by Matt Prentis
Group Innovation Director, PHD Global Business

Before we start to look at what the New Year holds for the Internet of Things, the App Store charts on Christmas Day often provide a useful barometer for determining which technologies have successfully cut-through the plethora of hype cycles and trends decks surfacing throughout ad-land, to the point of adoption in the real world. 

Christmas Day 2015 saw FitBit’s fitness tracking app simultaneously top the download charts, and help offset some seasonal largesse a week earlier than most resolutions usually kick-in. Last year gaming taking centre stage with Super Mario Run. Nintendo’s first foray into games outside of their hardware ecosystem took top spot on Christmas Day 2016.

Last month saw the tech giants of Amazon and Google battle it out to become Christmas Number 1 in 2017. Whereas their musical equivalents rarely live long in the memory, both platforms are attempting to accelerate the adoption of their respective Alexa and Google assistants and lock in the subsequent competitive advantage they envisage this bringing. Whether this be selling more product more often, or accumulating new streams of data linked to the habits, behaviours and preferences of their users beyond what they’re immediately searching for.

Such is the importance of this race for both organisations to provide the genie in everyone’s speaker – permanently placed and summoned on the shelves, kitchen counters and bedside tables of its users throughout the connected world – both Amazon and Google sold the hardware interfaces to their assistants, Echo and Home, for less than the cost of materials to manufacture them in the Christmas rush.

Whilst Amazon may have taken top-spot this year with “tens of millions of devices” sold in the lead-up to Christmas, Google is also bullish having sold a Home device for every second since launch in October, equating to over 7.5 million units sold to date.

As is often the case with Christmas Number 1s though, the real winner to emerge from the duelling tech-titans wasn’t wholly the artists themselves, but the IoT ecosystem that both platforms are component parts of.

This tipping point into the mainstream adoption of assistants will invigorate developers to provide new ‘skills’ or ‘actions’ that spread additional sensors and smarts throughout all facets of people’s lives; from lighting and entertainment to health, wellbeing, security, heating and ventilation systems.

The initial benefit to IoT developers is that people are seemingly happy to pay a premium to free up their valuable time and effort for use on other endeavours. At a base level, smart, connected objects used throughout the home, retail at up to 10x more than their perfectly reliable manual equivalents.

This is re-setting the expectations of what people pay and creating margin in previously commoditised markets. Soon consumables with embedded chips will be able to re-order themselves, with the potential to give brand owners continual feedback loops of information to inform CRM, NPD or Cross-Sell opportunities. This is creating repeat revenue streams for those with the imagination to use this insight to improve their propositions.

It’s little wonder the Economist Intelligence Unit when surveying executives last year, collectively saw the IoT as a key driver of the digital transformation and reinvention of propositions, internal operations and subsequent business models to better serve customers, stakeholders and shareholders for the long-haul. 1

Whilst it’s clear the IoT has the potential to reinvent value-chains across all products and services, 2018 will see shoots of this reinvention as opposed to the fruits of it. The reason being that we’re only at the very start of our journey to smarter, connected cities, workplaces and homes. In the same way the Christmas rush for smart speakers has expanded the current IoT ecosystem and intelligence it provides the developers, 2018 will see evolving infrastructure and experimentation that will accelerate the growth of users, use cases and confidence amongst governments and industry for further investment in the ecosystem.

The arrival of lightning fast 5G in many major cities across America and The Far East will kick-start a new wave of experimentation in the real world. With 5G connecting 100x more devices per SqKM, generating 100x data signals, 100x more often than 4G networks currently support, it means more sensors can be integrated throughout our cities as well as enabling connected objects safe passage through them – with the speed and stability of connection required to power trials of more significant IoT applications of the future.

This exponential increase in the volume of data generated will require ever more sophisticated machine learning techniques to make sense of this stimulus, both at a speed, and an accuracy required to take applications of the future from the simulator, into real-world experimentation.

A prescient example is Driverless Cars.

Over the past two months, Google Waymo has been running a ride-sharing fleet of autonomous Minivans for residents in Phoenix, Arizona to hop on to.

How did Google get there?

Through a set of proprietary hardware built in-house, with ground-breaking simulation. On the hardware side, Google’s engineers developed two new LiDAR sensors: a short-range and a long-range LiDAR to increase the car’s situational awareness in the macro and micro context. On the software side, Google has built an Area 51-esque lab in California that acts as a training ground for the algorithms that drive the vehicles.

At any one time, there are 25,000 virtual self-driving cars making their way through fully modelled versions of Mountain View, Phoenix and Austin, as well as test-track scenarios. This technology makes it possible to understand and optimise car behaviour for any scenario, which is being put to test in the real-world in Phoenix via a fleet of Chryslers at this very moment.

When you consider the future integration between a user’s life, their mobiles, their homes, the mobility required to live it and the subsequent intelligence required to assist it, through Waymo, Google has developed proprietary self-learning intelligence that becomes incredibly difficult for competitors to copy.

This step-change in the volume and nature of data transferred from both individuals and the collective to corporations, is starting to generate much-needed debate around the privacy, security and ownership of data and the practices of those who are collecting it, housing it, mining it and ultimately merchandising it. In May 2018, throughout Europe, the GDPR2 will trigger the sound of the death knell to much murky malpractice throughout the region owing to huge financial penalties being in place.

Progressive organisations that understand the value of maintaining this pipeline of data from their users, to their servers, are starting to create a value exchange with consumers to continue to benefit from this flow of data which is critical to the ongoing development of the IoT ecosystem.

A good example of this in the UK is the health insurer Vitality, offering Apple Watches for over 90% less than the retail price as a benefit to signing up to a life insurance policy, in exchange for regular uploads of biometric data to their servers.

This not only forms a compelling point of differentiation to steer consumer decision-making, but a new source of insight and understanding of behaviour that can inform risk assessment and new product development, linked to observations previously unattainable without IoT technology being in-place.

Whilst Christmas 2018 may come too early for me to get a driverless car underneath the tree to live out my dream of a snoozy commute, we will see experimentation that lays the foundations of the further removal of pinch-points throughout our lives, to give us more time to invest in the things we’re passionate about.

Now that’s what I call a Christmas present.

1 Revolution in the Making, Economist Intelligence Unit Perspectives February 2017
2 https://en.wikipedia.org/wiki/General_Data_Protection_Regulation

This article formed part of ‘PHD Perspectives’, click this link to read the full publication http://bit.ly/phdperspectives