The Business Case For Giving Away Consumer Internet of Things Devices For Free

Given the value of the data companies are receiving from customers using IoT and voice-activated digital assistants, the cost of the actual physical hardware is de minimus. 

And if disquiet about home and personal monitoring by tech companies grows, the loss of data access would be far more costly than the loss from giving away the devices. So seeding the market in order to grow it makes far more economic sense than charging for the device while taking the data it generates for free. Not that we should expect enlightened behavior from the tech community anymore than we do from any other sector of the economy...JL


Christian Stewart comments in Medium:

The benefit to the user is dwarfed by the benefit to the companies with the data these devices collect. Apple’s Siri, Microsoft’s Cortana, Amazon’s Alexa and Google’s Assistant are actually just a channel for these companies to acquire more data. With most smart home devices, people are paying the companies. Then, along with the money, the company receives information from its “smart” data-sponge device.
Devices are getting smarter. Everything from cellphones to refrigerators are connected to the internet. By 2020, there will be more than 20 billion IoT units in the world. The number of IoT devices in the world recently surpassed the world’s population.

The installed base of hard-to-secure smart things, such as TVs, fridges, and security cameras, is expected to grow 31 percent this year to reach 8.4 billion devices, or around a billion more than the world’s total population.

Why Should IoT Connected Devices Be Free?

IoT devices are portrayed as handy household gadgets, that help make users’ lives easier. The truth is, these devices are convenient and fun to use. However, the benefit to the user is dwarfed by the benefit to the companies with the data these devices collect.

Source: TechCrunch (11 July 2017)

Apple’s Siri, Microsoft’s Cortana, Amazon’s Alexa and Google’s Assistant are friendly helpers for their users. Although they seem helpful and friendly they are actually just a channel for these companies to acquire more data. Siri and Alexa, along with other digital assistants, are spies disguised as reliable aides.

Siri reports back to Apple and Alexa back to Amazon with a heap of information about the questions you asked and the topics of your conversations. And in the case of Google Home, it records everything, whether or not you ask it to.

Google stores your interactions with Google Home in My Activity, that includes the recordings of the questions you’ve asked or any other recordings the device made.

People Pay Google to Collect Information About Them

Data collection and analysis firms, like Nielsen, spend millions of dollars per year on acquiring information from consumers. Google though doesn’t have to buy information, because people willingly hand it over to them.

And in the case of Google Home and Google’s other IoT devices, people pay Google to collect their data. This is the case with most smart home devices, people are paying the companies. Then, along with the money, the company receives information from its “smart” data-sponge device.

Mozilla’s Gift Guide of IoT Devices

Mozilla is a leader in internet security and safety. It’s goal is to “defend the free and open web”. It published this gift guide to explain the privacy implications for some of the most popular gifts this season.

In this article, Mozilla lists these questions to ask yourself when considering your IoT devices:

• Can it spy on me?
• What does it know about me?
• What could happen if something goes wrong?

Google Home Privacy Information Source: Mozilla

However, it then explains that the companies producing these devices don’t make the answer to these questions obvious. Answering these questions, Mozilla says, “requires top privacy research skills as well as some high-level technical skills.”

IoT Security Concerns

The security issues may have a bigger effect on device sales this holiday season than expected. Consulting firm Deloitte released a survey in November in which 40% of respondents said they were concerned about home devices tracking their usage. If people are concerned about being tracked in their homes, they may wait for IoT security to catch up with other industries before buying the devices.

IoT Security Improvements

As IoT finds more uses in business and other large-scale infrastructure, the security concerns will ramp up significantly. This should lead to consumer devices also adopting better security.

As of now, a hack into a single IoT device would likely only lead to breaches in that single user’s personal data. But if an entire city’s traffic light system was connected and a breach occured, it could have very costly impacts. What is mostly a privacy concern for digital assistant users, could be a safety and security concern when applied to larger systems.

IoT Devices Are Risky, So Why Should We Pay for Them?

Bringing more connected devices into your home, really just makes you more vulnerable. These devices act as another point in which hackers could access your data. And some of these devices, like Amazon’s Echo Show, have cameras and microphones that could lead to major breaches of privacy.

If Amazon, Google and Apple all will benefit from the massive influx of user data, why should consumers have to risk losing private data and pay for the devices that make them vulnerable?