How to Make Sense of the Internet of Things

— by Alok Batra

No sooner had the fervor over the 2015 International CES show subsided, than the realists gave us a doze of reality check on the Internet of Things (IoT).

This week, Washington Post contributor Dominic Basulto wrote “3 reasons why the Internet of Things (still) doesn’t make sense”. It is always valuable for technology enthusiasts to examine things in pragmatist’s eyes, because it forces them to search for the real path leading to the ideal future.

Below I start with the views of Dominic and explain my interpretation of the real gaps:

First, price is too high for consumers.

The question was, are you willing to pay $99 for a “smart” light bulb? How much is the price appetite for an Internet-connected coffee maker? It seems obvious that there are a limited number of items that people are willing to pay a premium price for, and hence all the smart ideas for smart gadgets cannot possibly be consumed by the market. So, is the lesson here for the technologist to drive cost down?

Not entirely. Instead of asking the price question, we should ask the value question. Does a connected coffee maker drastically change people’s way of living? Does smart light bulbs make people feel better about themselves in a significant way? If the answer is “no”, then why bother investing tremendous effort to create something of incremental value, and eventually only get sold at an incremental price point?

Second, the “basket of remotes” issue.

How many individual apps do we want to run on our smart phones? One for thermostat, one for garage door, one for coffee maker… ? The interoperability challenge seems to be technically rooted in the lack of communication standards. But the tougher barrier comes from the fragmentation of the market. It is against the interest of the appliance providers (such as Phillips) to make their “smart” things cooperate with other companies’ “smart” things. And Dominic was right, it is infeasible to imagine even a big company like Samsung or Apple can put our home “in a box” just like Apple has put our personal gadgets (camera, flashlights, GSP, etc.) all in the enclosure of a phone case. We all ask the question of the standards. We all keep our fingers crossed that the big guys are going to play nice and settle on a standard – good for all. But back in our mind we all fear that it is not going to happen any time soon.

The truth is, the answer does not lie with any of the big, incumbent device makers. The answer lies with new, disruptive software and service companies, who can take on connected home (for example) as a service, hence relieving consumers from the burden of configuring and maintaining a complex system. Remember how the Internet service providers used to take the pains to send a few people to your home, connect the cable, put in the box, configure your TV(s), computers(s), make sure everything works, and then hand you a phone number for support? The market will have appetite for this type of services if the first question ofvalue is addressed.

Third, more connected things create more vulnerability on privacy and security.

Dominic gave the vivid example of hackers hacking into your bathroom mirror and release your naked selfies to the Internet (even though we have the same risk with cloud services and smart phones today). Part of such concern comes from our skewed interpretation of the “Internet of Things” definition. We think that IoT means all the things have to be connected to the Internet, all the time.

Remember (way) back in 2013, before the IoT hype takes over the media, we were talking about Machine-to-Machine (M2M) along with IoT? Although the two are overlapping in their vision, M2M emphasizes more the peer-to-peer communication between devices, that is, the Internet does not have to be involved. Your mirror can talk to your shower directly, from a local network connection. And the same local network is orchestrating the collaboration between your other devices at home. Even though no system is hack-proof today, taking the devices off the Internet will make them much less likely to be security-compromised.

Before I conclude, I will propose three ways to think differently about IoT opportunities:

First, think smart systems, not just smart things.

The value of smart systems is exponential; the value of smart things is usually linear. The smart phone ecosystem is a system. A smart home or a smart factory is a system. But a smart thermostat is still a “thing”. The value question needs to be addressed at the system level.

Second, think about business applications, not just consumer applications.

Not only do enterprises hold much stronger ROI equation for the IoT investments, they also have the resources, the experience, and the might to make sure every damn connected things work together, standard or no standard. The interoperability challenge may be solved in industries earlier than they are in homes.

Third, think edges, not just cloud.

Cisco has been heavily promoting the “fog” architecture. More and more IoT should happen at the edge, between the edges, and within the enterprise, with only higher layers of the system in the Cloud. IoT at the edge can reduce service latency, improve QoS, and help ease privacy concerns.

In short, is the Internet of Things making sense to you? Maybe not yet if you are a consumer. But it has to if you are a technologist who will drive it to happen. And if it still has not yet, you may need to switch a few lenses before finding the best vantage point.