Here’s why companies need to think bigger when it comes to connected devices
For as little as $35 (the cost of the Chromecast dongle) consumers can turn an older TV “smart” and start streaming content from the Internet onto their primary entertainment screen in the home. This is big for the television industry, but it got me thinking about the power of connected devices, which are proliferating like bunnies.
Connectivity changes how we use an old device, turning it into a product that can surpass the expectations of the original and then continue to change over time. A new report from Accenture recognizes this shift and calls for businesses to develop what it calls “living services.” Thus a connected TV becomes a window to the Internet or a big screen for your photos and could become the avenue for a new service or use case over time. How this malleability of products and services will change business isn’t known, but it will change.
For example, the all-in-one security devices that offer a connected camera, an array of sensors, microphones and sirens are deemed such a threat by incumbent security firm ADT (ADT) that it has contracted with LG Electronics to build one itself.
The all-in-one security products, from companies such as Canary or Piper, are single units that a homeowner connects to her Wi-Fi network in a prominent space in the home. If it is armed and detects motion, it starts recording video and sends a notification to the homeowner. The homeowner can elect to sound the siren or call emergency services. Or, if it’s just a pet or kids coming in, the homeowner can check the video and move on. When I tried the devices out, we found them useful for monitoring the arrival of packages but also surprisingly useful for new reasons.
For example, when items like jackets or lunch boxes turned up missing, we would check the video feed to see if the missing jacket was even in our hands when we came in the front door. We also were treated to a lot of impromptu dance concerts from our daughter who’d trigger the motion sensor, give us a dance and then grin. These sorts of products begin to appeal, not only because they are cheaper and offer a feeling of security, but also because they also do more. Thus, ADT is adding the all-in-one security product to its line up of security services it sells, with an eye toward co-opting the trend of DIY and connected home security before it changes its business utterly.
Another industry where connected devices and software updates could lead to evolving services is shopping. Amazon’s (AMZN) experiments with its Echo and Amazon Dash buttons are intriguing examples of a future where you only have to ask for a new product or push a button and the item is sent to your home. We already purchase our music, movies, books, and in-game upgrades almost on a whim while we’re surfing the web or mid-move in a virtual world. After living with the Echo for a few months, I am comfortable telling the device to re-order the Bags on Board dog waste removal bags we use every day. And yes, I’m already looking for other items I can start buying on Amazon just so I can ask the Echo to re-order them when the time comes, because it’s so much easier than trekking to the store.
The staid world of building management or home repair services could see their business models entirely disrupted. Sensors in plumbing, HVAC, and water heaters all have the potential to notify both the homeowner and the appropriate professional when there is a problem—or before there is a problem. In many ways this is ideal, but because there is a lack of standards currently associated with the Internet of things, for now this means that the sensors and systems chosen at installation will dictate which service firm gets the contract.
If Emerson (EMR) or Honeywell (HON) installs the sensors in a commercial or consumer HVAC they will most likely control the relationship with the service provider, unless the person who purchased the system stipulates that they can make that choice and gets the data they need when they sign those contracts. That’s probably easier if you are a big corporation as opposed to a homeowner. Another route might be working with a company like Comcast (CMCSA) or AT&T (T) which are also installing smart home systems in consumer houses.
What happens in these deals is the direct link between the consumer and the professional plumber or HVAC company is broken, and a middleman in the form of the sensor provider or data aggregator steps in. The consumer likely pays the middleman and monthly fee of sorts for the preventative maintenance service and nothing at all for a fix before catastrophe. It becomes more like insurance. That will likely lead to consolidation for the mom-and-pop professional services at the end of that chain should these types of contracts become mainstream.
There are hundreds of different ways the rise in cheaper, smarter devices and the data they provide will disrupt businesses. Television and security are two examples that seem well on their way, while e-commerce and the market for plumbers and other services could go in dozens of different directions in the next few years. But rest assured, these devices that may at first seem like mere curiosities on Kickstarter or in the living room of your early adopter friends—a few of them will change the course of established industries. And they will do it rapidly.