The Internet of Things, or IoT, is simply a trend to add information reporting and Internet connectivity to everyday objects. What we are seeing is the convergence of found technologies – smartphones, Bluetooth®, WiFi, the Internet, cheap and powerful microprocessors, open source operating systems like Linux and Android – and low cost rapid prototyping.
This has removed much of the burden for developing new products from small companies and individual inventors. Crowdfunding has given both a source of funding for ideas, and a launch platform. We went over the limitations of Crowdfunding in a different post, but aside from a few runaway funding projects (see Pebble and the Veronica Mars movie), most successful Crowdfunding projects raise a modest amount of money that allows an inventor to take an early stage prototype forward into a preliminary or test launch. One significant benefit of Crowdfunding is the level of media attention (conventional, online, and social media) that is currently focussed on new product announcements.
The bar to create a new product and bring it to market has been dramatically lowered, so it is not surprising that we have a proliferation of new products being announced by small companies and individuals. This looks like the blossoming of a new era of “democratized” product development. Perhaps it is, but we have already seen some of the limitations. Small companies that don’t have access to capital, and we mean significant capital at low or reasonable cost, can’t move past the curiosity stage, and never reach volumes of sales to be relevant.
The other trend we see with the IoT is a real focus on home automation and wearable technology. A great deal of attention is paid by the media, but at bbotx we are not convinced that we all need to know how many steps we took, or what our heart rate is right now. There is also a limited interest in turning our lights on and off from our couch.
The last issue we see is the “there’s an app for that” problem. Everything has to have its own app. Eventually this will resolve itself; the IEEE is attempting to set a standard for IoT devices. It is not clear exactly what problems that will solve. Some early incidents where so-called smart TVs and refrigerators were converted to spam-bots were sobering. Reports of baby monitors taken over by strangers and used to both watch young children and speak to them are creepy and frightening. Most recently we have seen a lot of excitement over hackers taking control of a car.
In our view there are two things holding back growth of the IoT, and one force that will push it forwards:
- Security vulnerability is making many people wary of IoT devices. This is not trivial, we have people who are careless about the security weaknesses in their technology. The liability of vendors for selling vulnerable products will slow down big companies, and it will reduce the flow of money to small ones.
- The absence of any kind of common infrastructure that enterprises and individuals can use to securely and conveniently manage their devices and the information streaming out of them. Too much data always equals noise, but even too much information is sometimes noise. We will need to be able to add devices, and configure them securely, and get useful information from the smallest number of apps possible.
- The driving force that will push this ahead into really big numbers will be enterprises deploying useful technology that -
- reduces risk;
- increases security (including personal health and safety);
- reduces losses (including theft prevention); and,
- helps them sell more product (make their products more attractive).
It is our view that home automation and wearable tech markets are exaggerated. Few of us think we need to be able to drive to the cottage, and only then turn off all our lights, stereos, TVs, etc. back home from a smart phone.
We will buy things that make sense – practical answers to real problems. There have been products promoted on the websites of significant companies proposing Internet connected egg keepers that will tell you how old your eggs are. Really, we are not making this up.
When the cost gets so close to zero that it doesn’t make a difference, people may accept this sort of frivolous application of technology, but it will still just add noise to our lives. Other than some novelty buyers, these products – including wrist bands that tell you how far you ran, or what your heart rate is all day – don’t confer enough value on most of us to be the drivers of this wave of new tech adoption.
Don’t get us wrong; we are bullish on this space. We think that as has been the case in the past with new technologies, the hype has the wrong emphasis. Big companies and little ones can get on the wrong side of the idea, for example:
- Google Wave, the future of messaging. Lots of good stuff, launched in 2009, didn’t really do anything new, waved goodbye in 2010.
- The Segway PT, the future of personal transportation. It got a lot of media attention, not helpful when President Bush fell off one. After disappointing sales Segway PT was bought by James Heselden, who promptly hurt sales prospects further when he accidentally killed himself by falling off a cliff while riding a rugged country version of the device.
- Apple and Microsoft have also had their share of misses, the Newton and Zune come to mind.
We should not ignore those who famously missed the start of a rising tide:
- “Who the hell wants to hear actors talk?” - H. M. Warner, Warner Brothers, 1927.
- “I think there is a world market for maybe five computers.” – 1943, Thomas J. Watson the president of IBM.
- Staying with IBM for the moment, Arthur D. Little advised them against acquiring the rights to market the Xerox 914, advising IBM that the 914 “has no future in the office copying market”. Clearly there was a future in office copying for the 914, and who foresaw the laser printer?
These were not foolish people; we just are not very good at seeing the arc of a new idea in its early stages.
We think the Industrial Internet of Things, or IIoT, is where the major innovation and dollars will be in the IoT space.
Paul is the Founder & CEO of bbotx. He has developed and marketed software products in different market segments in North America, Europe, Asia, Africa and the Middle East over the past 20 years – doing business and working in 40 countries.
photo credit: ppf via photopin (license)