The fanfare has gone on for years. Analysts have repeatedly predicted that the “internet of things,” which adds sensors and internet capability to everyday physical objects, could transform the lives of individuals as dramatically as the spread of the mobile internet.
Providers have focused on the home, touting products such as coffee pots that turn on when the alarm clock rings, lighting and blinds that adjust to the time of day, and fridges that send an alert when the milk runs out. But so far consumers have been largely resistant to making their homes “smart.”
That’s not for want of trying by tech firms. In 2014, Google spent $3.2 billion to acquire Nest, a smart thermostat-maker, and $550 million to buy Dropcam, which makes home-security cameras. Nest absorbed Dropcam; it is now one of the best-known smart-home brands. But it is also a warning about how long it will take for such gadgets to enter the mainstream.
Nest sold just 1.3 million smart thermostats in 2015, and only 2.5 million in total over the past few years, according to Strategy Analytics, a research firm. For a couple of years the firm has mainly tweaked existing products rather than introducing new ones.
Nest’s problems are symptomatic. Only 6 percent of U.S. households have a smart-home device, including internet-connected appliances, home-monitoring systems, speakers or lighting, according to Frank Gillett of Forrester, a research firm. By 2021 the number will be just over 15 percent. Too few consumers are convinced that the internet has a role to play in every corner of their lives.
A survey in Britain by PricewaterhouseCoopers found that 72 percent of people have no plans to adopt smart-home technology in the next two to five years and that they are unwilling to pay for it. Last year consumers globally spent about $60 billion on hardware and services for the smart home, a fraction of the total outlay on domestic gadgets.
There are several reasons for muted enthusiasm. A lot of smart devices for the home remain “fun but not essential,” said Adam Sager of Canary, a start-up that makes cameras that let people monitor what is happening in their house.
Many smart gadgets are still too expensive. One of Samsung’s smart fridges, with cameras that check for rotting food and allow consumers to see what they are short of while shopping (through an app on their phone), sells for $5,000.
The technology isn’t perfect yet, either. The smartphone, the link between the customer and smart-home device, has raised consumers’ expectations, said Jamie Siminoff, the boss of Ring, a start-up that makes a doorbell that can be answered remotely. Smartphones have trained users to expect a level of quality and ease of use that smart-home devices struggle to replicate. And a lack of standardization means that gadgets from different firms cannot communicate with each other.
There are exceptions. Devices that are easy to install and offer obvious benefits are gaining in popularity, such as motion sensors that send alerts when windows and doors are opened and cameras to monitor activity. Some devices, such as smart smoke detectors, are in homes because insurance companies offer financial incentives for using them. The smart-home sector is vibrant with start-ups and big firms betting that the hesitancy is temporary.
Perhaps the biggest surprise is that Amazon, which failed miserably in its ambition to develop a smartphone, is showing the way. Amazon Echo is a smart speaker that can recognize and respond to voice commands. It shares information about the weather and sports scores, plays music and turns lights on and off. The device, which costs around $180, is not yet a big seller. Strategy Analytics estimates that fewer than 1 million have been sold since Echo’s release in late 2014. Yet the Echo is the talk of Silicon Valley.
An interface that relies on voice commands could overcome one of the drawbacks of the piecemeal approach to the smart home, by becoming the standard integrator of all the other bits of smart kit. Echo is open to outside developers, who can come up with all manner of devices and services that hook up with it. Competitors have cottoned on that it may be a critical piece of equipment. Google has announced plans to build a stand-alone hub like Echo, called Google Home, which will also rely on voice commands. Apple is also expected to announce new smart-home capabilities
Each tech giant has a different reason for trying to overcome the indifference of consumers, and to embed itself more deeply in the home. The Echo can help Amazon learn how people spend their time, and suggest things they might buy. Google, whose main business is advertising, also wants to draw from a fresh well of data; by learning as much about users as possible, it can target them with appropriate ads. Apple, with a track record of simplifying and creating ecosystems where others before it could not, wants its devices to be the gateway through which people go to organize their lives.
Copyright 2013 The Economist Newspaper Limited, London. All Rights Reserved. Reprinted with permission.