Connections Europe 2016 Report: What’s holding back IoT adoption?
Amongst the buzzwords (read ‘killer app’ and ‘uberisation’) which naturally crop up at any conference focusing on a technology as talked about as the Internet of Things, were glimmers of insight of what can propel wide-scale adoption of the IoT at the 11th edition of the Connections Europe conference.
If one thing was apparent throughout the conference - held at the Grand Krasnapolsky Hotel in Amsterdam - it was that no company (whether manufacturer, service provider or retailer) can pinpoint a typical IoT consumer.
The Europe market was identified as “different and complex” compared to the US, in which adoption and use cases differs greatly – as noted by Amit Kroll from Assa Abloy on day one of the conference; “It varies from market to market in Europe – for example, in Scandinavia 80% of DIY, whereas elsewhere people get installer to deploy our products.” Statistics from Parks Associates show although ‘interactive smart home ownership’ remains below 20% of broadband households in the UK, Germany, France and Spain, the UK followed by Germany are leading the way in Western Europe. Interestingly, Germany is the country that places most trust in the custom installer to provide smart home systems.
A generational difference was also acknowledged when it comes to issues affecting wide-scale adoption of ‘smart home’ technology like data, as some suggested the attitude of millennials accustomed to sharing (encouraged by incentives) will differ from older generations.
One small point of entry could lead to opportunity
One recurring theme at the conference was that hesitancy towards the smart home amongst consumers (whether from security fears or simple lack of awareness) means one single product they love will be the key point of entry for most. And this can lead to more. A recent player in the IoT market, Logitech’s Remko van den Berg, head of sales in EMEA, says they’ve found that after a purchase of one US $50 dollar (€45/£40) products, has led to 70% upgrading to a higher value product in the years that follow – this was later reinforced by Deutsche Telekom.
The experiences that they have with this product will be decisive. “This first experience needs to be good – if they buy it and its not, then we lose the consumer forever. And you need to sell the value it can bring to them, and offer it an affordable price.”
Although important, these single ‘DIY’-type of IoT products are not the sole answer to driving the market. “DIY security solutions are terrific at creating awareness in the home, but there are limitations in terms of what they can do,” stated Mario Moura from Honeywell. “What buyers want can vary between a 30-something couple in an urban area compared to a 4-person family village. Some will look to the installer to provide a degree of reassurance; some will be interested in DIY. For us it’s a 50/50 split. We should let the consumer decide.”
“Not every type of customer is looking to the same channel for a smart home service. A lot don’t want to know about platforms ecosystems etc. – it needs to be simple for end user,” said van den Berg. He continued that some installers focusing outside automated systems for enclosure onto other smaller IoT devices could lead to bigger things. “If they offer other parts, this cross selling can create wider opportunities in the industry,” commented Jean-Marc Prunet, CEO at myFox.
MivaTek’ Daniel Wong agreed: “The B2B channel and the installer market is important. Products will always need to be installed – door locks in particular are difficult for some people.”
Although the consensus was that there is clear value in an installer who educates and is able to develop a point solution to offering more services, manufacturers at the conference claimed this will not drive mass adoption.
Sure, IoT is exciting, but is it truly safe?
A Parks report showed that security concerns are polarised around the world – with 45% ‘highly concerned’ about the privacy and security of IoT (most notably in European countries including France and Spain), with the remaining percentage considerably less concerned.
Although the event came only two weeks after the DDoS attack which attacked so many IoT devices, there was a consensus it had not been up for discussion as much as attendees would have liked at the conference.
At a panel dedicated to addressing the privacy and security of IoT, it was clear internet providers are seen as having the key role in ensuring the safety of the smart home, and that an end to end approach is essential to finding vulnerabilities. “If you ask people if there wear a seatbelt, most people will say they don’t – the same goes for protecting the home. How many people change their password on their modem? The most recent attack is a tipping point and will impact all service providers. Vendors aren’t ever labelled as ‘over-secure’ either,” said Allen Scott, director of the secure home gateway and IoT at Intel Security. Panellists failed to come to a conclusion on whether extra protection is something they can charge a premium for, or should simply be a given – however there is still a long way to go.
“We do need a kind of ‘Apple’ effect on the security side of things. Right now there is always a bit of chaos and the security comes as an afterthought,” concluded Scott. “There is a need for certified items in home that meet certain requirements, and the industry is moving in this direction. We already see this in the IT market, why can’t we get in the IoT market?”
“Security is our main focus over convenience. We are constantly performing penetrating tests to ensure our technology is secure from hacking,” affirmed Amit Kroll, business development & integration for EMEA at smart lock manufacturer Assa Abloy, at another panel discussion.
On the much-talked about surveillance issues, CEO of Panasonic’s cloud management service in Europe, Rishi Lodhia, commented; “Issues from WiFi cameras has being going on for years. The issue with a DIY product is that it’s on an uncontrolled, unmanaged network. If single devices had end to end connections then we could really control the security of a device and tackle what’s a huge problem for manufacturers – why shouldn’t we do this more?” To which myFox’s Prunet disagreed – making a case that both 4G and WiFi present issues via going to the cloud and therefore prevent hacks. Throughout the event a hybrid approach was suggested to be the most reasonable option when taking into account both cost and reliability.
Providing benefit through Big Data
“Big data is a bit like teenage sex - everyone claims doing it but know one know what doing, and everyone’s talking about it,” claimed Assa Abloy’s Amit Kroll. He added that although it will take time, things are changing and forecast a time when it will exceed the value of plastics. “People can buy a subsidised smartphone in exchange for accepting adverts. Imagine if the same happens with houses - they may be able to make money from data rather than house itself.”
There was no resounding answer to how manufacturers use data to best engage the consumer, and how to do it right, but transparency and bringing value to the consumer was naturally something they wanted to reassure attendees were amongst there priorities. Keynote Francois Girodelle from Nest naturally stressed the importance of using it to learn how people live and offering a personalised experience.
“There’s a huge spectrum (even in this industry) of opportunity when it comes to the computerisation of data. Its easy to see benefits of usage-based business models and offering new services based on data could be useful and offer more sales opportunities – and these things justify using data in this way,” commented Cozify’s Antti Vihavainen. “There is of course a risk of public opinion turning against it and says no – but as we’re all becoming accustomed sharing data through our phones, I doubt this a bit.” He added: “EU regulations are sometimes very good, but sometimes over enthusiastic, so that also could be an issue.”
One of the positive messages to come from Amazon’s presence at the show was the openness of Alexa ecosystem (something they’ve invested US $100 million supporting) has meant the company can’t even keep track of all the collaborations – as highlighted by panel involving Amazon and Ericsson.
Alexa technology has undeniably been instrumental to raising awareness of the ‘smart home’ in amongst millions of people. The issue is when problems arise when connected systems don’t deliver – who do you call when you can’t use Alexa with your thermostat? As nice as ‘DIY’ sounds, who do you go to when there is no installer in the process, and critically, who will answer your call quickly?
Buyers’ decision-making process is also being clouded by several low-energy transport protocol offerings from the likes of Z-Wave, ZigBee and ULE. Each of which has different views on the ideal protocol for the consumer (although they did agree on one thing: multiple transport layers are a necessity).
SkyBell’s Andrew Thomas offered an interesting perspective on this part of the market; “I think that we’re going to be leaving the standard protocols. We don’t think about anything about WiFi and Bluetooth, and the hub-driven smart home is not doing as well as cloud-based smart home system.” Many suggested this could possibly simplify and accelerate market adoption.
VR and AR: All hype or heading for our homes?
Perhaps surprisingly the much talked and written about topic virtual and augmented reality technology came up only once at the conference. Offering projections on where IoT will fit into our lives in the future, Catherine Van Aken from Technicolor said although over the past two years big industry players have invested approximately US $3.5 billion (€3.2/£2.8 billion) in AR and VR, they predict that VR in particular will remain “largely niche for a long time” – dominated by gaming applications. Although they foresee AR adoption moving slower whilst manufacturers build ecosystems, the company has higher hopes for the impact AR, particularly in how people consume films.
The value of the expert
Over the two days, talk amongst the industry stakeholders attending the event suggested some felt the conference was a case of ‘same old story’ for the IoT industry. The conversation is still centred upon ‘how we get there’ when it comes to mass adoption, therefore the question arises: why are we still talking about crossing the chasm rather than actually doing it?
Perhaps Patrick Strauss, supply chain visibility & internet of things subject matter expert at IBM summarised it best; “The problem is that there are a plethora of providers of innovative things, but bringing things together is the challenge, and it confuses people.”
In a discussion dominated by deliberation of going direct, through service providers (even possibly through insurance companies) or via retail (a channel many feel isn’t pulling its weight), at the conference - as with similar consumer-led IoT events - it seems like installers are being nudged of the conversation. Whilst players in the smart home market identified the point solution rather than complete smart home platform as the key to opening up the smart home market, security concerns and education about the product were concurrently pinpointed as what was holding adoption back.
A point solution clearly presents a challenge when it comes to providing a recurrent revenue stream if not in the right hands. On the flip side, in a market crowded by providers, someone to provide advice, guidance, support (and sometimes frankly a little bit of hand-holding) on the different smart home platforms is invaluable – especially when it comes to security. Therefore it seems apparent one cannot underestimate the role of the installer in ensuring IoT is not just something everyone is talking about, but something everyone has in the homes anytime soon.