CEO of AIoT chip company XMOS, Mark Lippett is a technology leader with 25 years’ experience in startup, scaleup and blue-chip companies.
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One consequence of living through unprecedented events is that it takes the gravitas out of the word "unprecedented." We’ve heard it so many times that the pandemic has rendered once-useful terminology a cliché—so events that lack precedent don’t spark the same interest.
Take the financial tightrope that Amazon and Google currently walk. Amazon’s 2023 layoffs could total 10,000, and Google’s profits dropped by $2.5bn in Q2 2022 amid predictions of a 10,000-strong layoff of its own.
It’s unlikely these events will prompt sympathy. But they do pose interesting questions for the Internet of Things (IoT).
The Echo, and Google Home, aspires to introduce the IoT to everyday consumers. But despite 71,600,000 Alexa speakers across American homes, the department responsible for them is operating at a loss of over $3bn. How can this be? And what does it mean for the future of the IoT?
Cost Of Doing Business
The immediate financial situation is due to smart speakers being "loss leaders"—sold as cheaply as possible, sometimes below production cost, to populate homes worldwide. This places a purpose-built device in the home that can theoretically be monetized, via purchases made through Alexa, for example, potentially achieving positive profitability over time.
For this to succeed, shoppers must spend enough through their smart speaker for the company to recoup its losses, and/or the data collected needs to be put to valuable use.
This is rarely the case. Statista suggests that only 20.5% of shoppers purchased using their smart speakers in 2020. Business Insider cites “failed monetization attempts” as a reason for which Amazon’s Alexa division “would be the primary target of layoffs.”
There’s an important distinction between the technologies underpinning devices like Echo speakers and the products actually sold to customers.
Voice as an interface is a successful, fast-growing technology, fundamental after the acceleration of touchless technologies during the pandemic. Proprietary smart speakers, based on business models that are opportunistic at best and nefarious at worst, are not.
Growing Pains
Such opportunism has led to design choices that compromise the user experience, ironically making them less likely to use it for the purpose intended by the manufacturers.
Ecosystem lock-in. Smart speakers primarily designed as platforms to support purchasing and data capture incentivize the jealous guarding of users, with data and spending captured in their own walled garden. This limits the utility of the device for the consumer, partially explaining why usage often remains limited to the simplest interactions.
Cloud dependency. Every major smart speaker in the market depends heavily upon the cloud. Storing and understanding captured data requires beaming it out of the home and back again once processed, raising significant data privacy concerns.
Out-of-the-box experience. These two issues also impact the useability of smart speakers in more mundane ways—with often complex sign-in and set-up requirements. Google Home users, for example, have been unable to add new devices to their program. In January 2022, Alexa simply stopped working for a period—worldwide.
Until meaningful progress is made here, mass adoption and consumer interest will be severely constrained.
Human Touch
Frustratingly, these issues of user experience, data privacy, and creating a more user-friendly out-of-the-box setup are all eminently solvable. We’re already seeing some small improvements in interoperability, as with Matter—a neutral platform through which electronics from different brands can interact.
However, the critical change is to alleviate or eliminate reliance upon the cloud and shift towards on-device processing. When the device can capture, analyze and activate via voice commands, it’s not necessary to send data to the cloud—removing data privacy concerns and the creepy sense that our devices are watching us.
Theoretically, this greatly enhances the out-of-the-box experience. Mitigating the need to log in, sync with other devices or jailbreak devices to play nicely with others can only make setup and maintenance less excruciating.
Mind Over Matter
The idea that intelligent entities can collaborate without acquiescing to a higher central power is not unprecedented. Humans do it, using voice and other visual cues to achieve it.
Objectively speaking, the idea that a cloud service is required to switch on a light is absurd—until you acknowledge the cloud service provider’s underlying objectives for the intelligent devices. Instead, the user experience should be top of the list of priorities.
Let’s take that example—a light bulb. In its simplest form, users need a light that understands “light on” and “light off.” The latest AI-enabled system-on-chips can do that without any networking capability whatsoever.
While such a simple local command set restores privacy to users, eliminating setup and maintenance, you might argue that this isn’t very “smart.” What if I have five lights—do they all switch on? Probably.
Let’s return to the user experience with another example: A nurse walks into a room full of people, and he says, “John, please follow me.” Unbeknownst to the nurse, everyone in the room is called John; they all stand. “Sorry; John Bailey?” solves the problem.
Similarly, we can easily create light bulbs that respond to “light on” and “fireplace light on.” To extend the model further, it can also respond to commands to a subset of the lights: “mood lighting on,” for example.
This simpler user-centric model is gradually happening. We’re simultaneously seeing the launch of processors that are designed to make the IoT more accessible, integrating greater data privacy and flexibility, alongside investment in "standardization" technologies that open ecosystems rather than locking them down.
Devices built on these principles will evolve into hubs of the entire smart home—coordinating sensors and other gadgets, centralizing sophisticated and personalized services while protecting people’s personal data.
This will make the IoT more attractive to all consumers, and regular use becomes far more likely—leaving plenty of reason to be optimistic about the future. Pursuing localized intelligence and interoperability, rather than profitability and opportunism, could be seismic.
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