Security Critical to IoT Living Up to Market Growth Forecasts, IoT Evolution Expo is Told

Security standards are among the industry's top concerns as it hopes to expand adoption in the home and in the transportation, industrial and medical sectors and more, analysts said. “Security is absolutely a fundamental for the growth of this industry,” said Andy Castonguay, Machina Research principal analyst. Providing security is “first and foremost” to ensure people have the confidence to invest in the IoT, he said.

Security could make or break the smart home market, said Dan Shey, vice president-B2B, ABI Research. “Smart home is probably the one market that could get killed by lack of security,” he said. “As benign as we might think that is, that’s the market that needs to address security fastest” for marketing reasons, he said.

So many aspects of the IoT are “exploding” that one area doesn’t take precedence over another, said Steve Brumer, 151 Advisors partner. “You look at what people are willing to buy, how they’re buying, what they’re willing to spend for it, what do they want to do with that data and then work their way backward.” IoT is “still not an easy sale,” he said.

There is also not a one-size-fits-all solution in the IoT, Shey said. Individual applications and machines “have to be architected a little bit differently,” he said. As a result of customization, growth in the IoT will be solid, he said, “but it’s not going to be hockey stick” growth.

James Brehm of James Brehm & Associates said the federal government is beginning to look at IoT security (see 1507290038) with an eye to not pinching innovation. “You can’t stifle the innovation that’s going on out there because it’s going to transform things,” Brehm said. That should be motivation for the industry to move faster on security and standards, he said. “If we don’t get ahead of it and help educate them on what’s real and what’s not real, we’re going to have a bunch of scared guys out there, and we’re all going to be in trouble.”

Just because things can be connected doesn’t mean they should be Castonguay, said. Nuclear plants, petrochemical facilities, “anything strategic” and hospitals are examples of places that should have physical protections in place and not rely on IoT connectivity, he said.

Standards are important to drive scale in the IoT, Castonguay said, but security is “absolutely fundamental to the growth of this industry.” He cited the recent hack of Chrysler’s Uconnect software platform by Wired magazine security researchers who were able to wirelessly hack a Jeep and take over dashboard functions, steering, transmission and brakes. The hack led to a recall of 1.4 million vehicles vulnerable through Chrysler’s Uconnect dashboard computers. Though it was a controlled experiment, there was “enough of a fear factor that they recalled a lot of vehicles, and it also showed significant flaws in the design of this vehicle,” Castonguay said. Multiply that scenario by all of the connected devices out there and “that’s when things start to shut down,” he said.

Analysts differed on potential market size. IHS analyst Sam Lucero referred to the vast collection of vertical markets and applications participating in the IoT and said his company’s view is a 26 billion-device market by 2020. “Each vertical has to be seen on its own merits,” he said. General Motors' OnStar isn't going to have 26 billion vehicles connected, he said.

Machina Research is forecasting a more conservative tally of IoT devices for the forecast period. Each segment will have unique adoption rates critical to the rate of growth in that sector, he said. Fitbit, for example, has sold a “fantastic number” of fitness trackers, he said, “but 60 percent end up in a drawer after six months.” When looking at long-term cultural adoption, he said, “We start to see some cracks in the overall facade.”

At the same time, Machina Research has been working with a client on a project involving 1,700 interviews with enterprises worldwide, and 21 percent of the companies said they were already using some type of machine-to-machine technology in their products or their operations, Castonguay said. “That’s pretty substantial,” he said. In the next 24-48 months, that penetration is expected to jump to 45-50 percent or more, he said. “We’re in a particularly important period here for adoption."