Everyone from industrial giants to bootstrapped companies on Kickstarter are talking about the promise of the internet of things to improve our lives. In fact, Cisco recently pegged the potential value of the market at $14.4 trillion. The business opportunities are massive to be sure, and we are fast approaching the tipping point where the devices all around us will come alive, work together seamlessly both in and outside the home, and transform the way we live our daily lives.
But how will the connected home make the jump from a favorite toy of the tech elite or a status symbol of the wealthy to be a ubiquitous technology that reaches the broad mass market of consumers? As usual, history offers some valuable lessons. In fact, we only have to go back a few years and look at how the connected TV market took shape to get a sneak peek of what will soon unfold for the connected home.
Connected TV missteps
Remember Boxee? It was a highly visible entrant into the connected TV space in 2006. It pulled together a community driven platform that enabled hackers, makers and early enthusiasts to reformat their Apple TV into a Boxee box that gave users access to all types of video over the web, regardless of copyright restrictions.
They were perceived by the press as the “cool kids,” getting breathless accolades from both the tech elite and mainstream media. From its beginning, Boxee played a cat and mouse game with both large and small content providers, aimed at getting restricted content to the consumer. When its leaders later tried to change their strategy to adopt one more compatible with the mainstream, the company’s early advocates became dissatisfied because of the perceived “sell-out” while content companies remained distrustful from the early positioning.
This approach, combined with the risky strategy of trying to create a consumer brand on other’s hardware and then trying to build hardware themselves, all without a clear retail distribution channel, was not only very expensive but also unsustainable. Boxee’s recent sale to Samsung brought an unfortunate end to the story, with investor returns that failed to live up to the early hype.
Embrace the big brands that matter
Conversely, other firms – that you most likely have never heard of – took an entirely different approach. They built software and cloud services that in turn were used by well-known HDTV makers who had established distribution channels and perhaps most importantly, the trust of consumers worldwide. While that approach may not have been as sexy to the press, it did work in the real world.
As a result, connected TV technology – and affiliated business model changes – were quickly adopted by virtually every OEM who made HDTV and/or Blu-ray players. Today, the majority of these devices on the market have some form of connected TV capability, driven by well-known services like Netflix, Pandora and YouTube.
In order for the internet of things – or even the connected home itself – to reach the mainstream like connected TV before it, today’s participants must learn from the past. While Boxee’s product was rightly a favorite of the tech elite, it was inaccessible to the mainstream consumer due to a lack of retail distribution and more importantly, a content strategy that bucked the way the media industry worked. As a result, retailers and content providers that could have been active promoters had their underlying business models threatened, and as a result, pushed other solutions.
Making the connected home a reality for everyone
There is a common misconception in the technology community that in order for a startup to be successful with the masses, it has to disrupt an industry and unseat the big incumbents. In truth, these types of tectonic shifts in markets are exceedingly rare. Real and lasting change often occurs when startups know how to leverage and partner with big companies in order to bring their innovation to the mass market.
The connected home will ultimately expand beyond the tech community when mainstream consumer brands get involved and introduce solutions that drive adoption among regular consumers. Over the next 12 to 18 months we will see a new wave of solutions that will push this technology to the mainstream, which will provide significant benefits to consumers, as well as the innovators who develop them and the investors who back them.
Mike Harris is CEO of Zonoff, which provides a comprehensive software platform that enables device manufacturers, retailers, and service providers to deliver new connected products and services to the consumer mass market.