Addressing Consumer Confidence in IoT and What This Means for Consumer Product OEMs

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4Q 2018 | IN-5253

In any forum or discussion, definitions are critical as they enable a common understanding of a word or subject. The world of technology is no different, and discussions regarding technologies such as the Internet of Things (IoT) are usually prefaced by an attempt from each party to understand how the other side defines the terms being discussed. Otherwise, it soon becomes apparent that there is a gap between how the terms are used by one side and how the other side actually understands them.

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Defining the Internet of Things

NEWS


In any forum or discussion, definitions are critical as they enable a common understanding of a word or subject. The world of technology is no different, and discussions regarding technologies such as the Internet of Things (IoT) are usually prefaced by an attempt from each party to understand how the other side defines the terms being discussed. Otherwise, it soon becomes apparent that there is a gap between how the terms are used by one side and how the other side actually understands them.

Recent article titles such as “IoT Failures Plague 64% of Users Worldwide” and “IoT failures plague most users worldwide” create a sort of temporary panic. A closer inspection reveals that, in this particular instance, “IoT users” include only consumer IoT users and not enterprise or industrial users, and the term “failures” includes any perceived performance issue on the part of the user. While the actual reality is far from dire, as these hyperbolic and clickbaity article titles would suggest, the underlying issues that consumer IoT manufacturers and solution providers need to address are not only delivering consumer-ready applications that meet consumer needs and expectations but also, more importantly, helping both consumers and providers understand what these expectations are.

A Lack of Consumer Confidence

IMPACT


Both of the abovementioned article titles reference Dynatrace’s recently conducted IoT Consumer Confidence Report, where 10,000 consumers were surveyed to understand their IoT experiences and understanding of smartwatches, smart thermostats, smart meters, connected automobiles, and smart kitchen appliances. While relatively few consumers surveyed actually use these devices, the majority of those that did use them reported having performance issues of some kind—generally meaning that their expectations of these devices and solutions were not being met. More importantly, the survey revealed that there is a large level of distrust in these solutions from nonusers. Eighty-five percent of respondents feared that self-driving car malfunctions would lead to high-speed collisions, while 62% stated they would not trust IoT devices to administer medication. Even if these “smart” solutions do drastically reduce automobile fatality or medical error rates, they are still incredibly novel. Even the smallest of errors seems to overshadow the fact that, in the United States, there were over 40,000 automotive fatalities last year and the third-leading cause of death is medical error. There is an inherent gap in consumer understanding of these solutions that results in a sort of technophobia—an irrational backlash against these technologies that providers somehow need to combat rationally. Moving forward, solution providers need to more effectively address safety, privacy, and performance issues to drive consumer IoT adoption, to ensure that their solutions are marketed accurately, and to ensure that consumers are adequately educated.

Educating End Users

RECOMMENDATIONS


Unfortunately, there is a complicating factor. Consumers often want the lowest-cost product, which does not always translate into the solution with the best experience. This is not as much of an issue for some of the higher-end solutions. However, for lower-end solutions, this price pressure means that certain solution components, such as user education or security, are often neglected by creating a watered-down product that the consumer expects but for which the consumer is unwilling to pay. As a result, many manufacturers are moving toward the lower end of the market in order to sell higher volumes at lower costs. These off-the-shelf smart home devices and systems have brought increased competition to the market while falling short of the value that more expensive installer entertainment systems provide. As the costs associated with creating and operating these connected devices decrease while the capabilities increase, there will be a rise in the number of consumer IoT experiences. ABI Research predicts that there will be 4.5 billion global smart home installations by 2022.

Manufacturers of these solutions need to be clear about both the benefits and shortcomings their solutions provide and ensure that end users understand these benefits and shortcomings. For higher-end companies such as Creston, ELAN, and AMX, this translates into educating the consumer during the professional installation process. For off-the-shelf providers like Amazon and Google, this translates into having dedicated customer support resources available for end users. Mid-range solutions have not fared as well; middle-market solutions such as Prodigy and System Builder are being discontinued due to the difficulties inherent with providing enough value and functionality to justify a higher price over lower-end solutions while still remaining attractive to consumers. Regardless of which market is targeted, providers need to make sure that end users are educated in the technology and rightfully understand solution expectations.

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