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The internet of things is setting up the ultimate culture clash

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There’s a gold rush underway to connect our devices to the web. For many, the devices are the keys to the kingdom — either riches in the form of selling data or from creating a widely used platform for services or applications. Yet what is becoming increasingly clear is that these models reflect a divide between cultures when it comes to the internet of things.

This idea that as we connect devices and sensors, they will combine into some super-intelligent whole that can help save electric costs, make manufacturing more efficient, and even predict our traffic is the underlying promise that many people are hoping for. But as I discuss the consumer efforts around the internet of things, I’m struck by the culture clash between old-line physical goods and those manufactured by startups. It’s a topic I hope to explore in greater depth at our Structure Connect show Oct. 21 and 22 in San Francisco.

The divide looms large in every category

In old-line businesses, there is an abundance of caution, not just driven by a lack of digital expertise, but by the concern about how this shift will impact their business. Questions I hear discussed range from, how long can I warranty a Wi-Fi module, to how can I support a cloud service for a decade. Others revolve around privacy and making sure data isn’t inadvertently leaked, because unlike Mark Zuckerberg, the CEO of [company]GE[/company] or [company]GM[/company] can’t just post an apology in a blog and expect any perceived or actual lapses to go away.

A Mea Culpa won't help GM. Photo courtesy of Facebook
A Mea Culpa won’t help GM. Photo courtesy of Facebook

There will be consumer outrage, possibly Congressional meetings and likely a visit from a federal agency to contend with, because what people accept on the internet is very different from what they will accept in their homes or businesses. On the flip side, coming from the Silicon Valley tech circles is an ethos of iteration and continual software updates that will improve the product over time. And while I often talk to founders about how they plan to support a device that might live in someone’s home for a decade when they are launching a Kickstarter from an incubator, I don’t get more than pat answers about how the device will still be functional without connectivity.

As for privacy, security and concerns about user data, there aren’t even a series of agreed-upon best practices. The more responsible firms hire security firms to test their products and react quickly when confronted with security and privacy holes, but in many cases the user experience can range from Nest’s immediate recall and automatic update of its Protect Smoke detectors when it discovered a potential design flaw, to pushing out an immediate update but not telling the customer that this update fixes a known security flaw that could seriously compromise them.

Nest Protect

Your point of view changes your business model

These differences in perspective play out in how companies plan to roll out services and how to make money. Old-line businesses are trying hard to encourage subscription models and more closed ecosystems, because that gives them the control they need to ensure quality and privacy while also offering a revenue model that will support a product’s deployment for years to come.

I spent a lot of time discussing this on last week’s podcast with Kevin Meagher, the VP and GM of Lowes Smart Home. In the podcast he explained why Lowe’s is using a subscription model and how it plans to roll out more devices over time. But Meagher points out the flaw in welcoming all of the current devices on the market today.

“What’s happening right now is some APIs are being opened, not all, and the only way you can actually control the device or integrate it into your ecosystem is by actually going through the cloud-to-cloud,” Meagher said. “So for example, whatever the device is, is talking to the manufacturer or the vendor’s cloud platform and then they are allowing you access to their cloud’s data … but if I am responsible to you with a level of service for your home so when you push a button you want your air conditioning to go on or off I’m dependent on a third party that won’t give me any guarantee of service — they won’t give you any guarantee of service, so how is that going to work. How is that going to scale?”

One reason he’s concerned about this is that [company]Lowe’s[/company] charges a $9.99 monthly subscription fee for its connected-home service, but it’s doing so because it wants not only to support the backend costs of offering a platform, but also because it is trying to reach a mainstream consumer who wants one person to call when his or her lights don’t work properly with a doorbell made by a different manufacturer.

This will affect consumers too

In the web world, this subscription idea is anathema to most, because we are used to getting content on the web for free, while businesses use the data they collect on us to monetize us via ads. This leads to some behavior that when translated to the physical world might turn a lot of mainstream consumers off. For example, Dropcam came up with some interesting computer-vision algorithms that let a camera now known who people are in the field of view.

A sample of Activity Recognition working in the Dropcam office.
A sample of Activity Recognition working in the Dropcam office.

It did this by taking all the camera data it had from people sending their [company]Dropcam[/company] footage to the company’s servers and using it to teach the computer what people look like. Yes, that footage was anonymized, but it’s still something that might creep people out. Another example might be the blog post from [company]OKCupid’s[/company] CEO called We Experiment on Human Beings that explained how the site set people up with matches that were decidedly “wrong” for them as a form of testing the efficacy of their algorithms.

Can you imagine if a restaurant served you a meal different from the one you ordered so that it could test how people responded to different spice blends? Or if the devices in your house conspired to wake you up a few minutes later in the morning because that seemed more optimal for your health patterns? The level of experimentation and use of troves of highly personal data collected by connected devices may be better off in the hands of companies trying to sell you a service as opposed to companies trying to sell your data.

As the internet of things becomes more mainstream in the consumer home, this culture clash may play out where most people aren’t aware of it, but I think it’s a debate we should be having. Many people regret that the internet has become a place where you are the product, but it’s a scenario that is set to happen again as we put more and more of our old-line goods online. We should talk about that.

11 Responses to “The internet of things is setting up the ultimate culture clash”

  1. Marty Bakal

    You mentioned that old companies are using subscription models but didn’t say what new ones are doing to make money. I consider this a key issue. I generally agree about a culture clash and I for one don’t want to be an experiment. That article would have made me leave OKCupid, although I am not on it.

  2. So true Andrew. There is little mixing even in the make-up of the companies. I go to ASHRAE and IFMA-type conferences where highly experienced and knowledgable business owners of Control Automation, lighting and HVAC service firms lament that they cannot recruit the young data jocks they need. And, I live in Silicon Valley where, with few exceptions, no IoT company will hire anyone over 35. As Stacy indicates, master system integrators that understand web services, data interoperability issues and legacy big equipment are holding the line in commercial buildings. At home, the IoT companies expect home owners to take on that role.

  3. Andrew Kippen

    To make a very broad generalization as you do in this article. There are old people and there are young people.

    More so than young people, older people understand the consequences of their actions, are aware of their mortality, and don’t take as much for granted. Often their commitment and experience provides them with benefits.

    Young people conversely rarely think about all the consequences, live as it tomorrow’s promised, and often take for granted the opportunities they have. Their lack of established thought patterns can lead to breakthroughs older people did not imagine possible.

    There are old companies, and there are young companies. We need both.

  4. Marcia C. Santos

    Very good article comparing IoT business models based on conventional and digital economy. Conventional models face issues to guarantee the quality of subscripted cloud services that rely on connectivity providers that are not part of their SLA. Digital models rely on advertising based on big data gathering but how far are agreeing on being data providers and experimentation labs for algorithms? The way I see it, as we blur the boundaries of digital and real with the IoT, the awareness of the end users about security, privacy, control and freedom becomes as tangible as the things themselves. IoT solutions will succeed only if they come with embedded ethics prerogatives.

  5. People are actually asking how to support cloud services for a decade out? That is definately old school thinking. Who knows where things will be in a decade? One thing for certain, they won’t be like they are now.

  6. As a consumer, I don’t want Lowes, or GE or Google… or anyone to have my data. There is no reason for me to give it to them, and good reasons for me not to give it to them. When someone comes up with a network device that I can install on my home network which will sync to my household devices and that I can access by installing an app on my phone or by remote login to my home network, then I’m all in, but until then. I’m not going to participate in the “internet of things” and if a new device I buy wants to phone home, I’m going to be blocking that on my home firewall. Companies who think they have found one more new way to suck my information and my money can shove off.

  7. Years ago I used to work for Class A property managers. They would constantly fiddle with the temperature (like turning off the AC/heaters a minute earlier every day) to see when tenants would complain. With varying number of people in the building, varying type of offices/equipment, seasons, etc, you had to experiment constantly. Especially when trying to heat or cool a few hundred thousand square feet.

    Point being, just because old-line business didn’t broadcast (or get caught that often), doesn’t mean they didn’t do plenty of experimentation.

    • Good point. I tried to steer clear of the industrial side of things here because it’s a completely different model. There businesses will pay for integration and services that consumers typically balk at. They also do that type of experimentation, especially when it comes to property management.

  8. Ken Goldsholl

    $120/yr for a portal to talk to your networked devices in your home? That’s not a service, that is rent seeking. And a grossly over-priced rent at that.

    Companies like Lowe’s and DropCam (uh, Google) like to portray this service as almost altruistic, but it’s just another form of converting something people should own into something they rent, at a big profit. It really isn’t necessary, as any networked device can easily incorporate their own web server for managing it, and doing almost everything the portal does, but then if device manufacturers do that, they lose the monthly fees, or the revenue they get from selling user data.