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When will the IoT market eventually crash ?

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I attended the first day of Unconvention in Brussels in January and what I saw and heard made me reflect on the value of innovation.
During the first set of presentation, a speaker explained the current state of an IoT project in Porto where sensors had been implemented everywhere to make the city management more efficient and life more livable.
For instance sensors measured pollutants (ozone and CO2) and connected to busses’ wifi Hub spots to send their data. More than 100 garbage collectors had been equipped with sensors to detect the level of garbage and help waste management authorities decide on the trucks’ routes to collect waste. Those sensors, the speaker said, sent already some 722 Mb/day worth of data.

This looks great, doesn’t it ? A smart city, full of interconnected sensors which will enable more efficiency and better life conditions. Well, to me “smart city” is yet another buzzword like “IoT” (Internet of Things) and “Big Data”. Everyone wants to claim using it, but in reality no one really knows how to deliver customer value. Of course there are exceptions. Some kind of sensors are really useful and have been massively adopted (smoke detectors for instance) but let’s face it. Most applications today are adding marginal value and are priced for the happy few only.

So, let’s go back to our smart city of Porto. Here are a few questions I asked myself when attending the presentation.
The use case is technologically very attractive, but what is the net value added by so much technology ? Will such so much technology, inter connectivity, actually add more value than it destroys ? Why aren’t we trusting human habits and common sense more rather than trying to automate everything ?

In the end, everything has a cost. Technology has a cost that the community will have to bear: hardware, software, R&D efforts, maintenance … the question to me is whether all those interconnected sensors will eventually make us better off. Don’t you think that there is a risk of squandering money and time to marginally optimize something that is already working well ? What difference does it make whether a truck collected a half-full garbage collector on its pre-determined truck ? Not sure about that.

The use case of Porto as a smart city reflects in my opinion the lack of attention dedicated to the value added by technology in general and by IoT in particular. Most connected objects actually fail to make their way to their customers. GfK predicted a whooping 30 connected objects by household in 2020 and Gartner 26 billions connected objects in 2020. All wrong. Most connected objects on the market today are addressing micro-needs of micro-segments and are created by geeks and nerds who forget to optimize their costs to sell their products. Who really needs connected objects worth 200€ which will end up in a drawer after a few weeks. The only product that leads to repeated use is the smart watch; yet it’s far from being perfect and can’t live without its paired smartphone.
Add the security problems of connected objects (there is no safety actually) and you understand why it’s far from being a mass market.

Conclusion

The market of IoT and connected objects is full of useless products that hardly seduce even the most early adopters. They fail, like early attempts to create smart cities will fail, because they don’t create real value for the end user. There are nothing but early unachieved dreams that techno-entrepreneurs are trying to “sell” to very early adopters and naive investors. Let’s meet back in 2020 and see how much of the GfK and Gartner predictions have neen fulfilled. In the meantime, if you really want to create something valuable for the end consumers, contact us.

Image : shutterstock

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Author: Pierre-Nicolas Schwab

Pierre-Nicolas est Docteur en Marketing et dirige l'agence d'études de marché IntoTheMinds. Ses domaines de prédilection sont le BigData l'e-commerce, le commerce de proximité, l'HoReCa et la logistique. Il est également chercheur en marketing à l'Université Libre de Bruxelles et sert de coach et formateur à plusieurs organisations et institutions publiques. Il peut être contacté par email, Linkedin ou par téléphone (+32 486 42 79 42)

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