Sticker shock: The Internet of Things has turned $10 light bulbs into $99 light bulbs

venturebeat.com

Above: Samsung's B.K. Yoon gave a keynote on the Internet of Things at CES 2015.

Image Credit: Techworld

The Internet of Things, or making everyday objects smart and connected, was a huge theme at the 2015 International CES, the big tech trade show that drew 170,000 to Las Vegas last week. Samsung Electronics’ chief said that 100 percent of the company’s products would be connected to the Internet within five years.

It all sounded great to me, and each idea seemed to have merit. If you add some processing brains and networking to any device, you can make it more useful and extract analytics from it. But every time I heard the price for each Internet of Things device, I flinched. It seemed like a way to hike the price of an object by 10 times, and it will lead to price inflation like you wouldn’t believe, if manufacturers stick to the prices that they talked about for their devices at CES. This pricing problem tells you how far the Internet of Things is from really catching on, and how much of it is hype for now.

KeeLight showed off its Wi-Fi enabled multicolor smart light bulbs at CES. You can control them with an app remotely, and turn on sections of your home to create the right atmosphere within seconds. That sounds great, but each smart light bulb costs $100. The average home has 40 sockets for light bulbs. That means it would cost almost $4,000 to outfit your home with smart light bulbs from KeeLight. You can get a deal with $350 for 10 smart lightbulbs. Still, that’s a pretty steep cost for getting a start on the connected home. I have an easier time getting over the psychological hurdle for paying $100 or more for a drone, since I haven’t owned one before, rather than paying that much to retrofit my house with a new version of something that I am already quite pleased with. For me in particular, I would rather pay $60 for a video game than $99 for light bulb.

Above: CES demo of KeeLight smart light bulb.

Image Credit: Dean Takahashi

I also thought that the Petnet Smart Feeder was a great idea. It dispenses precise amounts of dry food to your pet in an automated fashion. The mobile app lets you remotely feed the pet and reorder pet food easily. It keeps your pet happy and healthy, and that’s priceless, right? It sounded great, until I heard the price was $250. But a dumb pet feeder costs anywhere from $5 to $50. I had the same reaction to the Kolibree smart electric toothbrush, which lets you use an app to measure how well you are brushing. It replaces a $2 toothbrush, but costs $99 right now.

“It’s early days,” said Scott McGregor, chief executive of chip giant Broadcom, in an interview with VentureBeat. “We’re going to have to decide if pet feeders are an important category. Once we decide, we’ll see brands emerge and the price will go down. Right now, we have to decide what categories will succeed.”

Sometimes it’s clear that the electronics in an object isn’t that sophisticated, and the higher pricing just seems to be aimed at targeting enthusiasts. The Ozobot is a little toy robot that blends the physical and digital worlds. It teaches kids programming because it lets them program the path the Ozobot follows by laying down color tracks on an iPad or a piece of paper. That’s pretty cool, but each tiny little Ozobot costs $50. That’s pretty high for a device that is the size of a jawbreaker.

Sure, it’s hard to make objects small, and smaller devices often have higher prices. Still, the accelerometers and gyroscopes in some of these objects cost a few dollars. Zepp Labs adds cool Internet of Things sensor to tennis rackets and other sports gear. The app that lets you take a video of yourself and analyze your swing is free, but the Zepp sensor costs $150. There’s a nice try-before-you-buy value in the Zepp app, but the amount of technology in the device itself seems pretty small. The smart tech is in the analytics and other things in the app. But does it justify that price? In that case, it’s probably a smart price, as the target market is smaller, at least for now, and those target individuals may not mind paying that much money to make them better at something that they do over and over again.

We’re also in the stage where many Internet of Things devices aren’t compatible, or use competing standards. Samsung pledged to invest $100 million in making sure that the Internet of Things stays open. So we’re paying $100 for Internet of Things devices that aren’t yet interoperable.

Another problem I have with these small but expenses devices: We’re going to lose a lot of them. Do you want to pay full price again to replace a lost Fitbit health tracker? It’s like the cracked iPhone screen. Somebody is going to make a bundle of money replacing these devices. And the battery life is going to be limited. I have a great electronic key fob that can open my car doors. But I haven’t used it for some time because it has run out of battery power.

Above: Petnet Smart Feeder at CES 2015

Image Credit: Dean Takahashi

Some of the smart manufacturers introduced cool ideas without putting price tags on them. The Panasonic interactive mirror demo takes an ordinary mirror and turns it in to a smart display, enabling you to know what you would look like with sparkles on your eyelashes or a moustache. But that transparent display glass isn’t cheap, and I’m sure it is going to start out at a crazy price. The best thing Panasonic can do now is set our imaginations on fire and get us excited about it, and then tell us how much it will cost later.

I talked to a few analysts about my sticker shock, and they didn’t seem to be too alarmed about the price of the Internet of Things. After all, the laws of supply and demand will normalize the prices. And it’s OK to start out with a high price if you can’t get that many devices built, or if you’re the first to come up with an idea, or if you just don’t think you’ll sell much. If you look at UHD 4K TVs, the successors to high-definition TVs with four times as many pixels as HD, the prices started at $25,000 and have fallen within a few years to under $1,000 for some models. The prices should fall further this year.

“They don’t expect to sell many, they have to recoup development expenses and they know if it actually solves a big problem for a wealthy person or enthusiast they will pay it,” said Patrick Moorhead, analyst at Moor Insights & Strategy, in an email. “Also, pricing something high provides an aura of ‘premium,’ an attribute attractive to both the wealthy and enthused.”

Brian Blau, analyst at Gartner, said, “Most sophisticated consumer tech companies perform detailed customer analysis and do track price issues relative to customer satisfaction so there is to some degree a methodology to determining prices. There are other factors too. Is there demand? How much? Or they look at competition and how can they use pricing as a strategy to get an advantage. Often times new product categories start out being priced high and that is to help recoup the expenses needed for product research and development and to mitigate risk if the product category does not perform as they expect. Luxury items have a similar pricing trajectory.”

Roger Kay, an analyst at Endpoint Technologies, said he likes the idea of sticking a “beacon” on items. That is, for the cost of about $17, you can add a Bluetooth LE connectivity to anything. It broadcasts to your smartphone and you can interact with it.

“But many of these items risk being a gimmick with a very short shelf life if people don’t want to integration them into their everyday lives,” Kay said. “As it is, only a pro baseball player would really want a swing analyzer, and then, he probably has a $5,000 one with special functions.”

Over time, you see the adoption of devices skyrocket as the prices for those items go down. If you can get a device down to $300, it becomes much more accessible to mainstream households. And if you bring it down under $100, one spouse can buy it without the permission of another spouse. But if you’re asking someone to upgrade, you really want to have price parity between the old product and the new product, in order to get people who are used to the old device to adopt the new device. That’s the situation for the Internet of Things devices, where a smart bulb replaces a dumb bulb.

The problem I have is that the Internet of Things is going to affect every object we own, and the competition is quite fierce. If I can pay $10 for an ordinary light bulb, I’m going to do that. And it may take a long time to hit price parity, when you essentially get the smartness and connectivity for little extra cost.

Above: Samsung’s Chef Collection appliances at CES 2015.

Image Credit: Michael O'Donnell

Shawn Dubravac, chief economist at the Consumer Electronics Association, said that adding connectivity to a device and throwing lots of numbers at consumers has limited value. What really matters, he said, is creating something that is technologically meaningful. I talked to a lot of people who felt like a lot of dumb appliances should stay dumb. Kitchen appliances fall into that category for me. Part of the psychological problem is that, if you do the Internet of Things right, a smart object looks exactly like a dumb object.

 There’s a chicken-and-egg problem that manufacturers face. They can’t lower the price of these devices until they sell a lot of them and get volume efficiencies. But until they lower the prices, they can’t get a lot of volume.

“Things will sort themselves out,” Kay said. “The ridiculous pricing will fall away, companies will have to bet on higher volumes, and some will die. What will work will be things people really want to use in all seasons, not something that seems fun for a while and then becomes boring, tedious, or too much work compared to the analog solution.

10 technologies that will make the Internet of Things a reality

telegraph.co.uk

Smart energy management

Energy management was one of the original focuses of Internet of Things development, with smart thermostats like Google Nest (above), Hive, Tado and Honeywell offering systems that allow home owners to adjust their temperature and hot water settings from a smartphone. Some of these systems also learn the user's habits and gradually adjust their settings to fit the users' preferences.

Smart lighting

Smart lighting systems like Philips Hue (above) allow users to adjust the colour and brightness of the lighting in their home from a smartphone, according to their mood. Similar lighting systems from companies like LG can also be programmed to act as an alarm clock, for example, getting gradually brighter from a chosen time in the morning, or blinking when the user gets a phone call.

Connected appliances

Being able to control your home appliances from your office has become a big area of growth for the Internet of Things. For example, users of Electrolux's CombiSteam oven (above) can turn the oven on, adjust the temperature and humidity, and watch their food cooking from their smartphone via an interior-mounted camera. Smaller appliances like Smarter's WiFi coffee machine, let you make a cup of freshly ground coffee while you are still in bed.

Smart security

Mobile devices are increasingly used for identity management. The Goji Smart Lock (above) bypasses the need for keys, allowing you to gain access to your home with the simple tap of a smartphone or electronic fob, and sends you a text when the locks are activated. Meanwhile, the Bluesmart suitcase can be unlocked from your phone and automatically locks itself when its built-in proximity sensors detect it is no longer near you.

Self-driving cars

The Internet of Things is not just about making things smarter in your home but also in your car. Google kickstarted consumer interest in self-driving cars last year, when it began testing its driverless vehicles in Silicon Valley. Since then, Mercedes (above), Audi and BMW have all announced their own self-driving car prototypes, some of which can be controlled using smartphones and even smart watches.

Self-tending gardens

Out in the garden, Parrot has been making a splash with its Flower Power H2O (above), which autonomously waters your plants using exactly the right amount of water at exactly the right time and gives you personalised advice through a smartphone app. Meanwhile, a smart garden system from Edyn monitors and tracks environmental conditions, helping you make your plants thrive

Wearable health and fitness monitors

Wearable devices are often thought of as separate from the Internet of Things, but the health and fitness data from these gadgets is increasingly being fed back into the wider network. For example, Jawbone's Up fitness tracker (above) monitors sleep patterns and can set the alarm on your smartphone to go off at the best time, based on your body’s natural sleep cycle.

Drones

Drones are also often put in a category of their own, but beyond being amusing toys, they could also form an integral part of the Internet of Things. At CES, Intel showed off the anti-collision feature of the company's AscTec Firefly drone with Intel RealSense camera (above), proving that drones could soon be capable of autonomous navigation. Amazon has already shared its ambition to use drones for deliveries; other uses include watching live video feeds from the air.

Smarter city infrastructure

For the Internet of Things to really become a reality, the connectivity has to go beyond the products we use and become integrated into the environment around us. From traffic lights that adjest their waiting time based on congestion levels to parking systems that help drivers find a free parking space using a smartphone app (above), cities are becoming smarter by the day.

Faster, more intelligent networks

Beneath all of this lies the networks on which the Internet of Things will run. Huge investment is being made in networking technologies like 5G, ZigBee, and 'white spaces' to ensure that this infrastructure will be fast enough and affordable enough to support the influx of connected devices. Only when this is in place will the Internet of Things become a reality

Forget mobile, 2015 is the year of bluetooth

untether.tv
There was a distinctly blue layer over CES this year – as in Bluetooth. What is old is new again and bluetooth is one of those protocols that never really caught on when it arrived but it seems to now have hit its stride. Chuck explains what the importance of the emerging bluetooth ecosystem is on beacons and highlights some of the products he saw while walking the halls of the bluetooth pavilion.

Fiksu predicts an Appy New Year

bizreport.com

Recent figures from Fiksu shows just how much the app environment is growing with 42% growth recorded in November 2014 as downloads hit 8.1 million.

by Helen Leggatt

The latest Fiksu App Store Competitive Index, which tracks the average aggregate daily download volume iOS app store's top 200 free apps shows that 8.1 million downloads for November 2014. That is significant growth from November 2013's 5.7 million (42%) and, says Fiksu, was driven by increased device use during Thanksgiving coupled with a surge in new iPhone user numbers.

App engagement also increased, with average time spent in-app increasing by 21%, and the frequency of opening apps increasing to 11.5 times per month. This is up from 9.4 times one year ago.

"Breaking the 8 million app download threshold marks a staggering new milestone for mobile marketers and sets the tone for a new year filled with both promise and challenges." said Micah Adler, the chief executive officer of Fiksu. "As we've seen in past years, the effect will surely last into January with volumes and acquisition costs continuing to rise."

Fiksu, which gets its data from 3.5 billion app installs and 5.4 trillion marketing events tracked across 1.7 billion devices, also found that cost per loyal user was lower in November 2014 than the previous year. The Fiksu Cost Per Loyal User Index was $1.58 in November, 21% down on November 2013.

According to Fiksu, "the most important takeaway for marketers this month is the continually increasing download volumes, which set the tone for the New Year and, along with it, new opportunities as well as challenges. Volumes and acquisition costs are expected to rise in January; and while this doesn't represent a bargain time for marketers, it will be an important time to plan for acquiring new users and adopt strategies for retaining existing ones".

Retailers seek to link the mobile and in-store experience for consumers

mobilepaymentstoday.com

Every day, retailers are attempting to figure out how they can react to the expectations and demands consumers place on them thanks to new technology. 

Technology in some ways creates higher, sometimes impossible-to-meet, consumer demand for services. The retail industry often struggles to keep pace, but it is now more important than ever for merchants to meet consumers where they frequently these days and that's usually with a smartphone. 

"Mobile devices enable us to bridge the gap between online and offline world and that's the key," Frank Zimmerman, CEO for IT provider arvato Systems North America, said during a panel discussion Monday at the NRF Big Show in New York City. "There are so many different ways to do it and we're just at the very beginning of this change."

Zimmerman was one of four executives who participated in panel discussion about how mobile technology is changing retail as consumers increasingly demand near-instant gratification with their remote shopping experiences. 

The change Zimmerman mentioned is happening at a breakneck pace for traditional retailers, who historically are slow to respond to change. And it will only get more difficult for merchants to adapt in the coming years. 

The GSMA expects smartphone adoption to reach 75 percent in Europe and North American by 2020. Some industry pundits suggest worldwide adoption could reach 80 percent over that same time period.

As more consumers are exposed and become accustomed to new ways to shop and pay, the more they will expect the ability to reach and interact with their favorite brands on their smart devices at any time. That creates a challenge (and opportunity) for retailers to better align their remote and physical operations. 

"One aspect of [technology] disruption is the power consumers are gaining in terms of how they interact with the brand," Zimmerman said. "It's different from window shopping."

So, the question becomes how retailers can better prepare for the winds of change that come with new technology. Ryan Craver, a former senior vice president of strategy for Lord & Taylor, told attendees during the same panel discussion that all company decision makers need to first admit how technology is changing their customer-facing operations. 

"You have to make the sure the entire group of decisions makers acknowledge that we are in a different period of shopping," he said. "If you know mobile is a catalyst for commerce, it will make the entire organization understand how the customer is changing." 

Craver recommended retail executives make sure they keep tabs on other industries such as fast casual restaurants. For example, chains such as Domino's Pizza, Taco Bell, and Panera heavily market the order-ahead capability within their respective mobile apps. Craver believes consumers will come to expect similar services from their favorite retailers. 

"You have to have this relentless pursuit in how you react to what's happening in other industries," Craver said. 

The panelists agreed it will take experimentation and time for retailers to perfect the pairing of in-store and mobile experiences. 

Faisal Masud, executive vice president for global commerce at Staples, said the office supplies retailer has seen an increase of in-store pick ups from mobile/online orders. But he admitted there are still some hiccups in that process because sometimes a customer will have to wait in line to obtain their order. 

"There's still friction," he said about the in-store pick up experience. "Retailers often lag behind what the consumer wants."

Mobile Payment Boasts Rosy Future, But Some Obstacles Remain in Play

techtimes.com

Mobile payments are gearing up for a big year thanks to several factors, including the launch of Apple Pay and retailer incentives to consumers to use the technology. But as industry watchers note, there are still a few challenges to hurdle before mass adoption.
(Photo : Justin Sullivan | Getty Images

It's going to take a mix of customer reward programs and greater security efforts to drive mobile payment systems forward, but the outlook is rosy, with one research firm predicting mobile payments will account for $130 billion of worldwide consumer spending in just five years.

That spend point, predicted in a recent Strategy Analytics report, is equal to 254 million users making five mobile payments per month averaging about $9 each. Mobile payment vendors and service providers will have to do some work to hit that high note, however, as consumers are still a bit distrustful of the new spending approach and aren't likely to change from today's debit cards without some sort of incentive.

"The company or companies that are able to demonstrate the value of mobile payments to both retailers and consumers, beyond a simple like-for-like alternative for physical payment cards, will be able to drive mobile payments," analyst Nitesh Patel, author of the report, told Tech Times in an email interview.

The path to gaining mobile payment customers lies within loyalty and rewards programs. For example, Starbucks is driving customers to its mobile payment service by introducing rewards. Yet unlike some other mobile pay systems, Starbucks' app can only be used in its stores and no others, even though it taps near-field communication (NFC) technology like Apple Pay and Google Wallet, both of which can be used with whatever retail partner is using their payment system.

The Starbucks approach may change, though, if NFC point of sales systems eventually become ubiquitous. Right now, however, emerging payments systems, such as CurrentC from the Merchant Customer Exchange (MCX), do not use NFC. The reason is to avoid charging MCX merchants the charges tied to credit card fees. Apple Pay, for example, still allows the use of credit cards, which presents additional costs for merchants.

"MCX, through its CurrentC wallet, may be able to deliver this aforementioned combination effectively to drive mobile payments among its loyal customers -- e.g., those that have the apps of its members on its devices. While neither Starbucks or MCX is going the NFC route today, this is likely to change over time as NFC POS becomes ubiquitous," says Patel.

Beside the technology adaptions to come, retail merchants seeking mobile payments from customers are likely going to have to make it worthwhile for consumers.

"If mobile operators, Apple or Google wants to drive mobile payment adoption they should look to integrating offers and loyalty into their platforms and position to be 'retailer friendly,' " explains Patel.

That's because many customers will likely not switch to mobile payments when the payment system they currently use, such as a plastic card, works fine. Then there's also the dark cloud of mistrust by consumers surrounding mobile payments.

"Security will continue to remain a key barrier to mobile payments -- especially with people concerned that stolen phones can be used to make payments," Patel says, noting some solutions to the fear factor are already in play. One is the introduction of a biometric (fingerprint) security layer on the iPhone 6, for example. "That should certainly help to allay some consumer security fears."