Business: The internet of things: Where the smart is
Connected homes will take longer to materialise than expected.
The fanfare has gone on for years.Analysts have repeatedly predicted that the “internet of things”, which adds sensors and internet capability to everyday physical objects, could transform the lives of individuals as dramatically as the spread of the mobile internet.Providers have focused on the home, touting products such as coffee pots that turn on when the alarm clock rings, lighting and blinds that adjust to the time of day, and fridges that send an alert when the milk runs out.
But so far consumers have been largely resistant to making their homes “smart”.That’s not for want of trying by tech firms, which have poured cash into their efforts to connect everyday objects to the internet.In 2014 Google made the biggest statement of intent so far, spending $3.2 billion to acquire Nest, a smart thermostat-maker, and $550m to buy Dropcam, which makes home-security cameras.Nest absorbed Dropcam; it is now one of the best-known smart-home brands.But it is also a warning about how long it will take for such gadgets to enter the mainstream.
Nest has undoubtedly disappointed Google.It sold just 1.3m smart thermostats in 2015, and only 2.5m in total over the past few years, according to Strategy Analytics, a research firm.For a couple of years the firm has mainly tweaked existing products rather than introducing new ones.That may explain why Tony Fadell, Nest’s founder and boss, stepped down on June 3rd to take an advisory role at Google’s parent company, Alphabet.Mr Fadell, a former executive at Apple and designer of the iPod, failed to bring his magic touch to the smart home.
Nest’s problems are symptomatic.Only 6% of American households have a smart-home device, including internet-connected appliances, home-monitoring systems, speakers or lighting, according to Frank Gillett of Forrester, a research firm.Breakneck growth is not expected; by 2021 the number will be just over 15%.Too few consumers are convinced that the internet has a role to play in every corner of their lives.A survey conducted in Britain by PricewaterhouseCoopers, a consulting firm, found that 72% of people have no plans to adopt smart-home technology in the next two to five years and that they are unwilling to pay for it.Last year consumers globally spent around $60 billion on hardware and services for the smart home, a fraction of the total outlay on domestic gadgets.
There are several reasons for muted enthusiasm.Businesses have an incentive to embrace the internet of things: there are cost savings to be had from embedding sensors in equipment and factories, analysing the data thus produced and improving efficiency.A lot of smart devices for the home, in contrast, remain “fun but not essential”, says Adam Segar of Canary, a startup that makes cameras that lets people monitor what is happening in their house.Many smart gadgets are still too expensive.One of Samsung’s smart fridges, with cameras within that check for rotting food and enable consumers to see what they are short of while shopping (through an app on their phone) , sells for a cool $5,000.