Forget the Internet of Things – it’s a bubble. The majority of products currently claiming to be IoT devices are just the same, vertical M2M products we’ve always had, but taking the opportunity to benefit from a rebrand. Most of the rest of the IoT is the wet dream of Venture Capitalists and Makers who think that by overfunding and stimulating each other’s egos in a frenzy of technical masturbation, they can create a consumer market for the Internet of Things. As the IoT slips slowly backwards into the foothills of Gartner’s Hype curve you need to look elsewhere to find the real Internet device opportunity, which is only just emerging. It’s the IoV, or the Internet of Voice.
The problem that the current IoT paradigm has is that it’s mostly about collecting data and then applying algorithms to extract value from the data. That’s a difficult job. You need to make the devices, work out how to connect them and then hope you can find something valuable within the data to engage the customer. The problem is that all of that takes time, not least the time to get a critical mass of products out into the field. The Catch 22 which most business plans ignore is that you need to deploy tens of thousands of devices to accumulate enough data before you can even see if there’s anything of value in it. But without an upfront value, people are loath to buy the devices. Everyone, from wearables manufacturers to smart cities are discovering that it’s not a very compelling business case, not least because it needs fairly technical consumers to install everything in the first place.
The Internet of Voice takes a different route. Instead of expecting users to know anything about the IoT, they just get to ask questions and then get answers. No more buttons, no more keyboards, no more coding, just ask. But it has the power to control everything we come into contact with. It could mark the end of our love affair with smartphones and is probably the biggest threat that Apple faces today.
If you know your Julius Caesar, you may guess where this is going. Arduinos can seriously damage your start-up and your investors. But before we talk about that let me start by saying that I love Arduinos. I use them around the house in all sort of projects; they water my strawberries, and automate all sorts of things which most people wouldn’t ever think need automating. I’ve recently been inspired by Kurt Grandis’ project using video recognition and a water gun to track and deter squirrels – I’ve plans to use that as the basis of a robot to stop the local wildlife stealing our figs and apricots. Without Arduinos I’d never embark on some of the projects that eat up my free time.
I also love the innovation they enable. They underpin much of electronics design within the Maker community, letting makers accomplish projects that they would never have dreamt of starting without the benefit of the breadth of shared expertise which the community generates. The innovation of these developers has reenergised a love for making things for the sheer sake of it – because they can be made. For those of us who grew up with tinkering, frequenting the Tandys and Henry’s of this world, the Arduino and Raspberry Pi have brought back and re-energised a hobbyist love of design which most of my engineering generation thought had permanently died with the advent of mass market consumer electronics.
Not only that, they’ve helped the growth of crowdfunded hardware projects. Over the past few years Indiegogo and Kickstarter have blossomed, with all kinds of innovative concepts raising hundreds of millions of dollars of support from funders. Many of the prototypes for these developments only happened because they were based on Arduinos. And the process is self-fulfilling, as projects such as the RFduino, Qduino, Neutrino, Microduino, Piccolino, Attoduino, BLEduino, Garagino, Superduino, Tinyduino and others have developed ever more specialised variants to feed future generations of products.
Last week, after several years of build-up and hype, the world had the opportunity to place their pre-orders for the Apple Watch. It hasn’t generated the queues outside stores that have come to typify recent Apple releases, and despite some options “selling out” we have no idea what that means in terms of total numbers ordered, as supply is obviously constrained. Slice Intelligence reckon that over a million people signed up on launch day, but I suspect that’s over-optimistic. Nor I am I convinced by other analysts predicting sales of 19 million this year. However, over the course of the rest of this year I expect several million people around the world will spend between $349 and $20,000 each to acquire one. It will be the start of an interesting experiment which is far more than just about what we wear on our wrist. I see it as a similar, but larger scale experiment along the same lines as Google Glass, albeit a much lower risk one in terms of social acceptance. But it is still an experiment. To succeed it will need to change user behaviour – it’s not enough that it’s just a new Apple toy.
It may turn out to be an experiment which will indicate whether our love affair with the smartphone has a best-before date. That may seem an odd statement, but we’re already seeing some interesting feedback from people who have had the opportunity to trial the Apple Watch. Matthew Panzrino at Techcrunch has interviewed a number of these, reporting that the biggest recurring theme from those lucky few is how little they use their iPhone once you have an Apple watch. People he spoke to that have worn the Apple Watch said that they take their phones out of their pockets far, far less than they used to. One user told him that they “nearly stopped using their phone during the day; they used to have it out and now they don’t, period”.
Last month at the Apple presentation Kevin Lynch echoed the same point remarking that “you can put your iPhone down when you get home – you don’t need to have it with you all of the time”. For the VP of Technology at Apple to say that sounded almost heretical, but it highlighted an important point – Apple connectivity products, like the iPhone and Apple TV could become invisible hubs for connectivity to more personal products which Apple may produce in the future. That could have an important bearing on the way we use smartphones.
Apple is doing a lot of interesting things in its product ranges and we’ve yet to see how they fit together, or what that will mean for the future of the Apple ecosystem. But it’s important to get past the hardware and understand how they could work as an ecosystem to change behaviour. This is my view of where the iPhone may be going.
Over the past year I’ve been following the hype around smart wearable technology. Fuelled by the enthusiasm of the big players to embrace this market, analysts are falling over themselves to define and inflate the size of the wearable market opportunity, predicting a market worth over $30 billion by 2020. That belief is driven by a desperate need for major companies to find something to follow on from laptops, tablets and PCs, all of which are being commoditised. In his seminal book on technical disruption “The Innovator’s Dilemma”, Clayton Christiansen warns that “no one can learn from market research what the early market will be. I can hire consultants, but the only thing I can know for sure is that their findings will be wrong”. As I look at the current predictions, that warning feels worryingly appropriate.
The problem is that most of the models being used to estimate the consumer appetite for wearable technology are built around technology push, with manufacturers trying to shape their technology to fit what they believe consumers will buy. It’s a strategy that is likely to fail, as wearable technology is more personal than any product they’ve ever made before. To try and see whether there is a market, I’ve put together a report that looks at the market opportunity from the contrary viewpoint, building it up from known consumer behaviour and preferences. Whilst there’s no guarantee that doesn’t fall into the same Christiansen trap, it suggests the market could still reach $30 billion in 2020, but with a very different mix of products being made by some very different companies. You can download the report here.
A few months ago I wrote a report about the wearables market. At the time I was sceptical about the future of the smart watch. That was before the Apple Watch announcement. I didn’t think I’d find it very interesting. Now I’ve seen it, I’ve changed my mind – I think they’ve redefined the market by turning the concept of the smart watch on its head.
The prospect of Apple owning the wrist galvanised many other manufacturers into pre-empting them, of which the most notable contenders were Pebble, Motorola, Asus and Samsung. All want to seize the wrist, in what might be described as a case of carpus diem. Many in the industry want to believe in these products, predicting massive sales volumes and revenue. Few have bothered to ask customers what they want. Two who did were Kantor and Apple Insider. Kantor’s panel suggested up to 60% of iPhone owners would buy one, Apple Insider found “as many as 4%” of iPhone users would be early adopters, translating that finding into an estimate of sales between 5 and 10 million units in the first twelve months”. So what’s the truth?
When the Apple Watch announcement came, it only generated a muted whimper of excitement. It wasn’t what most commentators had expected. That was hardly surprising given the level of hysteria which had been whipped up prior to its unveiling. Whilst a lot of subsequent reviews have complained about its lack of functionality I found that I warmed to it, or at least its potential. It’s not just clever packaging of technology, which is what exemplifies the Asus, Motorola and Samsung watches – it’s a redefinition of the purpose of the wrist. I think it may be more of a game-changer than has been reported, but not necessarily in a positive way for the rest of the smart watch industry.
This year at CES – the market defining Consumer Electronics Show in Las Vegas, the general consensus was that 2014 would be the year when wearable technology took off. There were some dissenting views – some thought it would be the year of Home Automation, particularly when Google went and splashed out $3.2billion for Nest, whilst some felt that maybe the Internet of Things would move from being a playground for geeks to a mainstream business. But if you look at what is actually going into production, it looks like wearables was the best bet. That was reinforced at the Mobile World Congress in Barcelona. Phones and hardware were distinctly passé, the excitement was in what you could wear.
The reason the industry is having this debate is that it’s entering new territory. It’s generally agreed that we are in the post-PC era. Whilst PCs and laptops aren’t dead, they’re a declining market. It’s a long time since anything happened that made people go out and buy a new laptop. Most people don’t change their laptops any more. They wait for them to die and them replace them, just like light bulbs and fridges. Smartphones are facing the same fate. It’s no longer cool for most people to have a new smartphone and there is increasingly little to differentiate between them except price. They’ve reached that plateau where the only thing for manufacturers to do is to make them cheaper and try to saturate the market. Even tablets are entering the same territory, with Android tablets turning them from must-have accessory into commodities.
It’s a problem both for big brand names and also for the ODMs and factories which are churning them out. The latter are desperate to find the “next big thing” to the point that they’re courting new startups for small scale production runs which they would not have countenanced a few years ago. Wearables are the top of the list as the next desirable product. The question is whether that reflects reality, or whether the industry is at risk of believing its own PR?