IoT Devices 2016: A Retrospective

IoT DevicesThe start of the New Year is always a good time to look ahead while taking stock of the year just passed. CES 2017 is now behind us, and if there was one overall feeling we took away from Las Vegas, it was that many consumer brands who have not launched IoT devices are finally getting off their good intentions and starting serious discussions about creating connected product programs.

That is excellent news for Arrayent, for consumer product manufacturers, and ultimately for consumers. But before we race forward with the next series of predictions for IoT devices, let’s look back and see how well we did on our ‘Six IoT Predictions for 2016’ we made early last year.

ARRAYENT 2016 PREDICTED TREND NO. 1:
“CONNECTIVITY GETS BUILT IN”

Our prediction:
“…going out of 2016 we expect to see a growing number of companies transition from connectivity for IoT devices as a premium feature, to it being a must-have to stay in the game.”

How’d we do?
According to a recent Forrester report, connectivity for IoT devices is a top priority for product companies. And as CES 2017 just reinforced through our many meetings and conversations, consumer products goods manufacturers are talking ‘smart’ as a standard feature, not an upsell. So we’re counting this prediction as a win.

Further thoughts:
However, what we still don’t see happening consistently is a concentrated focus on creating IoT devices with new & improved user experiences that also have sustainable business models. Without both of these, success for IoT devices could prove to be elusive.

ARRAYENT 2016 PREDICTED TREND NO. 2:
“LOW COST SOLUTIONS ARRIVE”

Our prediction:
“This is where we are going to see major advancements in 2016…this year we expect to see lower cost connected products drive a huge increase in adoption of IoT devices.”

How’d we do?
We were partially right because the price of WiFi chips came down significantly in 2016 making the cost of creating a IoT devices that can connect directly to the Internet without requiring an additional gateway or hub much more viable. Today, there are WiFi chips which are available below $1.00 in small quantities—a far cry from $20 just five years ago.

Further thoughts:
In the last two years, ownership of IoT devices has more than doubled, according to the Parks Associates’ Q4 2016 nationwide survey: 360 View: Residential Security and Smart Home. But also in that study, it reveals that only 26% of U.S. broadband households own IoT devices, so industry expectations of a huge increase in product adoption may still lag behind reality.

ARRAYENT 2016 PREDICTED TREND NO. 3:
“USER INTERFACE MOVES BEYOND THE MOBILE APP”

Our prediction:
The Amazon Echo with Alexa took the voice control category a serious step forward in 2015…It’s a safe bet that you will no longer ‘need an app for that.’”

How’d we do?
Nailed it! CES 2017 certainly reinforced the trend of using voice as a leading interface for IoT devices. There were dozens of Alexa controlled products at CES—so much so that 2017 looks to become the “year of voice control.” But we’ll pause on that thought for now until our new predictions for 2017.

Further thoughts:
It’s clear that being able to control IoT devices from your smartphone has gone from being a novelty to being an expected feature. What is less clear is how brand manufacturers will now evolve user experiences to be more than the same, except this time by voice. The holy grail here is to evolve beyond direct user control and to make IoT devices truly ‘smart’ so they act on their own, in conjunction with other products and services in the local environments. We wrote about that, here.

ARRAYENT 2016 PREDICTED TREND NO. 4:
“CONNECTED PRODUCT AWARENESS WILL GROW”

Our prediction:
Amazon’s 2016 Super Bowl Ad promoting the Amazon Echo would prompt others to promote the category as a whole.

How’d we do?
The category was a big focus for Holiday 2016 advertising, with Google Home joining the fray and attempting to make people aware of why they should want a voice controlled digital assistant. Studies showed awareness also increasing with a boost at retail, as we noted in an earlier blog post.

Further thoughts:
From our view, this category has yet to crack the code of turning an interesting novelty into the next must-have home device. We are thrilled to see products like Amazon Echo and Google Home selling well. But current sales levels are a far cry from making this category THE must-have home device for the mass market. No doubt that will come, and we will be vitally interested in seeing what new user experience will cause consumers to say, “Shut up and take my money!”

ARRAYENT 2016 PREDICTED TREND NO. 5:
“PRODUCT REPLENISHMENT CREATES NEW MARKET OPPORTUNITIES”

Our prediction:

Brand manufacturers would “…realize that there is no better situation in which to engage with users than IoT devices themselves driving replenishment necessity.”

How’d we do?
There was still more talk than action on this front. Amazon clearly is trailblazing with Amazon Dash button ‘one-touch’ reordering, and also with Alexa’s voice reordering capabilities. But the trend to incorporate replenishment as part of a product’s original user experience is still just beginning for IoT devices.

Further thoughts:
Frictionless reordering is a trend and business model we strongly believe in. It’s for real, and it’s here to stay. But brand manufacturers still have work to do to create a relationship of trust with consumers that is strong enough to enable completely autonomous reordering and replenishment.

ARRAYENT 2016 PREDICTED TREND NO. 6:
“UTILITY REBATES”

Our prediction:

Connected thermostats and sprinkler controllers would encourage increased consumer usage rebate programs from utility companies, such as Southern California Edison’s Rush Hour Awards program with Nest.

How we fared:

The wheels at utility companies turn ever-so-slowly and we haven’t noticed a dramatic shift yet in consumer-facing usage response programs. But we believe the potential is still there.

Further thoughts:
Investor-owned utilities are rarely rewarded for being the first on the block to institute cutting-edge programs to their rate base. They are government-approved monopolies, after all, and as such, are not incentivized to foment change. On the bright side, though, when you get home and turn on the light switch, it pretty much always comes on—with no techy glitches to stand in the way. Consumers pay for this ultimate stability through sluggishness in launching new ways of controlling energy and water. Utilities will always aggressively create pilot programs and test new, promising technologies (just enough to demonstrate they are doing something to their government regulators). But they have proven to rarely roll these out to their constituencies.

Bottom Line on 2016 – It looks like we called 3.5 right out of 6 trends for IoT devices correctly. If this were baseball, we did better than Babe Ruth’s career batting average. But as we like to say in the IoT industry, it’s all about staying connected to real-time data, learning from it, and taking appropriate action. So with that, it’s on to 2017!