The Internet of Things: What Does it Mean for Businesses and Consumers?
Driven by the rising interconnectivity of digital devices and access to fast broadband, the Internet of Things (IoT) has the potential to transform traditional relationships between consumers and their environment. In essence, IoT signifies the capability to connect everyday devices and appliances, such as fridges, toothbrushes, thermostats and watches, to web-based networks. This integration opens up a number of new segments, ranging from data-analysis instruments for both businesses and consumers, to small-screen advertising, digital device updates and a variety of communications add-ons. However, IoT is only at present applicable to advanced markets, which have strong IT infrastructure, while infringes to consumer privacy are also a potential concern.
IoT Could Launch a Variety of New, Lucrative Segments
IoT has become the corporate buzzword of 2014 among digital businesses, driven by the sector’s potentially borderless opportunities. Trade sources forecast the IoT market to reach a global worth of US$7.1 trillion by 2020, and here are some reasons why:
- The household consumer appliances segment could see a renewed growth spurt if more durables boasted Internet connectivity. Fridges that monitor internal content, microwaves that can analyse calorie intake and air conditioners that are able to automatically adjust to weather patterns are just some examples of potential home innovations. Global consumer expenditure on household appliances reached US$382 billion in 2013, growing by 2.8% in annual real terms;
- With web-enabled smartphones reaching almost universal possession levels among developed world consumers, IoT can turn the mobile handset into a domestic smart-home remote control. This would expand the number of potential apps, programmes and software offerings for smartphones. Mobile Internet penetration reached 70.2% of all mobile subscriptions in advanced economies in 2013;
- The advertising segment would receive unparalleled access to consumers if IoT-connected devices such as wearable tech, fridges and cookers became web-enabled marketing platforms through small-screen capability. Global online adspend reached US$88.6 billion in 2013.
Digital Majors Jump on the IoT Bandwagon
While still not a mainstream proposition, IoT is a reality that the world’s digital giants have embraced:
- Google was one of the earliest entrants into the market by its purchase of smart device developer Nest Labs in early 2014. The US search giant has followed this up with an announcement that it is developing a new Android platform for wearable electronics;
- With the launch of iOS 8 in early 2014, Apple made the groundbreaking move of allowing third-party providers access to its platforms. Many believe this was motivated by a growing adaptation to an IoT environment where connecting to other non-Apple devices will be a vital capability;
- South Korea’s Samsung is entering the IoT fray with Tizen, an open-source operating system that is set to take on iOS and Android for connected devices. The company may hope the platform will act as an operating system for smart-home systems.
Privacy Concerns and Limited Global Appeal Offer Barriers
At present, IoT is only a realistic possibility for advanced markets and some wealthy, urban hubs in emerging countries. Connected home devices and service platforms would only be able to operate within a strong connectivity environment, unimpeded by slow Internet speeds and state censorship concerns. In 2013, less than a third of the developed world population were regular Internet users, though this is set to rise to around one half by 2030.
With the global digital space having been hit by a number of scandals surrounding state and corporate infringements of privacy, as well as the ongoing fear of cybercrime attacks, there is considerable concern that more web-enabled devices will simply offer more ways to access consumer data illegally. Whether consumers would be willing to give up more privacy for convenience and connectivity is a major conundrum for the corporate world.