Business models that make the Internet of Things feasible

The bid for widespread home use may drive technical improvements.

For some people, it’s too early to plan mass consumerization of the Internet of Things. Developers are contentedly tinkering with Arduinos and clip cables, demonstrating cool one-off applications. We know that home automation can save energy, keep the elderly and disabled independent, and make life better for a lot of people. But no one seems sure how to realize this goal, outside of security systems and a few high-end items for luxury markets (like the Nest devices, now being integrated into Google’s grand plan).

But what if the willful creation of a mass consumer market could make the technology even better? Perhaps the Internet of Things needs a consumer focus to achieve its potential. This view was illuminated for me through a couple recent talks with Mike Harris, CEO of the home automation software platform Zonoff.

Harris doubts that individual device manufacturers can crack the home market. First of all, they have trouble reaching their potential customers and establishing trust. Second, they aren’t attuned enough to customer needs, which include devices you can drop on a stone floor without breaking and services you can bring up by pressing a single button.

Most importantly, they are not manufacturing devices that play well together — but the whole premise of smart homes is that the lights, thermostats, phones, TVs, etc., easily interoperate. Furthermore, the Internet of Things is really a cloud service; few applications can get much done just using the devices themselves — and no single manufacturer can provide a comprehensive solution that all devices will talk to.

So, Harris sees three major types of companies driving the Internet of Things in the home:

  • Internet and phone service providers. These companies are experts at administering a business model that will work for home automation: give the consumer a phone for free or at a very low charge, extract a long-term contract with monthly fees, and tempt the consumer with value-added services whose costs cover the expensive equipment and installation.
  • Construction firms and others who already do home upgrades, such as HVAC companies. Already, many housing developers string fiber through new developments, a low-cost enhancement that greatly raises the value of the home. We may soon have sensors everywhere as well, lighting up the moment we move into the house.
  • Major retailers. These are particularly well positioned because they are used to providing reliable and easy-to-use consumer products, and have earned the shoppers’ trust. To implement the Internet of Things, they need to go further, providing standards and policing the device manufacturers so that home automation becomes a seamless experience. Harris cites Staples Connect and Lowes Iris as examples.

Harris thinks the laurels will go to large, well-established companies that take the time to choose high-quality devices, educate consumers, and enforce interoperability. This may be less fun than wiring up your bicycle to glow in the dark, but it can ultimately bring many benefits.

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