It’s a common fear: What if you threw a party and nobody came? One report suggests that may be the fate of the Internet of Things (IoT) in the consumer market.
Security concerns regarding the IoT have been acknowledged across all industries. But that’s not what has consumers dragging their feet. A majority of consumers see little or no value to IoT in the home, according to research and consulting firm Accenture. Sixty-two percent of the 28,000 consumers surveyed said that IoT devices are too expensive relative to the benefits they offer.
The electronics industry has placed its bet on IoT for the next wave of market growth. Component makers are churning out IoT devices, kits and tools; electronics distributors are providing design and supply chain support for IoT startups; OEMs and EMS providers are designing and building IoT products. The electronics industry is banking on IoT to create new products as well as increase the electronics content in major appliances, HVAC products, security systems and other consumer items.
But consumers are finding IoT devices hard to use. Sixty-four percent of early IoT adopters faced some sort of challenge with their devices, Accenture found. The most common problems cited: the device could not connect to the internet; it was too complicated to use; there were problems setting up the device; and it didn’t perform as advertised.
Accenture also found that security has moved from being an abstract concern to a reality among consumer IoT users. “Consumers are now choosing to abandon IoT devices and services over security concerns,” Accenture said. More than two-thirds of the consumers surveyed are aware of the recent security breaches such as hacker attacks resulting in stolen data or malfunction. Out of the consumers aware of hacker attacks and owning or planning to own IoT devices in the next five years, 18 percent decided to terminate the use of the devices and related services until they get safety guarantees. These are customers who once saw value in the device or service but now perceive the risk to outweigh that value.
An additional 24 percent decided to postpone purchase of an IoT device or service subscription they were planning due to concerns over security, Accenture found. Overall nearly half (47 percent) of consumers cited “privacy risk/ security concerns” as a barrier to adoption.
But all is not lost. There are three things consumer technology companies can do to ignite IoT growth, Accenture said:
Fix the known roadblocks.
- Offer a compelling value proposition to customers: Given that price is the top barrier to the purchase of IoT devices, consumer technology companies need to improve the value equation in consumers’ minds to increase adoption.
- Ensure a superior customer experience: Consumer technology companies have taken a step in the right direction but there is still much work to be done.
- Build security and trust: Security is a barrier but it is also an enabler, if companies can establish consumer trust. Addressing physical safety and security needs (through solutions such as connected home surveillance) is a top use case of interest to consumers.
Ignite innovation to avoid stalling.
- Shift investment to disruptive innovation: Accenture found channeling more investment into established technologies, such as smartphones, is providing diminishing returns. If consumer technology companies could create a high performing team whose sole purpose is to explore disruptive breakthroughs, that group may generate uneven short-term results but with cross-pollination could bring a bigger “home run” culture to the entire enterprise.
- Leverage IoT to create new types of customer solutions and experiences: IoT offers a better possibility of creating solutions that meet customer needs than ever before. Now that IoT devices and a more open technology environment are a reality, it may be time to go back to the shelf to see what previous innovation could be market-viable and attractive to consumers.
- It’s time to innovate with partners: Sharing data and creating integrated services across multiple companies—such as building a connected home through an integrated home security camera, thermostat, door locking and more—provides consumers with a richer experience and an opportunity for each company to offer a more robust set of services.
- Leverage strengths, including the data, of each player: Increasingly no individual company can develop and deliver the holistic experience customers demand. Instead the industry needs to look for collaborative partnerships that leverage the unique capabilities of different players.