This blog was adapted from a post that first appeared on LinkedIn.
Providers have focused on the home, touting products such as coffee pots that turn on when the alarm clock rings, lighting and blinds that adjust to the time of day, and fridges that send an alert when the milk runs out. But so far consumers have been largely resistant to making their homes “smart”.
As someone who has studied the IoT in detail this doesn’t surprise me. There are two kinds of consumer IoT idea – either you do something totally new or you do something that already exists much, much better.
Making something completely new is harder than it looks – in addition to clever end user technology you need compelling financial incentives for all parties involved if something is to last. And the consumer technology itself is rarely enough. You’ll almost certainly need the use of physical assets – Uber is ultimately dependent on tens of thousands of car owners being willing to expend not just their personal time but the working life of their vehicles. Even if you are just in the information trading business like Tinder you will still need to perform high speed processing in real time to handle the ‘Fast Data’ involved.
As for improving on what exists already? Venture Capitalists have a ‘10X’ rule they use for replacing existing technology – so compact disks succeeded because they were more than ‘10X’ better than vinyl, but in the UK ‘DAB’ digital radio is something of a flop because consumers don’t see its benefits as worth paying for. To simply ‘add’ IoT to an existing product or solution is to make the same mistake people did when computerizing manual systems in the 1980s – unless you change the boundaries of the system like Amazon did, you are as likely to add cost and complexity as you are to remove it.
The problem with a lot of IOT plays is that they are neither new nor 10x better than the old. To my mind this is to be expected: we’re still early on in the cycle and fundamentals like business models, security, legislation and public acceptance are all ‘works in progress’.
So to sum it all here’s a checklist to assess the viability of an IoT project:
- Is the business model clear? Does everyone involved benefit? I was in San Francisco at the epicenter of the dot com boom. I can therefore state with absolute certainty that if it doesn’t make money it won’t last, no matter how cool it is.
- Is it good enough to displace alternatives? If – for example – I make an IoT fridge, will it be so good that people will be willing to junk their existing working one? Bear in mind that consumer devices can last 20 years, so if your business plan involves waiting for fridges to wear out it might not end well for you…
- Is it legal and socially acceptable? The law is about 20 years behind and attitudes to new technology are in a state of flux. Could you provoke a backlash from concerned citizens or interest groups who lose if you are successful?
- Have you got a clear plan for supporting your hardware for at least seven years? If you don’t your brand won’t be worth much.
- How will you do security? How will you update your devices without bricking them? A significant number of IoT plays I’ve seen regard security as ‘Somebody Else’s Problem’. Have you thought through the possible motivations of people who would hack your system and the implications of a successful breach?
- All true IoT applications will involve some form of remote processing. Most IoT applications will require very rapid responses. How will you handle the ‘Fast Data’ involved, especially when you can never, ever turn the system off?