So, my “new” house needs a lot of work. The estate agent’s blurb was “needs updating” which, as everyone knows is code-red for “MONEY PIT.” The outside of the house still shows shrapnel marks from a stray 2nd world war bomb intended for the railway line nearby while the boiler powering our puny radiators hails from the same era. The upshot is that, before we can do any kind of renovation, we need a new heating system and “blimey” they’ve changed.
Getting a new heating system is the sort of capital intensive investment you make every 15 to 20 years. And it’s easy to see how much the technology has moved on, and the one we’re installing has all sorts of clever new features i.e. do I want “the app” so I can remotely turn on the heating from anywhere in the world (judging by the 2015 forecast for El Nino and the vagaries of the great British summer then that’s a no brainer); Do I want the system to “learn” how and when we want the heating to work (the jury is still out on this one—I’m old school and like physically turning the thermostat up or down as some in the Davis clan like to have the heating on in June with the windows wide open). Do I want to compare my heating habits with that of my neighbors (absolutely—I can see this displacing my need to twiddle the thermostat…)
Our new smart thermostat, boiler and app combo is set to turn my old, dilapidated house into a smarter home that will tune itself to our requirements. The solution features a beautifully designed bit of kit that gives us both heating and hot-water while collecting my household data and analyzing it. My “customer experience” with the solution is now abstracted to the app on my tab and phone rather than the silver 1970s matchbox on the wall. This is the Internet of Things (IoT) in action and the heating solution that I’ve landed on has persuaded me to move energy companies after 12 long years and a whopping £15,000 lighter. The new solution is quite simply, in a different class compared to the one offered by my incumbent supplier. It’s innovative, well designed and offers a better product experience because it fuses my data and with other data. Moreover I am willing pay more.
Check this out: Deloitte survey of 89 IOT implementations by 20 major providers between 2009 and 2013: it revealed that 65% of use cases were focused on cost reduction and efficiency, 22% were focused on risk management and only 13% were possibly targeting revenue growth or innovation. The real value of IoT will be realized when new business models with vastly expanded revenue and profit opportunities are created. And I believe that is starting to happen now with Smart Products—witness the app, device, data driven insight combo that I am about to install and why I decided to switch utility companies and spend more to get it.
IoT refers to the networking of physical objects through the use of embedded sensors, actuators, and other devices that can collect or transmit information such as location, performance, environment and condition about the things we like and need to use. Newer technologies such as Micro Electro Mechanical systems (MEMS) enable product companies to place very sophisticated sensors into virtually any object and even into/onto people. And as MEMS prices fall (and they are) the scope of IoT will expand and we will see the rise of a new Smart Product Economy (see my forthcoming report). Miniaturization and the declining cost of sensors are making it increasingly easy for products and physical assets to be instrumented. At the same time, the declining cost of connectivity is making it easy to transmit data. So product data can be collected, analyzed and acted upon, based on context and business need and in many cases this can be done automatically.
As a technology company we are intensely interested in the Internet of Things—and we are not alone either. Gartner are scaling up significantly to cover the opportunity while my former employers IDC, claim to have one of the largest IoT practices. No surprise as IoT has the potential to transform business models and it being felt in many fields. Thus sensors in an electricity grid can help utilities remotely monitor energy usage and adjust generation and distribution. Smart products are an element of IoT and they are turning my home into a smart home. Watch this space as I have more to say about the rise of a “Smart Product Economy” as we embrace the connected home, the connected car and even the connected life.