Consumer Experience in the Internet of Things

© Hoffman and Novak 2015 | http://postsocial.gwu.edu

Consumer Experience in the Internet of Things MSI Fall Trustees Meeting, November 5-6, 2015

Donna Hoffman and Tom Novak, The George Washington University

http://www.tylergore.com/words/stuff.html

http://postsocial.gwu.edu


http://www.tylergore.com/words/stuff.html


Ready or Not, Here Comes the Smart Home!

http://www.jklossner.com/TechToons/

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› Setting the Stage

› A New Framework

› Eight Important Insights

Agenda

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Setting The Stage

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Internet Phase 1 Internet of Information

(Web)

Internet Phase 2 Internet of People

(Social)

Internet Phase 3 Internet of Things

(Post-Social)

Research Focus online experience social media consumer experience of the assemblage

Catchphrase

“Nobody knows you’re a dog”

“On the Internet, everybody knows you’re a dog”

“On the Internet of Things, nobody knows you’re a

fridge”

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From the Internet to IoT



© Hoffman and Novak 2015 | http://postsocial.gwu.edu 6

The Evolution of Interactivity Internet Phase 1

Internet of Information (Web)

Internet Phase 2 Internet of People

(Social)

Internet Phase 3 Internet of Things

(Post-Social)

Nature of Interactivity

Many to many interaction between people and content via Web interfaces. Google

Many to many interaction directly between people via social networks. Facebook

C2M, M2M, M2P, C2C interactions; device interactions autonomous; Digital → physical. Interactions highly heterogeneous, ongoing and evolve over time. ??

Identity of the Internet

Shop online, browse web pages, search for information are all largely static. Global Collective Identity

Shift to smarter apps to enable more sophisticated and complex interactions. Balance of power shifts from marketer to consumer. Global and Personal Collective Identity

C2C interactions recede compared to evolving heterogeneous interactions of C2M, M2M, M2P in overlapping assemblages. New Personalized Consumer Experiences Will Emerge in the Context of the Unique Identities of These New Assemblages




Why Now? The 7 Technology Laws

Technology Law Description

#1 Moore’s Law Processing power. Transistor density on integrated circuits doubles every 12-24 months.

#2 Kryder’s Law Storage power. The density of information on hard drives doubles every 13 months.

#3 Gilder’s Law Communications power. Total bandwidth of communication systems doubles every 6 months.

#4 Kurzweil’s Law Accelerating returns. The time interval between salient technology events shorter as time passes.

#5 Weiser’s Law Instant adaptation. As technology becomes ubiquitous, people instantly adapt to new technology and take it for granted.

#6 Meeker’s Law 10x Multiplier Effect. With each new technology cycle, the number of devices increases tenfold.

#7 Metcalfe’s Law Network power. The value of a network is proportional to the square of the number of users.




The Consumer Internet of Things (IoT)

The collection of everyday objects in the physical environment, embedded with technology including sensors, actuators and the ability to communicate wirelessly with the Internet. These devices interact and communicate with themselves and each other – and with humans.

-- (Hoffman and Novak 2015)




The Internet of Things is Going to Be Huge

250 Million Connected Cars by 2020 (Telefonica)

$19 Trillion opportunity by 2020

(Cisco)

“100% IoT” by 2020 (CES)

Intel’s IoT group had 19% increase + $2.1

billion revenue in 2014

25 billion (Gartner) to 50 billion (Cisco)

devices by 2020




A lot of hype, but so far not a lot of adoption Industry research suggests that consumer adoption of smart devices, the “Internet of Things,” is inevitable (Acquity Group 2014; Affinova 2014), with ⅔ of consumers saying they plan to buy at least one smart home device in the next five years. Adoption rates are low:

16% own one device and 4% own two or more (Gartner) 6% use smart home tech (Nielsen) 4% own one device (Acquity)

Even the most aggressive projections suggest that only 30% are expected to purchase a smart thermostat (one of the most obvious smart home applications) 5 years from now, with much lower rates of adoption for other smart home devices.

But the Smart Home Has an Adoption Problem

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Even Early Adopters are Having Trouble




Awareness. 87% of consumers have never heard of the “Internet of Things” and if they have, they don’t really know what it is. Price, Security, Privacy and a Loss of Control. Oh, and smart home device prices are too high, there are serious concerns about security and privacy, and consumers worry that smart devices may develop scary minds of their own. Product Value and Performance. Industry research shows that the main barriers are a lack of awareness and a perception that the value proposition is missing. Many current products simply aren’t ready for prime time.

3 Barriers to Smart Home Adoption

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For smart home adoption to expand beyond upscale consumers and techy DIYers willing to suffer, we need to understand the value it offers to consumers. The current focus is on individual products (thermostat, light bulb, refrigerator) and specific “use cases” (turn on the lights when I get home). Many consumers are having a hard time seeing the value from that focus. We believe that value is embedded in what the smart home means to consumers and want to shift the conversation to smart home identity and consumer experience.

For this, for this we need a new framework...

Cracking the Value Code

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Framework

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What kind of insights can we derive about emergent consumer experience in the IoT from all these heterogeneous interactions? These interactions create a whole that is more than the sum of the parts – a set of recurrent “assemblages” (Hoffman and Novak 2015). Just as the web needed new frameworks for understanding consumer experience (Hoffman and Novak 1996), the IoT will need new frameworks to understand the consumer experience that emerges from these interactions.

Interactivity is Evolving and New Consumer Experiences are Emerging

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The Smart Home Consumer Starts with A Device or Two




The Consumer’s Focus Shifts Once There Are 3-4 Devices




People Start to Want the Devices to Talk to Each Other




Assemblage Theory. A comprehensive theory from the neo-realist school of philosophy which explains the processes by which the identity of a whole - a whole that is more than the sum of the parts - emerges from on-going interactions among its parts . (Deleuze and Guattari 1988; DeLanda 2002, 2006, 2011; Harman 2008).

Smart Home - An Assemblage of Heterogeneous Parts




CONSUMER DEVICE From assemblage theory, interaction

involves paired capacities (Hoffman and Novak 2015; DeLanda 2006)

capacity to affect

(IF “trigger”)

+ capacity to be affected

(THEN “action”)

The entities in an IoT interaction are either consumers or devices (sensors, beacons,

smart products, hubs, wearables, etc.).

Interaction is the Fundamental Unit of Analysis in the Post-Social Internet of Things (IoT)

IF I trigger a beacon by entering a room

THEN Philips Hue turns on the lights

DEVICE CONSUMER IF my leak detector is triggered by a broken pipe

THEN my smart home hub sends me a text

DEVICE DEVICE IF a motion sensor detects activity

THEN my security camera starts recording

Hoffman and Novak (2015) “Emergent Experience and the Connected Consumer in the Smart Home Assemblage and the IoT”




Some Interactions Define “Use Cases”

When the garage door opens or closes - Then turn the kitchen lights red. “Safety and Security”




In a 2010 White Paper, IBM introduced four areas of smart home capabilities demonstrating early adoption: 1) entertainment and convenience, 2) energy management, 3) safety and security, and 4) health and welfare In 2015, Lowe’s markets an Iris “Safe & Secure” kit, and a “Comfort & Control” kit. In 2015, SmartThings markets the benefits of system as “Home Security,” “Peace of Mind,” and “Limitless Possibilities” These benefits derive from specific use cases.

Use Cases Dominate Current Smart Home Marketing

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But - Uses Cases Don’t Explain What Can Emerge

Safety and Security

Awareness of Energy Usage

Control and Convenience “My house cares

about me”




The Home and Consumer Develop Emergent Capacities From Interactions

Consumer Smart Home

remotely control camera

stream live video view video live stream

move camera time 1




New Capacities Emerge From Interactions

Consumer Smart Home



feel secure

move camera

enable security time 2

time 1




New Capacities Emerge From Interactions

Consumer Smart Home



feel secure

move camera

enable security

grant delivery person entry open front door time 3

time 2

time 1




The Smart Home Assemblage Emerges From Ongoing Interactions Over Time

. . .

Qualitative aspects of interactions among heterogeneous entities: • Can be direct or ambient • Can be infrequent or habitual • Can involve material or expressive capacities • Can have instrumental or non-instrumental

objectives

“Something more” emerges from this bottom-up process: • New entities (“living light”; “welcoming door

locks”) • New identities (segments of territorialized smart

homes) • New consumer experiences (trust, assemblage

thinking, anthropomorphism, digital becomes real)

Even

t str

eam

ove

r tim

e




Paired Capacities in the Smart Home Assemblage




A Framework for Consumer Experience in the IoT

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2648786



http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2648786


Eight Important Insights

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1. Market From Bottom Up Interactions, Not Just the Top Down

Interactions by Individual Consumers

Pre-Defined Use Cases




2. Fill ‘er Up vs What Can I Do With a Full Tank?

Focus on the process...

...not the state




3. “Everything You Already Understand, But More”

“iPad is our most advanced technology in a magical and revolutionary device…[it] creates and defines an entirely new category of devices that will connect users with their apps and content in a much more intimate, intuitive and fun way than ever before.” --Steve Jobs (January 2010)




4. Encourage Habitual Repetition




5. Focus on Predictable Ambient Interactions to Build Trust

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6. Routines Also Need to be De-Stabilized




7. Pay Attention To Emergent Individualized Smart Home Identities




8. Can Personalization Trump Privacy?

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Conclusion

The fundamental unit of analysis in the consumer IoT is interaction – heterogeneous and dynamic. Marketers should focus on the processes involved in these interactions, not the state of interacting. Something new is emerging from these interactions. Marketers should encourage routine use, but also guard against consumer boredom. Watch for emergent segments from individual experiences to understand commonalities of consumer IoT identities. It’s possible that IoT identities will emerge that trump privacy.




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Consumer Experience in the Internet of Things Donna Hoffman and Tom Novak

postsocial.gwu.edu

