How Will IoT Change the World?

Business
// May 2, 2016
How Will IoT Change the World?

(7 Minute Read)


What the hell is IoT? You may have seen the letters spammed all over the internet recently but unless you’re into emerging tech, there’s a high chance you have no clue. Worry not my young ones, I’ll break it down for you. IoT stands for the “Internet of Things,” referring to the coming interconnection of most (if not all) of your smart home devices and appliances via bluetooth — including but not limited to your phone, lights, thermostat, refrigerator, clocks, speakers, computers, smart watches, tablets, fans, coffee machines and soon, even your car. Unfortunately the great minds of our age couldn’t think of a more clever name for it and “Home of the Future” is way overused.

Just imagine what this means — your alarm goes off, waking you with the smooth tones of Jay Z and Kanye West, and your shower’s already on at the perfect temperature — your quad-copter drone has already escorted your one night stand out the back door, carried her shoes with her, and your Google doorknob has already locked her ass out. Sounds perfect to me. But wait, for all of these devices to communicate with each other, you’ll need a central hub to input all of your directions, and that’s where devices like Amazon’s Echo come in.

Chances are you haven’t installed any Skynet-like IoT devices into your home just yet,  but you might’ve and you just don’t know they’re IoT, so to name a few, there’s Google Nest, Bose Bluetooth Speakers, the Xbox One, and the Amazon Echo. These are all incredible devices that the millennial generation doesn’t care enough about (or is too broke for) and generation X won’t buy unless it’s over-gimmicked like a toaster with four slits (like your mother). But why don’t we care about them? We’ll pay almost $1000 for a new phone, why won’t we spend a mere $200 for Amazon Echo? Answer: because it’s being marketed like crap.

Think about the futuristic Amazon Echo as either:

A: A wireless speaker

B: Space-Age lifestyle technology…

Did you notice a difference between those descriptions? Yeah, it’s called advertising, something the “ingenious” minds at Google, Amazon and elsewhere have somehow forgotten all about. Maybe it’s too much time spent in the “nap-room”… I guess in the age of the iPhone9000, big tech companies assumed the lame-duck strategy, expecting items to sell simply through inflating mass media with images of the product. Even though it’s no where near as exciting, tactics like this work. Note all your friends who showed off the “amazing” features of the iPhone6 that were all standard on Androids from two gens earlier….Before that, thousands of people actually waited in lines all over the WORLD for Apple’s small screened, average of 9.5 hours of battery life (iPhone5S) instead of the big-screened, 16 hour average touted by the Galaxy S4. Think about that for a minute… what was the difference? Why do you have a dozen Apple devices? Wy do you bag on your friends for having Android phones when the do the exact same thing? Answer: PERVASIVENESS OF MESSAGE.


Tip: In advertising, this always always always always always always wins. Always.


How Will IoT Change the World?


To put things in perspective, Apple’s team spent a total of $97.5M in 2008, $149.6M in 2009, and $173.3M on advertising for the iPhone in 2010, according to Phil Schiller, Apple’s SVP of Marketing, who revealed these numbers during the Apple-Samsung patent trial back in 2012 (The Verge), where Apple specifically utilized marketing channels with massive audiences, and fully taking advantage of social media which was still a new-ish thing (Business Insider). In 2013 alone, Apple spent over 1 Billion Dollars advertising its products, including a wonderful commercial displaying the usefulness of an iPad for those who vacation in high-altitude tents hanging from cliffsides in the arctic (iDownloadblog). Really. However, the real key to their success is credited to their brilliant product placement. If you think ludicrous amounts of money alone brought the iPhone to the fore of the market, consider these numbers on Samsung’s marketing bills for 2012 (Click to visit: appleinsider), and change your definition of ludicrous.

Apple spent $333 Million on ads in 2012…
Samsung spent $401 Million on print, television, billboard, and Internet advertisements in just the U.S., in just 2012 alone…… $68 Million more than Apple for that year…

So now that your pants are wet — in one way or another — from the utterly absurd and unforgivable budgets that have kept these device-giants neck and neck for most of the decade, let us return to our discussion on IoT and Alec Baldwin (MediaPost).


How Will IoT Change the World?


While several commercials aired during Super Bowl 50 to unveil Amazon’s Echo, also known as “Alexa” to a new generation of connected consumers, they defaulted to non-Jetson-like expectations. Rather than positioning the super-advanced (I’ll just say it) robot as the ultimate personal assistant to streamline your entire life –or even make mention of the fact that one day very soon learning devices like Alexa or similar devices will likely control or connect with everything you see, touch, hear, taste, smell or feel– Amazon chose to smash through the screens into the laps of consumers with: an argument between Alec Baldwin and Dan Marino… It’s pretty upsetting actually… In the commercial, the pair go at it, tearing each other apart by making poor little Alexa side with one parent or the other, talking about Alec’s lack of Oscars or Marino’s lack of championship wins.

I’m honestly surprised I haven’t seen a comedy sketch about this — because it’s exactly the brand of comedy you’d expect CollegeHumor to snatch up immediately and slap Amazon in the face with… Seriously, wtf even happened to collegehumor.com? Oh wait. That’s why you’re here — ZING. Anyway, the pair ask Alexa to shut up several times, showing true diversity of the interface’s integrated voice command vocabulary, and finally end the bit by telling the confused, yet anxious-to-please virtual assistant to return to playing her loud music while a friend threatens Marino with physical violence… (Watch the video here). {Trigger Warning}


How Will IoT Change the World?


Sure, the commercial quickly explains to the world’s dullest football fans “this device can tell you things and play music” but is that really enough? Are they flying off the shelves? Well, the official answer is: maybe (according to fortune) but no one really seems to know. While a bunch of tech blogs proceed to write the same article about how this device is the hottest toy of all time, all of them leave out the important thing, the numbers. Amazon itself is guilty of this, as the company infamously “does not release sales figures” for some reason (inc.com), but they continue to boldly and seemingly endlessly preach about Echo being the #1 or #2 best selling item above $100 on Amazon.com on Black Friday (inc.com) and other vague language like sales of the item growing by “342 percent during the third and fourth quarters of 2015 (slice). Matter of fact, the vast majority of articles on the subject of sales squarely zero-in on these two stats, primarily the Q3-Q4 bump in sales thanks to Amazon’s Black Friday discount (See: quartz: “The Amazon Echo is a Sleeper Hit!” we just don’t know how many sold or literally anything at all).

This is one of my personal favorites from TheVerge:

“Amazon isn’t breaking out any specific sales numbers for these devices, which makes it difficult to verify their claimed successes. However, the company says that “hundreds of thousands” of Kindle e-readers were bought over the weekend and that “millions” of 7-inch Fire tablets have been sold since launch. Again, this is imprecise, but it does seem that the super-cheap Fire was a success.”

Need I say more?

Try this one from BusinessInsider, which uses misleading Data and wording to convince the reader two graphs point to Amazon selling millions of Echo devices. Shame on you BusinessInsider. This is a ridiculous assertion. Just because there is a correlation between Amazon’s OVERALL speaker sales skyrocketing and their market share increasing, this in no way indicates the Echo was responsible, but may instead point to Amazon’s insanely low Cyber-Monday and Black Friday deals for ALL of its speakers, which as the Walmart of everything, it no doubt destroys all competition). Just an idea…

Remember kids, “Correlation Does Not equal Causation” and if you weren’t high and hungover during your stats class, you’d remember that Business Insider…

Moreover, given IoT’s current state of cult-following, and I mean a very specific subset of tech nuts, it’s time for the advertising to change if this thing is going to hit the mainstream market and not disappear into obscurity, which it’s dangerously close to doing. Here’s a great quote from USA Today to illustrate my point:

“Despite its many uses, while the Echo has been a compelling product for early adopters and enthusiasts, thus far “it isn’t something a mainstream audience understands,” said Patrick Moorhead, president of Moor Insights & Strategy.”

So despite early adopters, this thing isn’t going to blow up like it should… And most of the people included in these early-adopter figures are probably just psycho Amazon moms and resellers. For instance: 

“It should come as no surprise that many early Echo adopters are among Amazon’s best customers. Echo buyers made an average 86 Amazon item purchases in 2015, more than three times the average Amazon shopper, according to Slice.”(quartz)


How Will IoT Change the World?


…So that’s something to consider… a hot cheap tech item being bought by impulsive Amazon customers and people who probably saw the potential of these devices and could make a few bucks reselling them if they bought at the discount Black Friday price. Consider also that these things aren’t being bought at even a fraction of the rate of iPhones, Amazon Fire Sticks, or even fucking Kindles. The idea is out there that they’re doing well, but let’s face it — Amazon is just the land of misfit branded products, lest we forget the oh-so expensive Fire-Phone flop. Do you know a single person who owns or ever owned one? Please leave us a comment at the bottom because I don’t believe you.

Lastly, let’s not forget that Echo/Alexa Baldwin is a LEARNING ROBOT, and you can program different IFTTT (If This, Then That) “skills” and responses into the thing, to make it do just about anything you can think of. These commercials should show Alexa waking me up to peaceful music while clearing my translucent glass blinds, turning on my coffee machine, heating up the seats in my Tesla, and making my toast like the imprisoned virtual assistant in the terrifyingly awesome Black Mirror Christmas episode (Youtube).


How Will IoT Change the World?How Will IoT Change the World?


These machines are going to AUTOMATE OUR LIVES. Alexa will add items to your shopping list while your drone flies down to Wegmans. It’ll start your shower and heat your floor on those cold winter mornings before Alexa even wakes you up! It’ll schedule maintenance on your self driving car and drive it to the shop, call you an Uber to the airport, and pack your kids lunches, all while keeping your Roomba from killing your cat… Hopefully… and if not we’ll all know the day the machines have become self aware… And then murder us all via Fit-Bit electrocution.

The point is, this blatant lack of both intelligent creative and future-based positioning strategy for the Echo and other IoT devices are leaving money on the multi-touch table. If companies really want to take advantage of the potential here, especially Amazon, and get anywhere close to the same returns an iPhone gets for an these incredible connected-home products, it’s time to get smarter, or risk seeing the Echo turn into your dad’s dust-covered pager.
Remember pagers?

Spending millions on a series of dull Super Bowl commercials might be enough for those kids in the trailer park, but they can’t even read, so how can Amazon expect them to have Bluetooth?

How Will IoT Change the World?

Alright, so now that you’ve had a brief history of advertising and know what IoT devices are and their full potential, here’s what you came for:


How to Monetize IoT and Profit Big


You have a few options, you can follow the footsteps of the resellers, make a few extra bucks and move on, but that’s no fun. The other thing is platforming. If you have a pulse, a phone and you live in the first world, you know what iTunes, Facebook, Linked In and Twitter are. If not, maybe you’ve heard of Google Chrome, Internet Explorer or WordPress… These are platform companies, and this is how the boys and girls making millions in Silicon valley are doing it. With platform companies, you don’t have to focus your efforts on the sale side, it’s just a product or service people and businesses want because it’s useful, and they jump on the train to push their own brands and make money for themselves, which only generates more money for the platform.

Platform companies are so powerful, they’ve opened up enterprises that allow near-infinite revenue streams to benefit not only themselves, but hundreds of thousands of other companies. Just think, while every person who sells an App on the iTunes store makes a small chunk of change, Apple makes more by being the epicenter of music & entertainment that anyone can buy for their apple devices. It’s the same with the Google Play store for Androids and the Amazon store for those silly Kindles. To see it another way, almost every business in the world today needs social media to compete in the market, so every company worth its salt has a twitter, Linked In or facebook, and MOST have all three. How does this play into the Alexa argument?

Alexa is a platform… MIND = BLOWN

This is how IoT will change the world – Only a few companies have jumped on the train thus far –You can say “Alexa, call me an Uber” or “Alexa, order me pizza from Dominos” (TechCrunch)– but that doesn’t mean there isn’t HUGE potential here. Maybe you go the mile to become a Snowden-like privacy hero and create a voice-protection security software that masks your conversations when you’re not asking Alexa to do something… because remember, she’s a “Forever Listening Device,” meaning she’s constantly monitoring your conversations so advertisers can gear your web and social ads toward things you talk about, things you’re watching on TV, audio books you’re listening to around the house or even music. Maybe you go a different route and design app software that lets users make Alexa’s voice sound like Mila Kunis or Snoop Dogg. You might start up a company to count how many times Alexa hears the word “Daredevil” to create a new Nielsen Rating for popular word-of-mouth topics… Something advertisers have been struggling to track for years (shit, I should do this…), or make an app that will change your thermostat, fans, lights, and ambient sounds to make you feel like you’re in the rainforest while you watch Apocalypse Now! or play your insane Virtual Reality games on Oculus rift… Maybe you make educational games that Alexa can play with children while the parents are enjoying themselves elsewhere… The possibilities are literally endless. If you have an idea for an IoT app, now is prime time to get a few business partners together and start that shit up. Don’t forget to tell Alexa which bank to route your checks to.


How Will IoT Change the World?


Leave a comment below, I really want to know you’re thoughts on this.
And best of luck when the war against A.I. finally comes. Watch your Roomba closely…

Regards,
Rich D.

 

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