“Smart” objects such as self-operating thermostats and self-driving cars may sound like science fiction. But many experts say these and other early possibilities suggested by the Internet of Things (IoT) are only a hint of what’s to come—and the massive amounts of consumer data they are set to collect.
Seen as the fifth wave of online technology that's emerging as the mobile and social revolution begins to peak and wind down, the IoT era will be marked not by people talking to each other using new technologies, but instead by machine-to-machine communication.
"Machines can and will chatter with each other at a level that a few billion people on Facebook can’t even begin to approach," James McQuivey, vice president of research and principal analyst at Forrester Research, said at the recent Internet Retailer Conference + Exhibition (IRCE) in Chicago.
We are all early adopters now
The Internet of Things is a symptom of two larger trends, McQuivey noted. “First, consumers are hyperadopting new technologies, and companies are engaging in digital disruption.”
“Hyperadoption is the rapid and simultaneous uptake of unprecedented behaviors,” he said, pointing to texting or talking on smartphones—things people didn't do much 10 years ago, but now embrace quickly. “If you think, ‘Oh, I’ll never need that,’” pointing to a slide depicting the Apple Watch, “get that out of your system.”
The economics of innovation
The reason new technologies are being adopted so quickly is that their creation is no longer limited to large companies and research universities. And that’s increasing the number of new ideas in the marketplace exponentially.
“The economics of providing what customers want is getting more favorable,” McQuivey said. “Many more people can participate, each of them operating at significantly lower cost than before. Multiply those two things together, and you get an explosion of ideas. This is what’s happening in every industry.”
The result for retailers is the proliferation of sensors, cameras, microphones, and gadgets such as the Apple Watch, all of which are set to capture the data that powers the Internet of Things. But it isn’t sensors that consumers are interested in, McQuivey said; they are looking for new purchase experiences.
Tapping even bigger data
The data that IoT devices generate is going to be make today’s big data look like small potatoes.
“By 2020, the amount of data consumers give off will be 100 times what we have today,” he said. “You will know more about your customer, including data your customer never knew about themselves. That information is gold.”
Machine-to-machine communication could soon guess a consumer’s mood or whether they are in a hurry based on mobile usage, helping determine the best time to serve them an offer. Or Home Depot and Whirlpool might collaborate on a sensor that reports when a washing machine needs more detergent, service or replacement, McQuivey suggested.
The big question mark is not what people want or what will people do with it. It’s, what will we do with that information so that we can anticipate our customer’s next need?