The Internet of Things Myth part 1: What happened to the promise of 50 billion devices?

Matt Hatton

By Matt Hatton, Founding Partner at Transforma Insights.

Back in 2011 some industry commentators were promising an IoT market of 50 billion connected devices by 2020. We’re in 2020 and we can safely predict that we won’t reach anywhere near that figure by the end of the year. What happened? Why did we not hit that figure, or get anywhere near it?

The Internet of Things Myth’, a new book by IoT industry veterans Matt Hatton and William Webb, lifts the lid on the challenges and mis-steps that held back IoT adoption. This article, by one of the authors, looks at one reason why we fell short: the idea that everything would and should be connected. In subsequent articles we will examine some of the technical issues that dogged the adoption of IoT, and the challenges enterprises faced in really harnessing IoT.

The first thing to note is that not every company was forecasting 50 billion connected devices. In late 2011, for instance, Machina Research, an analyst firm founded by the author, was predicting just 12 billion devices by 2020. The 50 billion figure grabbed the headlines because it was one of the larger forecasts but not everyone subscribed to the idea that the market would be so big.

Nevertheless it is hard to escape the idea that the IoT fell short of expectations in the last decade. During the first half of the last decade there was an exponential growth in interest in IoT and substantial reduction in barriers to entry, not least in plummeting costs of connectivity and software platforms that made deployment significantly easier. In the second half, however, very few elements of IoT reached a ‘tipping point’ to achieve accelerated growth. Some, but few. A number of other factors acted as a break on growth.

The buzz around IoT perhaps fooled forecasters that the wacky ideas for connected products that graced the floors of CES were realistic: connected wine bottles, dental floss, toasters, and so forth. The reality was that the utility was limited and certainly not worth the associated premium. Even where the product was viable, many IoT customers will have been put off by records of poor customer care, such as the ‘bricking’ of devices like garage doors, lighting and music systems. Lifecycle approaches more associated with smartphone apps were applied to physical products that might otherwise has been expected to last for decades. Not least this applies to replacement rates. While mobile handsets might be swapped out every 2-3 years, the same is certainly not true of lighting or music systems.

The lesson that Webscale dynamics don’t apply in the physical world is one that has seemingly taken a long time to learn. And, what’s more, the development process for IoT laid bare the inherent friction between the ‘internet’ and the ‘things’ worlds. The internet (or software) world is characterised by much greater tolerance of faults, less robust testing and faster iteration and time to market. The hardware industry, in contrast, comes from a heritage of organisations that are much more risk averse, understandably so because when hardware fails people die.

While bricked products and poor user experience may be costly, frustrating and not conducive to encouraging adoption of IoT, security and privacy threats have the potential to cause fundamental mistrust of all things connected. There have been numerous examples of security flaws, from the hacking of the Jeep Cherokee in 2015 to the Ring Santa Claus hack last year. These issues spill over into user reluctance to adopt. The same is true for enterprises, which have had equally challenging experiences.

Even those applications that are driven by regulation have seen slower than expected growth. As outlined in detail in the book, smart meter roll-outs in the EU alone were 200 million devices short in 2020 compared to initial mandates. Emergency call (eCall) regulation was similar delayed, leading to a short fall of up to 100 million. Furthermore, much heralded government investment plans such as in China and India failed to create the anticipated boom in smart cities connections.

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