Tackling the Internet of Things and Potential for Gains and Abuses

Posted: June 11, 2017 in General Commentary

The “Internet of Things” has now become the newest, hottest marketing powerhouse. The scale of claims and the breadth of its application transcends lighting, so it eclipses popular lighting themes of Energy Efficiency and Human-Centric Lighting. The idea of everything being connected through the internet, accessible, upgradable, and monitored from anywhere at anytime is the big sell. Refrigerators that not only tell you when a product has expired, but automatically places an order for a replacement is one proposed far-reaching concept. Products that learn from our use cycles to adopt and send data to manufacturers for product development is another. Lighting that responds to local natural light conditions without local sensors. Power grids constantly adjusting in anticipation of user demand. Facilities managers, utilities, and end users accessing and monitoring building activity, condition, and resources usage is another hot concept. Security monitors, tracking children, moving cars for hire around to meet changing demands, tying phones, computers, public data, private data, and corporate data into a massive super-computer like universe to benefit us all – it’s massively compelling… and potentially a scam of monumental proportion.

A week ago, I attempted to print a 3D model on one of my small 3D printers. The process failed when the required internet connection procedure revealed the manufacturer had discontinued support for the machine – which was top of line 5 years ago when I purchased it. The printer now operates using an off-line workaround that requires the use of manually moving files to it with 2Mb SD cards (try to find that at your local store), so no longer prints directly as it did when originally chosen and purchased.

A few weeks prior, a 3D CAD program that demands Internet connected verification before I am allowed to start the software, failed due to a glitch in a server connection. The result was a day of lost production as we sorted the server issue out to regain the required connection. I have a tablet computer that can no longer operate current apps, due to the manufacturer removing the model from support on its website. Every attempt to jail break it, to allow current software and operating systems to be utilized has failed, due to manufacturer embedded firmware designed to make that impossible. We’ve recently binned a wireless lighting control system in its entirety, due to the manufacturer deciding to discontinue support for it, rendering it non-functional – and since it required internet connection to operate no longer functions. Recently, I was spent more than $1,500 on software and firmware upgrades to a 7-year-old machining center to allow me access to features I already paid for in prior upgrades. Every year we pay out thousands in service fees we rarely use, to retain a relationship with service providers who will refuse service otherwise (like health providers who won’t serve customers without insurance.) I now spend more annually on service, service fees, and mandated software upgrades than we spend on hardware.  This was not the case 15 years ago. Today, money spent on these annual non-tangible expenses add zero to our company’s asset value, and reduce the amount of capital we have to invest in expanding capabilities. The idea of embracing the IoT, which promises to expand that reality gives me pause.

Every morning, we press the wireless lighting control button, cringing and hoping it won’t be stalled by some forced software update, which can take 30 minutes before the control returns to a functional state. We watch TiVo and Roku, where software and the interconnection to the cable company receiver are constantly in conflict between software resets and updates, not to mention security updates and wireless server conflicts from recent updates, which are imposing in their regularity.

Expand these simple issues to a global level, and its easy to see where IoT is actually leading – end of service life controlled by manufacturer choice and product management – by Internet connection.  This is the ultimate in forcing the “service economy” into existence. Turn everything into a service, then create a planned obsolescence cycle economy that forces re-purchasing of hardware to remain connected. Refrigerators with tablets built into their doors transforms the service life of a lump of hardware to that of a consumer electronic. Game systems with cameras looking into living spaces around the world, connected to the web, accessible to hackers. Computers, system controls, and security systems, constantly stalled to download and install updates and synchronize data to some data bank on the web. The idea that we all need to surrender the decision of when hardware is replaced to the mercy of manufacturers and marketers, is ridiculous on its face.

There is certainly a place of IoT connectivity. Connecting the elderly needing regular care and monitoring to service providers who can monitor and provide non-intrusive aide remotely is another. Tracking children as they move from home to school and back home, is yet another. Doctors having access to the latest techniques, your complete medical records readily available, and a record of your ongoing health and activities in hand to make expert diagnostic choices, is an amazing potential opportunity.

The use of the IoT will enable:

  • Managers of multiple properties would certainly benefit from remote access to building condition and activity
  • Building traffic models for dispatching cabs and ride share resources based on the movement of target customers
  • Grocery stores being provided real-time data on what their customers have in their pantries and refrigerators
  • Knowing exactly how many hours of use and severity of that use, through live monitoring of products under warranty by durable and consumer goods to improve designs and anticipate failures
  • Utility producers controlling thermostats of empty homes and commercial structures
  • Connection of grid-tied solar power production
  • Monitoring diets and consumption behaviors of individuals by health care and health insurance providers alike
  • Monitoring risk behaviors and driving habits by life and auto insurance companies
  • Observation of work habits by employers
  • Pointing shoppers to items of greatest interest based on prior purchases, as they walk through a store
  • Collecting data connecting demographics, use and buying behaviors across all products and industries to identify over-saturated markets and under-served customers
  • Health care providers access to personal data and leading edge diagnostic and treatment opportunities
  • Health care connectivity to patents for monitoring and real-time response and treatment
  • Health insurance providers access to information to adjust rates to match needs with more precision, saving healthy lifestyle individuals money while placing the burden of costs on those who do not take similar care
  • Stores will be better stocked on items you and your neighbors buy most, with less spoiled inventory of items you don’t regularly consume.

The issue is that when you review the greatest advantages to the IoT, the majority favor manufacturers, service providers and product marketers – often at the cost of consumer and end-user privacy and right to self-determination. This leads to numerous potential areas of abuse:

  • Products that are rendered un-serviceable by remote control
  • Collection of private information through behavior monitoring
  • Security risk exposure of damaging credit and personal information through products with weak protective features that are exploited by hackers and thieves
  • Manipulation of markets by exposure of market data that cause or initiate transformations – by design
  • Over-individualization of services and products that leave a portion of the population at a severe disadvantage
  • Exposure of private personal information and data one might wish to control

There is also another massive elephant in the room looming over us all – the commodification of the entire market. You know what this is already. every store today seems to carry what every other store carries. Making money is no longer about serving individual customers per-se, it has become the science of serving the largest masses with products they consume most regularly. In this, big-box retailers differ very little from one another, as product managers have become expert at data mining to eliminate slow-moving inventory to make room for products that have greater turn over rates. This has left anyone with unique or specialized needs out, reliant on On-Line channels to fill needs, as stores offer less and less. Further, hardware stores have not only displaced unique products with faster moving, low-cost inventory, they have slowly begun offering greater and greater commodity offerings outside hardware  – from clothing to groceries to barbecue grills. Meanwhile, providers of these commodities are now offering popular tools and hardware items. The IoT will simply blur these lines further, as stores move toward fastest moving products in demand, to displace specialized products. Add to this a layer of product engineering to serve the masses, that results in extremely short product life for heavy users. Further, as retailers boil themselves down further by data extraction, their will be far less excess inventory, pricing will tighter between providers, and there will be fewer “clearance” sales, except for those orchestrated to give the illusion of spot buy opportunities designed by marketers to attract certain bargain shopper customers.

The old model of hardware and auto parts stores establishing a reputation for having hard to find products as their differentiation, has been abandoned in favor of having every shelf filled with multiples of common, fast-moving products. The loss of profit from competing under a price sensitive model is offset by greater turn over. At least that’s what they think. In the end, we have seen thousands of stores close as shoppers find little reason to shop around when every store carries the same products at similar prices. Linens and Things, the crash of the electronics market, Radio Shack, Sears, Penny’s, K-Mart, and numerous others, have all suffered from this commodity model approach, where store brands once built on unique character and offerings were destroyed systematically by the common commodity fast turnover, everything everyone wants model. The IoT will make this even more chronic by more precisely identifying and targeting customers and connecting their common needs to every store subscribing to data resource providers. The IoT is the perfect tool for the risk averse high turn over, low profit marketing managers, and as it has already proven to be the case, it will destroy more than it creates.

Another area where the IoT will wreak havoc is on communities themselves. Real estate markets will be devastated by the availability of detailed data on homes, retail traffic, demographics, school activities, etc… A crude example of this is the effect CarFax has had on pre-owned cars. One small insignificant incident report on CarFax can destroy a cars resale and trade in value – simply because there are so many competing vehicles with clean reports to make choices from. Great for car buyers, bad news for those attempting to sell or trade a car off. Great for auto retailers who will use a single incident mention on CarFax to hammer a customer attempting to make such a trade at the dealer. Extend this to the entirety of commercial and residential real estate, coupled with data on builder history, energy use, maintenance history, surrounding market intelligence, similar home comparisons in real-time, etc.. and the effect will be devastating to those who find themselves on the wrong side of the new universe of open data access. Communities that suffer minor incidents in crime, or undesirable demographic makeup, or undesirable traffic patterns or slightly lower school performance – will find the decline in values precipitous, as surrounding communities with fewer reported “incidents” succeed. This will create death spiral vortex effects, where decliens feed more negative data, feeding more decline, as competing communities realize gains from the momentum of positive reviews and performance variables. You cannot insert data and information access into an infrastructure built on limited access, without experiencing a period of adjustment. Again, this favors those who benefit most from change, and who control the variables involved to their advantage, at the cost of consumers.

The benefits of the IoT for commercial interests far outweighs any real gains to be realized by individuals and consumers overall. Yet, the success of the IoT demands a massive acceptance and adoption by individuals as consumers and monitor-able end users as possible to make it actually work. You cannot mine data without consumer subjects that serve as the ore for that data. If end use customers resist connection, data is diluted, and the value of the entire model fails. To this end, a great deal of effort will be made to espouse the advantages of the IoT to individuals, even when those advantages are spurious, or simply totally unnecessary. This is not analogous to smart phones, which are a combination of useless and useful features – it is much grander in scale and reach. The benefits of expanding the IoT and its reach into the lives of individuals, will be captured by-product marketers, while reciprocal benefits to end users will be a mix of concealed loss, and improvements in conveniences that are primarily offered to make the IoT attractive – in a cynical form of loss-leader marketing. There will be many case studies showing how lives are made better, and how the IoT will make our world a better place – but the real gains will be made by corporations and marketers. The fallacy that forwards the idea that what is good for corporations is good for their customers is in play here more than ever, and as wrong as it has always been.

There is an interesting parallel concept emerging, supported by IoT connectivity, that products can be transformed from hardware to service. An example of this is lighting being sold as a service, where you pay for delivered lumens, with hardware provided by the service outlet. This sounds good, as it eliminates capital investment. However, it also makes lighting hardware a continued expense, as the capital investment by the provider is recovered in the service charge, at a profit, plus the cost of energy and maintenance, at a profit, until they decide that its time for an upgrade – forced by stating the current product is no longer supported, thus will cease to function on a prescribed date. The IoT will maximize the profitability of these entities as they monitor usage and make adjustment to service charges. For example, those who frequently turn lights off, or dim them will pay a higher rate than those who leave lights on, negating gains made by frugal behavior and increasing profits earned by service providers. Further, the capacity for abuse, such as using built-in occupancy sensors or other data collection devices to sell access to, like email addresses are now, to other marketers is very real. Expand this “service” based model to every product in a work and living environment, and its easy to see why it has captured the imagination of capitalists, and why they might be spending millions to promote it.

So, when your new IoT connected toaster has made toast for the number of slices it was pre-determined to deliver, and shuts down with a message to contact the service department for a mandatory upgrade or replacement, you will thank the IoT for that. When the stores in your area no longer carry anything but what you and your neighbors buy regularly, and seem to time their inventory arrangement perfectly to that need, with limited inventory that is depleted rapidly – but have nothing new or interesting, or no longer fill specialized needs, you’ll have the IoT to thank for that. When you are in a retail store and find your phone nagging you about specials and sale items, and the status of the content of your refrigerator and pantry, you’ll thank the IoT for that. When you receive a notification that the lighting, furnace, and water heater service providers in your home and office are reaching the end of their current contract, that require both upgrades and renewal at a higher cost (or face having the devices removed leaving you to secure a replacement service provider as your only recourse – exactly like the cable and phone companies do today), even though the products work just fine as they are… thank the IoT for that. When the value of real estate changes based on reports and scores gathered from real-time activities in your area to promote a competing new development, you will thank the IoT for that. When you see the value of your earnings decline as wealthy corporations get richer, while you find yourself always facing updates, upgrades, renewals, re-connection charges, forced obsolescence-by-software, changes in the availability of locally available special interest products and services that leave you in the cold, and your identity and private information under constant threat of exposure and exploitation – you will thank the IoT for that. When you feel creepy about how much those around you that you have never met, know about you, and what you are doing… you will thank the IoT for that.

This is not to say that the entirety of the IoT model is to be avoided at all costs. As stated early in this commentary, there are areas in which the IoT can deliver benefits to both corporate and consumer equally. The value of information is beyond reproach, access to the right data at the right time is invaluable. To this end, there are many reasons to embrace the IoT and its expansion and deployment. However, the fervor over it is not being driven by consumers publicizing a need to be served. The fervor is coming from those who see it as a business opportunity, because it can be done, hoping to excite the consumer market to buy into it to make it do what they envision it doing… for those who will benefit from selling it as a value add over their competition. Because of this, and the lack of controls and regulation as to how it is deployed, the opportunities for exploitation and abuse are something that everyone must consider before blindly buying into a sales pitch. Be careful and selective about where you allow the IoT to intrude on your personal space, be cognizant that it is not all as-advertised, and that security is a personal responsibility. When it works right, the IoT will deliver wonderful new value. When it goes wrong, the potential for unforeseen consequences are very real and worthy of cautious consideration. When it comes to appliances loaded with IoT connected gadgetry? I will personally pass. Chinese consumer products loaded with delicate electronics, wireless connectivity, and software control – just has dumpster-bate written all over it.

 

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