Could a nationwide stock of connected umbrellas (see here for a $43 prototype) replace the National Weather Service? Is a weather forecast by crowdsourcing more accurate than a room of high-performance computers?
These were some of the questions posed at a recent London event by my co-presenter Teresa Cottam. Her point was about business-model disruption in the emerging “Internet of Things” and wearables market. This year’s Mobile World Congress brought further examples, neatly summarized by my colleague Jeff Barak’s in-situ blog post.
A couple of weeks later, the 50th IDC Directions event in Boston offered further food for thought. In typical IDC style, a forecast (actually four) was presented. From $3.5 billion in revenue last year, the global wearables market is expected to rise to $37 billion by 2019. In unit terms, the growth estimated by IDC is remarkable, too – from 21 million devices in 2014 to 125 million in 2019.
Quick reality check: This is small fries compared to the number of phones on the planet – getting to about 7 billion – and the famed prediction of 50 billion connected devices by 2020.
Two questions follow. Is the wearable forecast underestimated? And should service providers worry about the ever-increasing number of connected devices?
Can take-up possibly accelerate? IDC payment expert James Wester provided an insight that will resonate with many. “When we leave home in the morning,” he said in Boston, “we take three things with us: our keys, our wallet and our phone.” I checked with my teenage daughters this morning – that’s what they do! “There is no reason for this,” James continued. “One device should be enough.”
Cue the Disney MagicBand. Using an RF antenna, the wristband enables visitors at Disney resorts to enter the park, jump the queue, open their hotel door, pay for food and gifts and, best of all, be recognized by Mickey. What’s not to like? There is currently no GPS or SIM card in the MagicBand – and Disney does stress on the terms and conditions pages they take data privacy very seriously – but this one device is not far off providing the promise outlined by Wester.
And outside the Magic Kingdom in the more mundane everyday world: the Tesla car app; the Apple Watch; and the Pebble are examples of convergence in the making. Utility, then, may reduce the number of wearables, but increase their appeal among consumers and business users.
So how will this impact the service providers’ business model?
Arguably, even 125 million devices is no big deal. It is, after all, fewer than the number of phones connected in India in 2009 (178 million). The real issues for operators are the risk of disintermediation and the quality of customer experience.
Already today, many consumers feel they have a stronger relationship with their device than with their service provider. Wearables with superior utility could widen this gap, unless service providers continue to invest in exciting services, offered in a personalized and contextual manner.
But, fighting the battle for services is not enough. Service providers must also enter the battle for experience. At all touch points with their customers, the organization must orchestrate an experience that is smooth and differentiated. Which might translate into a customer service representative telling Cottam that rain is on its way, and to not forget her umbrella.
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