I went to a recent Lewis Silkin LLP event, ‘Overcoming the Legal Implications of the Internet of Things’ to explore the commercial rewards – and possible legal pitfalls – of the IoT.
I use a connected thing every day, and in case you were wondering, so do an awful lot of people. I could bore you with stats but I find it fascinating to look at thingful.net – a search engine which locates open connected devices (the tip of the iceberg) on a Google Earth style map. The amount of devices appearing, whether it’s in my neighbourhood or on the hills overlooking Nairobi, is mind-boggling.
The media have also been paying attention; connected homes are now frequently featured in business and consumer press. Most recently, John Lewis announced that they were devoting a space in their flagship London store to connected devices and products. Having seen 81 per cent growth in sales over the previous year, that looks like a sound investment.
Our clients are also getting involved. We’re working with E.ON to connect their smart meters with their website, and we were excited to see Sony announcing their new connected product range Life Space UX at CES recently. IoT 1.0 is well and truly here. The immediate focus seems to be on monitoring and controlling our environment, and reducing the friction in doing just about anything anyone can think of.
Naturally, sceptics abound, but that’s understandable. We’re at the beginning of a long journey, and there’s not much in the current crop of connected products that inspires a great deal of excitement. But frankly the same could have been said of the late nineties: in the days of geocities and Alta Vista it was hard to imagine the speed with which the web would evolve.
Beyond products: this is changing everything around us
Of course, the IoT is not restricted to consumer products, and it’s interesting to see data specialists like Jim Anning at British Gas getting excited about ‘sexy’ minority report style interventions to fix boilers before they need fixing. And in my own experience, I’ve explored the benefits of introducing IoT to Catalyst housing, where there is potential to deliver huge cost savings and customer experience improvements using sensors and automation. Indeed, these approaches have been used in Industry since the 1970s - search SCADA to find out more.
There are some encouraging concepts emerging elsewhere too, particularly within the connected car space. VISA have been working with Hyundai on a prototype of connected services centred on payments, and a range of organisations are looking at different facets of the opportunity, including car-to-car communications (safety) and monitoring / telematics (insurance).
It’s interesting to see how the connected car opportunity is far less focused on individuals interacting with objects. Instead these innovations place more emphasis on data, location, and interactions with other objects; scenarios involving multiple actors and observers within dynamic environments, where everyone and everything within those environments is a potential participant or contributor. This offers a clearer signal as to the true potential of IoT.
The key to these scenarios is simplicity. Humans will not welcome a connected world that requires constant intervention. Wherever possible machines, products, and services will need to work behind the scenes. Automation and personalisation must deliver experiences that just happen. Given that assertion, the threat to progress in the IoT space becomes abundantly clear.
Technology giants vs Open source
Within the new commercial and technical spaces created by IoT, battles for supremacy and dominance are naturally emerging. Established technology giants are ranged against startups, as well as ambitious hardware manufacturers. A number of alliances have been formed and proprietary platforms are creating unwelcome layers of complexity that will hinder adoption if left unchecked.
Fortunately, there are some interesting and exciting counterweights emerging. Microsoft are championing ‘Open Translators’ as a means of enabling interactions between different proprietary platforms and hardware. Meanwhile, the Blockchain is increasingly touted as a world changing technology. Its ability to establish verifiable truths about digital transactions provides a potential solution to the gnarly authentication challenge.
Commercial opportunities and pitfalls
With connections to homes, vehicles and environments, organisations will be closer to consumers than ever. Contextual personalisation should give rise to business propositions tightly focused on measurable outcomes; dynamic insurance policies for example, tightly tied to consumption, location, and other factors. We’ll also see frictionless purchases, such as Amazon’s DRS, an instant replenishment system for consumables used by printers and coffee machines alike.
We’ll see ‘traditional’ products move into service relationships, and sometimes morph into something else entirely. AT&T’s digital life hub was once a home security product. Over the course of their natural replacement and sales cycle they shipped their boxes with a range of connected technologies including Z-Wave, ZigBee, Bluetooth, and more besides. Suddenly, with a range of product and hardware partners, they were a major player in the smart home market.
Of course, ‘with great power, comes great responsibility’. Nest recently ventured beyond the smart thermostat market, with their purchase of Revolv – a German smart home hub. They’ve bricked that product and absorbed the team within Nest, to the chagrin of customers, who’d purchased those hubs with the promise of long-term support. Companies who enter the IoT space need to factor in the long-term responsibilities inherent in IoT products and their integration with customer’s lives.
The data gathered by connected products and service is a source of great promise. The IoT takes us beyond the realm of big data and into a realm of massive data. Convergence of multiple sources of data will unlock enormous potential for organisations to exploit data for commercial gain. However, Simon Morrissey at Lewis Silkin highlighted that “regulators are already considering the ramifications of what could amount to in-home surveillance. Permissions and consent will be critical and this could limit the opportunities for commercial exploitation”.
So where does this leave us?
With all this data flowing between connected products, services and platforms, it seems likely that organisational mindsets will shift toward partnerships and collaboration. For example, Innit – a new kitchen product ecosystem – have negotiated an interesting tie-in with Good Housekeeping, an established and trusted publisher with a valuable archive of recipes. It’s no great leap to imagine their content served up in the kitchen. Revenue will increasingly rely on the ‘network effect’ of integrating commercial ambitions in complex value chains.
Fridges, mixers, and cookers, seem likely to become vehicles for contextual advice and product promotion but, as Geraint Lloyd Taylor at Lewis Silkin was keen to emphasise, where content is concerned the boundaries between information and marketing will need to be understood. While seeking new opportunities, organisations cannot afford to discount established guidance for advertising and marketing.
In among all these opportunities, hardware manufacturers need to be aware of their changing roles. David Deakin at Lewis Silkin suggested the likelihood that connected kitchen products would inevitably introduce biddable product advertising opportunities. Where there’s a recipe, there are products needed to make it, and with ordering capability wired in brands are sure to try to gain preferential contextual placements.
Welcome to the world of kitchen products as services and media networks! Indeed, you could draw a parallel with the set top boxes introduced into our homes by cable TV providers. Once upon a time these cost a few hundred quid on subscription, but they swiftly became bundled into the subscription. So here’s a thought – will my connected fridge be given freely by my groceries supplier in return for a contract tying me into a relationship?
Put simply, I am convinced that the IoT will usher in a new wave of disruption, potentially on a grander scale than we’ve already experienced. Organisations wishing to embrace the wealth of opportunities presented should have no illusions as to the extent of change required. Changing roles will introduce new roles, skills, and competences. Connected technologies require heavily integrated back-end systems. And an ever-changing commercial landscape will favour agile and flexible businesses. The IoT offers tremendous rewards for the brave and the bold, and little room for prevarication. I say bring it on.
Simon Nash is a strategy director at Hugo & Cat