IoT: Challenges to overcome for consumer mass adoption

IoT: Challenges to overcome for consumer mass adoption

Consumers are sold on the utility of smartphones and wearables. This first wave of IoT devices has largely enhanced the quality of life for most people.

As new use cases are still being discovered, we are getting a glimpse of what the second wave of IoT devices might look like.

The second wave of IoT is taking root

Smart homes

Here in Canada, the penetration of smart homes is estimated to reach 18.8% this year alone, which will further increase to 34% in the next 5 years.

The initial products offered seem disjointed with a limited set of features like the ability to tweak the temperature, change the color of the light, or control the door lock.

However, as businesses address the various teething issues and bring in real utility, smart home technologies are likely to become a universal fixture in our homes.

Smart cities

IoT holds the promise to have energy-efficient, eco-friendly cities where smart devices control everything from water supplies to traffic management. They can even help the city’s residents to find parking.

Locally, the Canadian government is empowering local communities to launch smart cities, with the Smart Cities Challenge. Cities like Toronto and Vancouver have their own smart city initiatives.

Globally, Singapore leads the pack with the Smart Nation program that uses technology across mobility, health, safety, and productivity to better the lives of their residents.

“Our vision is for Singapore to be a Smart Nation – A nation where people live meaningful and fulfilled lives, enabled seamlessly by technology, offering exciting opportunities for all.”

Lee Hsien Loong, Prime Minister of Singapore

While these are mostly consumer-facing IoT initiatives, let’s not forget the massive Industrial IoT (or IIoT) market that is already humming along.

We are steadily reaching a point where different pieces of technology such as 5G networks, machine learning, big data, low-cost sensor technology are converging to unleash the truly transformative power of IoT.

In fact, it is estimated that by 2025 IoT will deliver anywhere from USD 4 trillion to USD 11 trillion in economic value.

Future challenges to be addressed

The move towards a world of an interconnected system of systems seems inevitable, but the journey towards it will not be smooth.

As with most emerging fields, there will be competing standards, closed ecosystems that cannot talk to one another, and piecemeal applications that are not thought through. We only need to look at the evolution of the internet or the smartphones to see how this will play out.

Below, I discuss 5 challenges we need to overcome to see mass adoption of the technology by consumers.

1. Address platform fragmentation

Unified and seamless customer experience is crucial for mass adoption. However, the need to control the ecosystem drives businesses to create proprietary systems.

Even within the home automation market, there are at least 3 large competing protocols – Z-Wave, Zigbee, and X10. Zigbee Alliance got a boost when Amazon joined it earlier this year.

With some of the biggest names in tech (Google, Apple, Microsoft, Samsung, Intel, Sony, Lenovo, Cisco, IBM to name a few) vying for the consumer’s attention, a unified platform is unlikely to emerge anytime soon.

“Today, platforms for the Internet of Things are still a kludgy collection of yesterday’s technology and architectures that do not address the most basic development challenges. Even though many companies are telling fantastic IoT marketing stories about what their solutions can do, you wouldn’t know it from today’s fragmented collection of incomplete platforms, narrow point-solutions, and software incompatibility.”

The Failure of IoT Platforms (2018), Harbor Research

Lack of universally accepted standards will bind customers to silo-ed ecosystems or leave them with incompatible devices. First-time buyers might think that they are getting just a single device without realizing that they are buying into a whole ecosystem at the exclusion of other ecosystems out there.

2. Make security a priority

In a system of systems that IoT represents, a single device with an unpatched vulnerability can be exploited to the detriment of the entire system.

A tradeoff between privacy and convenience is acceptable, however, when it comes to security it is non-negotiable. There is no dearth of security frameworks for IoT (such as ETSI TS 103 645, GSMA IoT Security Guidelines and Assessment, OTA IoT Trust Framework etc) but there is no universal standard yet.

Due to the placement of IoT devices in offsite locations (e.g. the consumer’s house), securing them poses an extra challenge. For starters, these devices can be physically tampered with, making them harder to secure.

“Around nine in ten (89%) consumers have concerns about IoT security, with the most likely being that a hacker could control the devices (65%)”

The State of IoT Security, Gemalto

Instead of cloud computing, many of the new applications are likely to use edge computing to reduce the amount of raw data transmitted and stored. Storing and processes this data at offsite locations have additional risks.

Moreover, the IoT devices are also likely to have limited capabilities of encryption, authentication and access control.

Aside from reputational and legal risks, security breaches hamper consumer confidence in the technology.

Good news is that studies have shown that consumers are willing to pay more for greater security. It is no surprise that businesses are taking the security challenge head on and governments are stepping in with regulations.

3. Explore alternative revenue models

Managing the product life cycle of IoT devices has more elements than a traditional product life cycle management. Smart devices offer businesses a new ability to receive instantaneous feedback directly from the device. We can use this information to improve the customer experience.

On the other hand, smart devices will also be an ongoing cost for the business. There are several open questions. What will be the ongoing cost of maintaining connectivity? How will the devices be maintained? How will they be patched if when vulnerabilities are found? How long will they be supported and what happens at the end of the support period?

Moreover, in an evolving market, startups will come and go. When a company goes out of business, the IoT devices are still installed in consumers’ homes. Would the consumer be able to retain the device and ‘switch’ the service to another provider? What will that look like and how will it be priced?

In all likelihood, revenue models such as fee-for-service, licensing, or subscriptions will replace the traditional product models that consumers are used to. This will give customers a much-needed assurance that their investment in IoT devices is not suddenly going to go up in smoke.

“Product-as-a-Service (PaaS) is on the verge of becoming a popular business model for IoT products. In the automotive sector, visionary pioneers are discussing equipping cars with virtually uniform engines and enabling an individual access to variable engine performance via the Internet”

Marketing Management for Consumer Products in the Era of the Internet of Things, Reinhold Decker and Christian Stummer

4. Have a plan for data

IoT devices collect, send and/or act on data. Due to various factors, the cost of IoT sensors is dropping rapidly. The ease of tagging on multiple sensors to devices and the low-cost of data storage leads to the approach of collecting as much data as possible and then figuring out later how to use it.

In the last decade, it seems customers were willing to trade privacy for convenience. More recent studies show that customers are taking privacy seriously.

Therefore, when designing the product, businesses need to develop a data strategy for the data they plan to collect. They need to know beforehand how will they use & analyze the data collected, and for how long will they store this data. They need to establish how this data will be cleaned and indexed. They also need to address the security measures implemented to protect this data.

Regulations such as GDPR are only the tip of the iceberg and more regulations will come up around the world.

IoT devices are intrusive by nature and companies that approach the market with a clear and transparent plan to collect and store customer data are likely to win a more loyal following.

5. Communicate the real utility

The second generation of IoT devices bring real cost savings and come bundled with early detection capabilities that provide added security.

IoT devices are still in their infancy, mostly targeted at the Innovators and the Early Adaptors (these 2 segments typically represent about 16% of the market).

While mass adoption typically follows an established cycle, businesses and business associations could speed up the process by communicating real benefits of the technology, beyond the bells and whistles of being able to set an alarm with a voice command or unlock the door remotely.

So, what do you think of the five challenges? Should I have added privacy to the list above? Are there other challenges that you would have prioritized? Do let me know below.

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