USAToday Column

July 23, 2015
The Personal Value of IOT is All About Connections

By Bob O'Donnell

FOSTER CITY, Calif. — Buying tech products used to be easy. You found a product that had the function(s) you wanted, chose from an often limited number of brand options, and you were set.

But that was in an era when the value of devices was primarily determined by their own functionality. Now, while the individual capabilities of devices is still important, their ability to connect with, interact with, and bring additional features to other devices you already own is becoming more important. It’s no longer simply about what a device can do; it’s also about how that device can make your other devices work together better.

This is a fundamentally different way of thinking about tech products, but it’s likely to become the norm as we enter into the new era of IOT — the Internet of Things. From wearables to smart homes to connected cars, the key evaluation criteria for new products will be connectivity options and what those options enable.

There are many reasons for this shift. First, many people already own their share of core devices. In the U.S., the market for PCs, smartphones, tablets, TVs, portable audio devices and other similar products is saturated. Most people who want to own these devices already have them.

Sure, there’s the opportunity to upgrade every now and then. But even the upgrade cycles for many of these categories have started to lengthen as each of the products has matured and the rate of change between product generations has started to slow.

Second, the degree of connectivity now available to all of us is extremely high. WiFi in our homes, businesses, modes of transportation, and even public spaces has quickly moved from a luxury to a necessity.

And when WiFi’s not available, we can now quickly and easily turn the LTE connections from our smartphones into portable hot spots, keeping us all connected anytime and anywhere. (The fact that some people are now considering home purchase locations based on their proximity to high-speed Internet is further testament to this trend.)

Finally, many consumers are now much more aware of the value of connected devices because of all the new capabilities these connections can bring. From something as simple as wirelessly playing music from your smartphone through your car’s entertainment system, to remotely monitoring activity in your home from your work PC via a connected home security camera, the connectivity between devices is what’s driving today’s most compelling applications and services.

“The value of the network is directly related to the number of connected devices” — a phrase credited to Ethernet inventor Bob Metcalfe — used to be relevant only in business IT environments. Now it’s started to take on increasing importance for households and even individuals. We all have networks of connected devices, sometimes without even realizing it, and we’re really just starting to see what kinds of capabilities all those networked devices will enable.

In the context of these personal networks, we can start to appreciate the value of new kinds of connected “things” that bring new capabilities to our networks. For instance, devices like wearables can provide personal data about our own bodies, not only to ourselves, but also to health care professionals, if we choose to share it. A recently completed study by TECHnalysis Research shows almost 60% of US health care organizations are actively considering (and a few are already using) data from their patients’ wearable devices.

As we look to the future, we can also think about the value of connected cars, connected appliances, smart homes and other visions promoted by companies involved with IOT.
Some of these visions are a bit grandiose and need to be tempered with the reality that, although the promise of IOT is enticing, there are still many potential stumbling blocks and security issues — as the recent car hacking story clearly points out.

Technology problems, product complexity, standards battles and costs are going to keep many from adopting these new consumer-focused IOT products anytime soon.

Increasingly, though, it is the connectivity and the capabilities these personal networks can enable that are, and should be, the most important factors to consider as we purchase additions or replacements of not only tech devices. But also many other common “things” that we use, from cars to TVs to lights to thermostats to front door locks, and much more.

We certainly shouldn’t run blindly into this new era of personal device connectivity without thinking through some of the potential challenges, but many of the opportunities are bound to be compelling.

Bob O'Donnell is founder and chief analyst of TECHnalysis Research, a market research firm that provides strategic consulting and market research services to the tech industry.

Here's a link to the original column: http://www.usatoday.com/story/tech/2015/07/23/personal-value-iot-all-connections/30566865/