Dropcam’s computer algorithm lets a camera know who people are in the field of view.

There’s a gold rush underway to connect our devices to the web. For many, the devices are the keys to the kingdom — either riches in the form of selling data or from creating a widely used platform for services or applications. Yet what is becoming increasingly clear is that these models reflect a divide between cultures when it comes to the internet of things.



This idea that as we connect devices and sensors, they will combine into some super-intelligent whole that can help save electric costs, make manufacturing more efficient, and even predict our traffic is the underlying promise that many people are hoping for. But as I discuss the consumer efforts around the internet of things, I’m struck by the culture clash between old-line physical goods and those manufactured by startups. It’s a topic I hope to explore in greater depth at our Structure Connect show Oct. 21 and 22 in San Francisco.

The divide looms large in every category

In old-line businesses, there is an abundance of caution, not just driven by a lack of digital expertise, but by the concern about how this shift will impact their business. Questions I hear discussed range from, how long can I warranty a Wi-Fi module, to how can I support a cloud service for a decade. Others revolve around privacy and making sure data isn’t inadvertently leaked, because unlike Mark Zuckerberg, the CEO of GE or GM can’t just post an apology in a blog and expect any perceived or actual lapses to go away.

There will be consumer outrage, possibly Congressional meetings and likely a visit from a federal agency to contend with, because what people accept on the internet is very different from what they will accept in their homes or businesses. On the flip side, coming from the Silicon Valley tech circles is an ethos of iteration and continual software updates that will improve the product over time. And while I often talk to founders about how they plan to support a device that might live in someone’s home for a decade when they are launching a Kickstarter from an incubator, I don’t get more than pat answers about how the device will still be functional without connectivity.

As for privacy, security and concerns about user data, there aren’t even a series of agreed-upon best practices. The more responsible firms hire security firms to test their products and react quickly when confronted with security and privacy holes, but in many cases the user experience can range from Nest’s immediate recall and automatic update of its Protect Smoke detectors when it discovered a potential design flaw, to pushing out an immediate update but not telling the customer that this update fixes a known security flaw that could seriously compromise them.

Your point of view changes your business model

These differences in perspective play out in how companies plan to roll out services and how to make money. Old-line businesses are trying hard to encourage subscription models and more closed ecosystems, because that gives them the control they need to ensure quality and privacy while also offering a revenue model that will support a product’s deployment for years to come.

I spent a lot of time discussing this on last week’s podcast with Kevin Meagher, the VP and GM of Lowes Smart Home. In the podcast he explained why Lowe’s is using a subscription model and how it plans to roll out more devices over time. But Meagher points out the flaw in welcoming all of the current devices on the market today.

“What’s happening right now is some APIs are being opened, not all, and the only way you can actually control the device or integrate it into your ecosystem is by actually going through the cloud-to-cloud,” Meagher said. “So for example, whatever the device is, is talking to the manufacturer or the vendor’s cloud platform and then they are allowing you access to their cloud’s data … but if I am responsible to you with a level of service for your home so when you push a button you want your air conditioning to go on or off I’m dependent on a third party that won’t give me any guarantee of service — they won’t give you any guarantee of service, so how is that going to work. How is that going to scale?”

One reason he’s concerned about this is that Lowe’s charges a $9.99 monthly subscription fee for its connected-home service, but it’s doing so because it wants not only to support the backend costs of offering a platform, but also because it is trying to reach a mainstream consumer who wants one person to call when his or her lights don’t work properly with a doorbell made by a different manufacturer.

This will affect consumers too

In the web world, this subscription idea is anathema to most, because we are used to getting content on the web for free, while businesses use the data they collect on us to monetize us via ads. This leads to some behavior that when translated to the physical world might turn a lot of mainstream consumers off. For example, Dropcam came up with some interesting computer-vision algorithms that let a camera now known who people are in the field of view.

It did this by taking all the camera data it had from people sending their Dropcamfootage to the company’s servers and using it to teach the computer what people look like. Yes, that footage was anonymized, but it’s still something that might creep people out. Another example might be the blog post from OKCupid’s CEO calledWe Experiment on Human Beings that explained how the site set people up with matches that were decidedly “wrong” for them as a form of testing the efficacy of their algorithms.

Can you imagine if a restaurant served you a meal different from the one you ordered so that it could test how people responded to different spice blends? Or if the devices in your house conspired to wake you up a few minutes later in the morning because that seemed more optimal for your health patterns? The level of experimentation and use of troves of highly personal data collected by connected devices may be better off in the hands of companies trying to sell you a service as opposed to companies trying to sell your data.

As the internet of things becomes more mainstream in the consumer home, this culture clash may play out where most people aren’t aware of it, but I think it’s a debate we should be having. Many people regret that the internet has become a place where you are the product, but it’s a scenario that is set to happen again as we put more and more of our old-line goods online. We should talk about that.

Photo credit: Spider Oak

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