Consumer IoT is broken and our stupid optimism is to blame

Some of us have a closet full of connected devices that at one time represented the cutting edge of smart home tech — devices like the Revolv hub, the Lighthouse camera, the Jibo robot, the Petnet feeder, and the original Sonos speakers. And while most of us were able to shrug off the end of Juicero and the related loss of $400 as the inevitable cost of living the early adopter lifestyle, the perception of expensive, short-lived gadgets haunts consumer IoT.

Every time these stories hit the tech press or the mainstream media, a much larger group of people congratulate themselves for not buying into the latest hype around connected devices and smart homes. They recognize that this tech is new, unproven, and likely not as convenient or necessary as its creators claim. Which is why — even more than the lack of standards that we in the smart home world constantly bemoan — the lack of faith in the life of a connected product hurts the IoT. After all, if you can’t convince someone to buy a connected product in the first place, they’ll never reach the point where they’ll want it to interoperate with other devices.

So what’s the industry to do? The common demand after a product fails and the companies that make them tell their customers they’re turning off the servers (if they do, in fact, tell customers that) is to open-source the device code so the tech-savvy early adopters can keep the device operational. But while this sounds great, it’s akin to cryonically freezing your head in the hopes of coming back to life after death.

Getting the code running on a connected device without having access to the backend cloud code and the application code may allow the device to run, but the overall experience will suffer. The device may work, but it won’t have a good interface (or you’ll have to build and maintain it) and it won’t have a cloud component for remote access and other functionality (unless you build and maintain it).  Just like your newly thawed head will need a body, the open-source device code needs someone to build and maintain a cloud backend and a mobile application.

There are third-party companies such as Digital Dream Labs, which raised funds to take over the support and development of the Anki Vector robot, that are attempting to take device code and build infrastructure around it. But doing so requires expertise, time, and money. Are customers willing to pay someone a second time just to keep their devices running?

So when asking a company to open up its source code for a connected device, ask yourself if your frozen brain is successfully revived, if that would be enough for you.

Such partial resurrection was the plan all the way back in 2015 when we starting seriously discussing what happens when connected products fail. Some companies put code in escrow so people could have it later and maintain it. In the meantime, I encouraged venture firms, entrepreneurs, and development shops to think about failure and how their product might gracefully degrade to give the consumer time to come to terms with the loss.

Now I realize that keeping code in escrow and thinking about failure are only part of the solution. Granted, because people crazy enough to build a connected pet feeder are often stupidly optimistic, it’s still good advice. Please do think about what happens if your business fails so you can build a decent experience for the end consumer. Also, set milestones that indicate failure so you can warn your customers in time and perhaps allocate some of the diminished cash on hand to ensuring a graceful shutdown.

By far the greatest challenge for connected device companies is the ongoing cost of operating those devices. An investor in Mellow, the maker of a connected sous vide machine that recently told customers they needed to pay a subscription fee or see certain features vanish, explained the issue. He told me that the company has roughly $4,000 in monthly costs associated with the device and those costs go up the more people use it. And that doesn’t include the ongoing costs associated with having a developer update the Android and iOS apps.

Some of those monthly bills might be lowered by choosing a different cloud architecture or security platform, but every connected device company has to account for ongoing maintenance costs. And the more features a company adds and the more customers it has, the higher those costs tend to go. At an event I hosted in August, Matt Van Horn, CEO of June Life, said that his company’s cloud bill continues to rise, and he doesn’t have the resources or cloud infrastructure that Amazon or Google do.

So one option might be to only buy gadgets made by those companies, since I doubt AWS is going to shut Alexa down if that business unit stops paying its cloud bills. But that’s a really limiting option for consumers — and for innovation in the sector overall. Nate Williams, a former employee at August and now an investor at Union Labs Ventures, says he thinks some kind of model built around an independent organization that companies pay into, and that will operate and support a device and the supporting server code going forward, might help.

He initially likened it to a homeowners’ association for smart home devices, but given the negative connotations around HOAs then clarified that he was seeking a sense of shared responsibility as opposed to something punitive. But I think having a little enforcement might actually be good. We could see companies pay into an organization that ensures a product has a year or 6 months of cloud and developer costs in escrow to at least ensure a failed company can keep a product running for a little while longer after giving customers notice that it will die.

That organization should also have some sort of provision for getting the remaining stock of a defunct product off the shelves. Indeed, I’d love to see retailers like Best Buy or Amazon get involved. Kickstarter or Indiegogo might also be good members of such an organization to add a little more credibility to the products launched on their platform.

This sort of upfront cash that would be held in escrow to cover six months of cloud and developer costs would be a burden for smaller startups or folks trying to build something in their garage. It would be great to see scholarships or other models arise that could pay those costs for a company that can’t otherwise afford it. It could be kind of like a pension plan for IoT devices.

This may not be the right solution, but failed consumer IoT devices or abrupt changes in the business model for connected devices are a very real problem that holds back adoption. I’d love to see us set aside optimism so we could focus on what to do if the companies behind these products fail.