July 28, 2015 | Authored by: Vindicia Team Blogs
2 challenges facing IoT
The Internet of Things is the future of business. Predictions vary on adoption rates, according to Tech Cocktail. The website cited a Gartner study that estimated there would be 26 billion connected devices by 2020. Cisco projected an even larger number in the same time period: 50 billion.
This is great news for manufacturers, or anyone thinking about getting into the connected device business. But a few challenges remain in mass adoption and sustainability for these companies. They are both related to consumer mindset. First, these businesses need to get past security concerns, and second, these companies need to get customers to embrace products as a service.
Security is emerging as a big issue for IoT devices. The problem is that as new devices are added to the Web, an increasing amount and variety of consumer information is at stake. If insurance companies some how get a hold of individual fitness data, are there potential implications? If someone finds a way to hack into a smart lock, theft could ensue.
"As new devices are added to the Web, more consumer information is at stake."
As every part of consumer life goes digital, a lot of problems could result. This particular issue is why the Federal Trade Commission recently released a report on IoT that recommended a number of best practices for device makers.
"The only way for the Internet of Things to reach its full potential for innovation is with the trust of American consumers," FTC Chairwoman Edith Ramirez said in a press release accompanying the report.
The report recommends that device makers incorporate security measures from the outset, rather than as an afterthought. Companies should ensure that any partners they work with maintain high-security standards as well.
There is a positive side to this, too, as the FTC pointed out. If data is managed appropriately, the vast amount of data could lead to improvements in health, energy use and many other areas. But before any of this innovation can take place, consumers need to feel assured that their data will be safe.
Seeing beyond the device
Monetizing the Internet of Things could be a significant challenge for manufacturers because it requires that these businesses shift consumer conception of what a product is. There is a lot of potential in this market if companies can figure out how to make this shift happen. According to Wired, Gartner estimates that the worth of IoT could reach $1.9 trillion. But unless companies figure out a proper monetization strategy, this may not happen.
"Companies could add more value to their products by offering software that provides additional features."
Companies are going to need to market their devices so consumers see beyond a one-time purchase and begin to see these products as services. And when that happens, they are going to need to build a subscription model for the software that is user-friendly and flexible. By monitoring how consumers engage with the product, companies will be able to learn which features could potentially be a premium add-on, as well as what different subscription plans would work.
Right now, when customers buy a connected device, it's often a one-time purchase. Once you buy a Fitbit, for instance, the company won't get any more money from you unless you add an additional device like the smart scale. Is there a missed opportunity here? Companies could add more value to their products by offering software along with these devices that provides additional features.
IoT has huge potential for businesses, but there are still some kinks that need to be worked out. Device makers need to make security a priority and convince consumers of the value of devices that offer an ongoing service. From there, they can offer subscription plans that retain a thriving customer base rather than customers that just make a one-time purchase of a product.
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