This Christmas, experts have worried about the way that the “Elf on the Shelf” conditions their kids to accept a surveillance state. But the actual monitors are more likely to be under the tree: For kids, the RC helicopter gets connected to a smartphone and the cute little robot has to get set up with its own social network to the list. And it’s the same with gifts to adults: the Wi-Fi-enabled coffee maker, the smart watch that gives you weather and traffic alerts or a smart home kit that lets you turn off the lights or shut off your water with the touch of a button.
Experts say this is going to be the biggest Christmas for Internet of Things devices—which wirelessly sense or send information—ever. (Until next year.) As the relatively new ritual of unwrapping a present and then logging it on plays out on December 25, the day increasingly becomes notable for the sheer number of items that start sharing data. For many folks giving and receiving this holiday, an IoT gift will be their first experience with an always-on monitoring device. As such experts say the industry is watching closely to see how consumers respond.
“These devices always seems to take a leap around this time of year,” said John Fetto, a senior research and marketing analyst at Experian Marketing Services. Recent data by Experian shows that consumers already have been scouring Google the past month for Nest thermostats, DropCams, Fitbit wearables and Nike Fuelbands. Every holiday going forward is projected to accelerate on this trend, until there are 25 billion connected devices by the end of 2020, according to Gartner. (Some experts estimate that there are already twice as many things connected to the Internet as there are people on the planet.)
And as the number of smart devices increases, so do consumer concerns. “The data that’s being collected on you, it makes you the product,” says Chris Rouland, founder and CEO of Bastille Networks, a security company focused on the Internet of Things (IoT).
Experts stress that while the IoT market is in its infancy, the decisions consumers make this holiday—what you buy and what IoT gifts you end up using regularly—will tell companies a great deal about what consumers will and won’t put up with.
Big-box retailers are already pushing IoT items hard: Best Buy has created a new connected home department in its stores, while Staples, Lowes, and Home Depot have launched their own smart products. Seemingly everyone has an IoT angle, from small tech startups like wearable company Beacon & Lively, to big names like Google, Samsung and Apple, which will launch HomeKit, its first home automation product, next year.
Consumer advocates say now is the time to think about who is manufacturing these products and to read their privacy policies. Security breaches, such as a November incident with baby monitoring company Foscam, show that consumer data may not be as protected as users assume.
For many consumers, holidays are the last time they’re likely to think about privacy or read Terms of Service. That’s why it pays to be a responsible gifter. “A lot of companies are trying to get into this business and consumers need to really pay attention to the companies they’re using,” says Michael Kaiser, executive director of the National Cyber Security Alliance. “Startups may be rushing things to market faster than larger companies or may not be as concerned about security, so consumers need to know it may be a little bit of the Wild West out there.”
“People need to be wary about what they’re giving up,” Rouland says, pointing to fitness wearable company Jawbone, which released information on how a summer earthquake in California affected its users’ sleep patterns. “If I’m a consumer who purchased this product, I certainly wouldn’t think Jawbone could publish a report about what time I woke up.” Maybe you’re Uncle Bob wouldn’t care if his data was used this way, but you should consider that as surely as you’d check the size of a sweater you’d gift him.
“By and large consumers understand that they’re willing to sacrifice a little bit of information and privacy for convenience, but they need to feel that they’re actually getting the value for that transaction,” said David Chivers, a retail expert and consultant. Today, many are okay with the tradeoff: A recent study found that 69% of consumers plan to buy an in-home connected device within the next five years.
Donna Hoffman, a marketing professor at George Washington University, said that beyond security, there’s a more basic issue as shoppers gift smart devices this holiday season: customer support.
“People are going to take these devices home and they’re not going to work as advertised, and then there’s going to be a lot of dissatisfaction,” Hoffman says. “The challenge for the industry is going to be how to manage consumer expectations, because I think they’re not prepared for the onslaught.”
“At Christmas, there may be some enthusiasm and a lot of people buying these products, but come return time in the new year, we’ll have another data point to see how well this is actually going.”