IoT’s Ticking Time Bomb

The Internet of Things is making major headway in consumer product categories — but it turns out it’s bringing its share of headaches along for the ride.

It shouldn’t be particularly surprising that security could be a potential issue around IoT, of course.  But recent evaluations point to the incidence being more significant than first thought.

That’s the conclusion of research conducted by management consulting firm Altman Vilandrie & Company. Its findings are based on a survey of ~400 IT decision-makers working at companies that have purchased some form of IoT security solutions.

According to the Vilandrie survey, approximately half of the respondents reported that they have experienced at least one IoT-related security intrusion or breach within the past two years.  The companies included in the research range across some 19 industry segments, so the issue of security doesn’t appear to be confined to one or two sectors alone.

What’s more, smaller firms experienced higher relative “pain” caused by a security breach. In the Vilandrie survey, companies with fewer than $5 million in annual revenues reported an average loss of $255,000 associated with IoT security breaches.

While that’s substantially lower in dollar amount to the average loss reported by large companies, the loss for small business as a percentage of total revenues is much greater.

More findings from the Altman Vilandrie research study can be accessed here.

Where Robots Are Getting Ready to Run the Show

The Brookings Institution has just published a fascinating map that tells us a good deal about what is happening with American manufacturing today.

Headlined “Where the Robots Are,” the map graphically illustrates that as of 2015, nearly one-third of America’s 233,000+ industrial robots are being put to use in just three states:

  • Michigan: ~12% of all industrial robots working in the United States
  • Ohio: ~9%
  • Indiana: ~8%

It isn’t surprising that these three states correlate with the historic heart of the automotive industry in America.

Not coincidentally, those same states also registered a massive lurch towards the political part of the candidate in the 2016 U.S. presidential election who spoke most vociferously about the loss of American manufacturing jobs.

The Brookings map, which plots industrial robot density per 1,000 workers, shows that robots are being used throughout the country, but that the Great Lakes Region is home to the highest density of them.

Toledo, OH has the honor of being the “Top 100” metro area with the highest distribution of industrial robots: nine per 1,000 workers.  To make it to the top of the list, Toledo’s robot volume jumped from around 700 units in 2010 to nearly 2,400 in 2015, representing an average increase of nearly 30% each year.

For the record, here are the Top 10 metropolitan markets among the 100 largest, ranked in terms of their industrial robot exposure.  They’re mid-continent markets all:

  • Toledo, OH: 9.0 industrial robots per 1,000 workers
  • Detroit, MI: 8.5
  • Grand Rapids, MI: 6.3
  • Louisville, KY: 5.1
  • Nashville, TN: 4.8
  • Youngstown-Warren, OH: 4.5
  • Jackson, MS: 4.3
  • Greenville, SC: 4.2
  • Ogden, UT: 4.2
  • Knoxville, TN: 3.7

In terms of where industrial robots are very low to practically non-existent within the largest American metropolitan markets, look to the coasts:

  • Ft. Myers, FL: 0.2 industrial robots per 1,000 workers
  • Honolulu, HI: 0.2
  • Las Vegas, NV: 0.2
  • Washington, DC: 0.3
  • Jacksonville, FL: 0.4
  • Miami, FL: 0.4
  • Richmond, VA: 0.4
  • New Orleans, LA: 0.5
  • New York, NY: 0.5
  • Orlando, FL: 0.5

When one consider that the automotive industry is the biggest user of industrial robots – the International Federation of Robotics estimates that the industry accounts for nearly 40% of all industrial robots in use worldwide – it’s obvious how the Midwest region could end up being the epicenter of robotic manufacturing activity in the United States.

It should come as no surprise, either, that investments in robots are continuing to grow. The Boston Consulting Group has concluded that a robot typically costs only about one-third as much to “employ” as a human worker who is doing the same job tasks.

In another decade or so, the cost disparity will likely be much greater.

On the other hand, two MIT economists maintain that the impact of industrial robots on the volume of available jobs isn’t nearly as dire as many people might think. According to Daron Acemoglu and Pascual Restrepo:

“Indicators of automation (non-robot IT investment) are positively correlated or neutral with regard to employment. So even if robots displace some jobs in a given commuting zone, other automation (which presumably dwarfs robot automation in the scale of investment) creates many more jobs.”

What do you think? Are Messrs. Acemoglu and Restrepo on point here – or are they off by miles?  Please share your thoughts with other readers.

Suddenly, smartphones are looking like a mature market.

The smartphone diffusion curve. (Source: Business Insider)

In the consumer technology world, the pace of product innovation and maturation seems to be getting shorter and shorter.

When the television was introduced, it took decades for it to penetrate more than 90% of U.S. households. Later, when color TVs came on the market, it was years before the majority of households made the switch from black-and-white to color screens.

The dynamics of the mobile phone market illustrate how much the pace of adoption has changed.

Only a few years ago, well-fewer than half of all mobile phones in the market were smartphones. But smartphones rapidly eclipsed those older “feature phones” – so that now only a very small percentage of cellphones in use today are of the feature phone variety.

Now, in just as little time we’re seeing smartphones go from boom to … well, not quite bust.  In fewer than four years, the growth in smartphone sales has slowed from ~30% per year (in 2014) to just 4%.

That’s the definition of a “mature” market.  But it also demonstrates just how successful the smartphone has been in penetrating all corners of the market.

Consider this:  Market forecasting firm Ovum figures that by 2021, the smartphone will have claimed its position as the most popular consumer device of all time, when more than 5 billion of them are expected to be in use.

It’s part of a larger picture of connected smart devices in general, for which the total number in use is expected to double between now and 2021 – from an estimated 8 billion devices in 2016 to around 15 billion by then.

According to an evaluation conducted by research firm GfK, today only around 10% of consumers own either an Amazon Echo or Google Home device, but digital voice assistants are on the rise big-time. These interactive audio speakers offer a more “natural” way than smartphones or tablets to control smart home devices, with thousands of “skills” already perfected that allow them to interact with a large variety of apps.

There’s no question that home devices are the “next big thing,” but with their ubiquity, smartphones will continue to be the hub of the smart home for the foreseeable future.  Let’s check back in another three or four years and see how the dynamics look then.

B-to-B content marketers: Not exactly a confident bunch.

In the world of business-to-business marketing, all that really matters is producing a constant flow of quality sales leads.  According to Clickback CEO Kyle Tkachuk, three-fourths of B-to-B marketers cite their most significant objective as lead generation.  Pretty much everything else pales in significance.

This is why content marketing is such an important aspect of commercial marketing campaigns.  Customers in the commercial world are always on the lookout for information and insights to help them solve the variety of challenges they face on the manufacturing line, in their product development, quality assurance, customer service and any number of other critical functions.

Suppliers and brands that offer a steady diet of valuable and actionable information are often the ones that end up on a customer’s “short-list” of suppliers when the need to make a purchase finally rolls around.

Thus, the role of content marketers continues to grow – along with the pressures on them to deliver high-quality, targeted leads to their sales forces.

The problem is … a large number of content marketers aren’t all that confident about the effectiveness of their campaigns.

It’s a key takeaway finding from a survey conducted for content marketing software provider SnapApp by research firm Demand Gen.  The survey was conducted during the summer and fall of 2016 and published recently in SnapApp’s Campaign Confidence Gap report.

The survey revealed that more than 80% of the content marketers queried reported being just “somewhat” or “not very” confident regarding the effectiveness of their campaigns.

Among the concerns voiced by these content marketers is that the B-to-B audience is becoming less enamored of white papers and other static, lead-gated PDF documents to generate leads.

And yet, those are precisely the vehicles that continue to be used most often used to deliver informational content.

According to the survey respondents, B-to-B customers not only expect to be given content that is relevant, they’re also less tolerant of resources that fail to speak to their specific areas of interest.

For this reason, one-third of the content managers surveyed reported that they are struggling to come up with effective calls-to-action that capture attention, interest and action instead of being just “noise.”

The inevitable conclusion is that traditional B-to-B marketing strategies and similar “seller-centric” tactics have become stale for buyers.

Some content marketers are attempting to move beyond these conventional approaches and embrace more “content-enabled” campaigns that can address interest points based on a customer’s specific need and facilitate engagement accordingly.

Where such tactics have been attempted, content marketers report somewhat improved results, including more open-rate activity and an in increase in clickthrough rates.

However, the degree of improvement doesn’t appear to be all that impressive. Only about half of the survey respondents reported experiencing improved open rates.  Also, two-thirds reported experiencing an increase in clickthrough rates – but only by 5% or less.

Those aren’t exactly eye-popping improvements.

But here’s the thing: Engagement levels with traditional “static” content marketing vehicles are likely to actually decline … so if content-enabled campaigns can arrest the drop-off and even notch improvements in audience engagement, that’s at least something.

Among the tactics content marketers consider for their creating more robust content-enabled campaigns are:

  • Video
  • Surveys
  • Interactive infographics
  • ROI calculators
  • Assessments/audits

The hope is that these and other tools will increase customer engagement, allow customers to “self-quality,” and generate better-quality leads that are a few steps closer to an actual sale.

If all goes well, these content-enabled campaigns will also collect data that helps sales personnel accelerate the entire process.

Are wearable devices wearing out their welcome?

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So-called “wearable” interactive devices – products like Fitbit and Apple Watch – aren’t exactly new. In some cases, they’ve been in the market in a pretty big way for several years now.  Plenty of them are being produced and are readily available from popular retailers.

And plenty of consumers have tried them, too. Forrester Research has found that about one in five U.S. consumers (~21%) used some form of wearable product in 2015.

That sounds pretty decent … until you discover that in similar consumer research conducted this year, the percentage of consumers who use wearables has actually declined to ~14%.

The findings are part of Forrester’s annual State of Consumers & Technology Benchmark research. The research involves online surveys of a large group of ~60,000 U.S. adults age 18 and over, as well as an additional 6,000 Canadian respondents.

Not surprisingly, the demographic group most likely to be users of wearables are Gen Y’ers – people ages 28 to 36 years old. Within this group, about three-fourths report that they have ever used a wearable device … but only ~28% report that they are using one or more this year.

Forrester’s research found the same trend in Gen Z (respondents between 18 and 27 years old), where ~26% have used wearable devices in the past, but only ~15% are doing so currently.

The question is … does this mean that wearables are merely a passing fad? Or is it more a situation where the wearable technology isn’t delivering on consumer expectations?

The Forrester research points to the latter explanation. Gina Fleming, leader of Forrester’s marketing data science work team, put it this way:

“Younger consumers tend to have the highest expectations for technology and for companies. They tried these devices, and oftentimes it didn’t meet their expectations in their current use case.  Young consumers tend to be early adopters, but are also fast to move on if they’re not satisfied.”

One interesting finding of the survey is that among the older cohorts – respondents over the age of 36 – their usage has increased in the past year rather than decreased as was found with younger respondents.

Among the respondents who currently use at least one wearable device, there are no real surprises in which ones are the most popular, with Fitbit and Apple Watch heading the list:

  • Fitbit: Used by ~40% of all current wearable device users
  • Apple Watch: ~32%
  • Samsung Galaxy Gear: ~27%
  • Microsoft Band: ~21%
  • Sony SmartBand: ~19%
  • Pebble Smart Watch: ~17%

Looking to the future, although marketers of wearable devices might be happy to see positive trends among older consumers, the usage levels in broad terms tend to be significantly lower than with younger consumers.

It’s within that younger group where the high degree of “churn” appears to offer the biggest opportunities – as well as risks – for wearable device purveyors.

What about your own personal experiences with wearables? Have you found yourself using wearable devices less today than a year ago?  And if so, why?

Are self-driving cars finally set to become the breakout stars of the highway?

Uber's first self-driving fleet of cars arrives in Pittsburgh in August, 2016.
Uber’s first self-driving fleet of cars arrives in Pittsburgh in August, 2016.

It looks as if self-driving cars are poised to make the leap from “stuff of science fiction” to “regular sight on the roads” within the coming half-decade.

In the past few weeks, CEO Mark Fields and other senior leadership people at Ford Motor Company have stated as much. They’re giving their predictions on what’s going to happen with self-driving cars, along with explaining what their own company has been doing to move the ball forward.

Here are some key takeaways from the Ford pronouncements:

  • Rather than being a novelty, self-driving cars will start being a regular sight on the highways by 2021.
  • Most of the first self-driving automobiles will be conventional cars or hybrids, rather than full electric vehicles.
  • The first self-driving cars on the road will be heavily geared towards ride-sharing fleets and package-delivery services, rather than vehicles sold to the general consumer market.
  • Self-driving technology will be too expensive for individual ownership – at least until 2025 or beyond.

Several additional predictions from other industry observers are also worth noting:

  • Johana Bhuiyan of Vox Media’s Recode predicts that the price of ride-hailing services like Lyft or Uber will decline because of lower human resources requirements (drivers), thanks to self-driving vehicles.
  • Brian Johnson, an analyst at Barclays, believes that once self-driving vehicles are in widespread use, auto sales will decline precipitously (as in nearly 40%), as more people come to rely on ride-hailing services that are priced significantly more affordably than taxi or ride-hailing services have been up to now.

If these predictions are accurate, it means that the biggest advancement in consumer transportation since the inception of the automobile itself is right on our doorstep.

Are U.S. warehouse jobs destined to go the way of manufacturing employment?

Even as manufacturing jobs have plateaued or fallen in certain communities, one of the employment bright spots has been the rise of distribution centers and super warehouses constructed by Amazon and other mega retailers to accommodate the steady rise of online shopping.

In my own region, the opening of Amazon distribution centers in Maryland and Delaware were met with accolades by local business development officials, who figured that new employment opportunities for entry level workers would soon follow.

And they have … to a degree. But what many people might not have expected was the rapid rise of robotics usage in warehouse operations.

In just the past few years, Amazon has quietly gone about purchasing and introducing more than 30,000 Kiva robots for many of its warehouses, where the equipment has reduced operating expenses by approximately 20%, according to Dave Clark, Amazon’s senior vice president of worldwide operations and customer service.

An analysis by Deutsche Bank estimates that adding robots to a new Amazon warehouse saves approximately $22 million in fulfillment expenses, which is why Amazon is moving ahead with plans to introduce robots in the remaining 100 or so of its distribution centers that are still without them.

Once in place, it’s estimated that Amazon will save an additional $2.5 billion in operating expenses at these 100 facilities.

Of course, robots aren’t exactly inexpensive pieces of equipment. But with the operational savings involved, it’s clear that adding this kind of automation to warehousing is kind of a slam-dunk decision.

Which helps explain another move that Amazon made in 2012. It decided to purchase the company that makes Kiva robots — for a cool $775 million.  And then it did something else equally noteworthy:  it ceased the sale of Kiva robots to anyone outside the Amazon family.

Because Kiva was pretty much the only game in town when it came to robotics designed for warehouse pick-and-ship functions, Amazon’s move put all other warehouse operations at a serious disadvantage.

That in turn created a stampede to develop alternative sources of supply for robots. It’s taken about four years, but today there are credible alternatives to Kiva brand robots now entering the market.  Amazon’s uneven playing field is getting ready to become a lot more level now.

But the other result of this “robotics arms race” is the sudden plenteous availability of new robot equipment, which companies like Macy’s, Target and Wal-Mart are set to exploit.

The people who are slated to be the odd people out are … warehouse workers.

The impact could well be dramatic. According to the Bureau of Labor Statistics, there are nearly 860,000 warehouse workers in the United States today, and they earn an average wage of approximately $12 per hour.

Not only is the rise of robot usage threatening these jobs, thanks to the sharp increase of minimum wage rates in areas near to some major urban centers is putting the squeeze on hiring from a wholly different direction. It’s a perfect storm the seems destined to blow a hole in warehouse employment levels in the coming years.

Thinking back to what happened to manufacturing jobs in this country, it’s seems we’ve seen this movie before …