We recently took a look at IoT Tech Predictions From 6 Of Your Favorite Childhood Movies, including smartwatches predicted in Dick Tracy and virtual assistants in 2001: Space Odyssey. However, while it’s fun to look back at the predictions that proved true, there are countless more that never actualized. Many predictions are just hype or fanciful thinking.
Don’t get me wrong, it’s inevitable that we’ll continue to connect people and machines. It’s inevitable that we’ll continue to instill ordinary objects with intelligence.
But it’s not inevitable nor clear which people and machines we’ll connect first, how we’ll connect them, nor what opportunities or issues might arise from those newfound connections.
Benefits vs. Costs
As I’ve written about in the past, I see IoT as accomplishing one (or more) of the following tasks; increasing efficiency, improving health/safety, or creating better experiences.
To understand where IoT is going and where we’ll see the most growth, we need to examine what tasks are being accomplished by a particular area of IoT and at what cost. In general, expect that the areas of highest growth will be those with both clear, compelling benefits and transparent, low costs. Let’s explore some examples.
Clear Benefits and Costs
Between consumer IoT and industrial IoT, industrial IoT has seen much more success to date. This can be explained by the relative ease with which we can see substantial benefits at low costs.
Industrial IoT is primarily about increasing efficiency, and increased efficiency can be directly translated into increased profits. For organizations that are considering implementing an industrial IoT solution, such as predictive analytics or preventive maintenance, it’s a simple calculus. How long will it take for the expected gains in profit to outweigh the expected cost of implementation?
Industrial IoT has seen success because there are solutions that have established this clear ROI (i.e. significant monetary benefits at low enough upfront costs).
Another good example of clear benefits and costs is smart buildings, though the costs are not yet low enough across the board. As we wrote about last week, only 10% of the world’s commercial real estate has smart building tech to monitor and control HVAC, lighting, power, and related systems. Why? Because any building smaller than 100K square feet would take too many years to realize a positive ROI.
As sensors and networks become easier and cheaper to deploy, suddenly the ROI will be there for buildings under 100K square feet, allowing smart building tech to proliferate to the other 90%.
The biggest opportunities for growth in the coming years are therefore areas where the benefits are clear and the costs are both transparent and decreasing.
For other areas of IoT, either the costs are too high or the benefits are unclear.
Unclear Benefits and/or Too-High Costs
On the consumer side, the wearables market has progressed slower than earlier expectations. If you’re buying a smartwatch, the cost is completely transparent, but wearables as a whole have faltered in offering a clear and significant benefit. Fitbit, once king of the wearables market, provides a good lesson.
Four months ago, Apple passed Fitbit in market share. Two months ago, Chinese handset maker Xiaomi leapfrogged into first and put Fitbit into third.
Xiaomi has gained marketshare by providing low-end wearables with accompanying, affordable price points. The Mi Band is priced as low as $14.99.
Apple is more interesting, with a high-end approach to smartwatches befitting the company’s business model (i.e. selling premium hardware, differentiated by software, at a significant margin). Apple has gained success where Fitbit has lost it for two reasons:
First, because Apple controls both the hardware and the software of its various products, Apple can offer a more seamless, integrated experience that extends beyond just the smartwatch. Whereas Fitbit must integrate with smartphones and/or other devices from separate companies, Apple can offer services (such as Apple Pay and Apple Music) more readily. Overall, this provides a greater, clearer benefit to the customer.
Second, and more importantly, Apple has doubled down on fitness and health for it’s Series 2 watch. Why is this more important? Although greater integration and a more seamless experience is an added benefit, it’s not enough in and of itself.
For any successful IoT solution, there needs to be a compelling, single reason to justify the cost. For Industrial IoT, that benefit is monetary. So what is the benefit for smartwatches or wearables in general?
If you check out this list of 30 Exciting Things You Can Do With the Apple Watch, you’ll find that very few live up to exciting. “Change your watch face”? “Send Apple Watch emoji”? How riveting…
These might be nice to have, but the real benefit is self-tracking.
These days, most of us carry supercomputers in our pockets, but they can’t track the way smartwatches can. Unlike smartwatches, our phones are not on us while we sleep, they’re left at home while we run/swim/bike, and they’re not constantly pressed against our skin. Smartwatches can thus meet an important need, automatically tracking personal data to provide useful insights into health and fitness.
However, wearables have seen slower-than-expected growth because the benefit still isn’t clear and compelling enough. Anecdotally, I purchased my first smart watch a year ago because I loved the idea of customizing workouts and then tracking my exact progress. But the smartwatch quickly fell into disuse. The things that my smartwatch tracked weren’t that useful, as it still required me to take the data and find insights on my own.
Eventually, smartwatches will track our heartbeat, daily activity, glucose levels, blood pressure, and more to provide us with truly useful insight. We’ll know that our sudden drop in energy is because we’re dehydrated and should drink some water. We’ll know that we sleep best when it’s exactly 66 degrees in our room, and the temperature will automatically adjust accordingly. We’ll know when we’re beginning to slip off our baseline of health, and get suggestions to prevent sickness before it strikes.
But that’s eventually. Right now, IoT solutions that are priced too high and/or on’t offer compelling benefits will see slow adoption like wearables.
If the above sounded obvious to you, that’s because it’s true. IoT is really, really hard. There are no universal, drag-and-drop or plug-and-play solutions right now. Instead, organizations are wading through uncertainty and complication to develop specific IoT solutions for specific problems.
That’s why it’s absolutely critical to understand the benefits of what the organization is attempting, to make the uncertainty worth it. And the less uncertainty and more clarity on the outcome, the better. But of course, this doesn’t matter either if the cost isn’t low enough.
So whether you’re building IoT solutions, buying them, or just following the market from afar, focus on areas in which value is clear and costs are low. Although identifying these areas is no easy task either.