some of the companies advertising on billboards also have apps on your iPhone. The iPhone also knows that you listen to the ad-supported iTunes Radio on your phone. When you go back to listen to iTunes Radio, ads from the company’s billboard campaign are matched with the audio ads served to you in iTunes Radio. You have been given relevant information about a company you interact with already in a way you expect. That’s the future of advertising with ‘Always-On’ sensors, and it’s all enabled by a simple device that does one thing.
Many suspected Apple’s new smart watch to become the center of the ‘dumb’ smart device which simply allows for the wearer to enable other connected experiences around them. This does not seem to be the strategy of Apple’s wearable from Apple’s perspective, or if it is, Apple is not talking about it. Perhaps the phone can stay the center of the connected smart device experience, and perhaps the watch will enable new ways of interacting with smart devices. But notice that in either case, the ecosystem is simply looking for the user to posit themselves into s pace where other devices can understand their situation and adjust their surroundings accordingly. This is the future of the category, to allow the users mere presence to dictate action from the devices in the context of where the user is, what the user is doing, and what the user wants to accomplish.