The Internet of Things isn’t new. For a while now we’ve had tags in clothing and sensors that can detect the flow in a distant pipeline or traffic jams around the corner.
But looking towards a consumer-facing IoT, the extent of our dreaming was a fridge that would detect whether we needed to buy milk or that would have an Internet terminal built into the door (one of the world’s oddest design ideas – as if we need to check out our Facebook page when we wake up in the middle of the night to grab a piece of leftover chicken).
But slowly, consumers start to see things that might actually make a small difference in their lives: a thermostat that saves you some money, makes your home more comfortable, and looks kinda cool too; a watch you can wear when you go jogging; or a system to help you water the lawn (and not waste water if it’s about to rain).
It might have taken us time to get there, but we suddenly have visible examples in the world around us and the Internet of Things starts making sense because it isn’t about “things” it’s about US - it’s about more comfortable lives or greener grass or encouragement to jog just a little bit longer because we want to see our pulse race.
The Battle for the Home
Matt Turck writes at TechCrunch that venture capital is starting to pour into the Internet of Things, and with it the battle is heating up for the connected home, pitting scrappy start-ups against established incumbents:
While this new generation of startups has an exciting opportunity in front of it, the path to success will also be narrow. To succeed long term, startups will need to maneuver shrewdly among the giants in the space, and do what startups do best: deliver truly ground breaking products, build developer networks, bet on openness and interoperability, and leverage data in innovative ways.
It’s an unusual space: usually the big giants slumber, are late to wake up to how their industry is about to be upended (think the music industry and you’ve got the idea), and then notice one day that some little company in California is tracking to a multi-billion dollar valuation.
But for the connected home, the giants are already there – from cable companies wiring up your home to the big appliance companies wiring up your toaster and fridge.
However, for all the enthusiasm on crowdfunding platforms and in the press, this is already a crowded space. Many of the existing players are large companies that come equipped with deep distribution networks and a whole ecosystem of service providers that make a living installing and maintaining their products.
What the Connected Home Means for Bluetooth LE
As goes the home, so goes the rest of the world. Because while Bluetooth LE is a key driver of the automated home, its bigger premise is to create proximity nodes in the rest of the world too.
And much like Nest might make IoT visible in the home, Macy’s is taking a crack at making beacons visible in retail: grabbing a large share of the headlines over being, um, “first” to create a connected shopping experience in a store.
Matt makes a larger point: that while these might be the first visible fronts in the war for the home (or in Macy’s case, the war for retail), there’s a longer-term battle underway:
One key choice is whether to go “product first” (build a consumer product, like Nest) or “platform first” (build a platform that connects all products, like Revolv). The former involves more hardware, but arguably offers a better chance of gaining rapid sales traction if the product delivers. It is also less of an immediate challenge to most of the large companies in the space. The path to control of the home involves releasing multiple products that connect to one another (which Nest is starting to do with its Protect smoke alarm), and eventually become a platform.
I tend to think of it another way: there’s a stack of technologies that underpin a user experience, and in the early days it’s a battle to the middle.
From the top of the stack are the large existing consumer-facing apps like Facebook or Pinterest and at the bottom of the stack are the chips that run the devices that are the beacons in the world around us.
In a world of beacons, there’s a race for:
- Product (beacons) and their associated services (cloud management)
- Platforms (whether content management systems, messaging like Urban Airship, or in-store analytics)
- User experiences, the third leg of the stool, embodied in apps or watches and interfaces
Where Matt sees a hardware/platform battle, I see the third contender (the user experience) being the ultimate battleground for beacons and Bluetooth LE because it’s the thing you see, it’s the place where feeling happens, it’s the place for delight.
Seven Success Factors for a World of Beacons
Matt finishes his review of the home automation battleground with seven success factors that start-ups (and incumbents) should keep in mind. Check it out…because it’s a pretty good tick list for the companies battling it out for beacons.
I’ll take a few liberties (with apologies to Matt!) and present a revised/edited checklist for a world of beacons:
- Design quality is hugely important in transforming beacons and the experiences they create into moments of delight and desire.
- Simplicity of installation and usage will be essential: little effort in, maximum return out. Whether setting up a beacon in your store or managing them from a distance.
- System integration and ROI are key, especially in areas like retail, where beacons need to integrate with existing CRM and analytics systems that retail incumbents have spent tens of millions of dollars deploying.
- In the same vein, startups will need to deliver real innovation. Simply adding connectivity to a home/store/gallery/venue doesn’t make it great. Is the connected product 10X better than its analog equivalent? Or, even better, does it simply not have an analog equivalent? If your beacons experiences aren’t somehow ten times better than just talking to a shop assistant then why are you doing it?
- A multi-product vision and the ability to release successful products back to back will be crucial in building self-standing, long-term successes in the space. We need more than one kind of beacon. We need dozens of kinds, and we need them to integrate with other forms of technologies and systems: from loyalty programs to social media, from GPS to accelerometers.
- Software openness and interoperability will be necessary to successfully build developer networks and partnerships. There is already a splintered approach to how beacons are being managed and deployed and we’ve barely started.
- Perhaps most importantly, startups will need to be true “data natives”. Many connected devices offer exciting opportunities to build “data network effects”: each device captures data that, aggregated and analyzed at the cloud level, enables the extraction of insights that in turn make each individual device smarter, through machine learning and predictive analytics. This is one of the main reasons why the Internet of Things goes much beyond a simple hardware play, and will be a key aspect of the defensibility of the winners in the space: you pay for the hardware, but the software (and data) is what keeps you using the product.
Where Does Your Value Lie?
Where does YOUR value lie? The platform, the product or the experience? How far are you willing to go to create experiences that don’t just add a slightly sexier layer to what already exists, but that transform and delight? Are you delivering a digital coupon book? Or are you changing the very nature of the consumer experience?
Because whether at home or on Main Street the Internet of Things isn’t just a new technology – it’s a whole new way of experiencing the world itself.
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