The financial viability of the Internet of Things depends on quality and security

LAWRENCE — Modern tech terms like “data mining,” “cryptocurrency,” and “influencer” have gone from obscurity to pervasiveness in a matter of months. It’s time to add the Internet of Things (IoT) to that list.

The term describes physical objects that connect and exchange data with other devices/systems over communication networks.

“The Internet of Things is everywhere,” said Anurag Garg, an assistant professor of analytics at the University of Kansas.

“Even before this term came into effect, a lot of things were connecting to the internet, and the idea behind IoT was to connect silly things, things that shouldn’t be connected to the internet, like a coffee maker, for example. It can be plugged in so you can set the timer, make coffee while you sleep, and wake up to that smell. So the main idea behind IoT is to give consumers more services.”

But his new article titled “Financial sustainability of IoT platforms: the role of quality and safety” notes that despite the proliferation of platforms such as Amazon Alexa and Google Home, customers do not perceive them as valuable unless they experience adequate levels of quality and safety. This research studies the financial viability of the platform provider (such as Amazon’s Alexa) and app developers, finding that the collaboration between these two parties plays a significant role in the profitability of all parties. It appears in Production and Operations Management magazine.

Garg, who co-wrote the paper with the University of Florida’s Emre Demirezen, Kutsal Dogan and Hsing Kenneth Cheng, notes that IoT spending is expected to reach $1.1 trillion globally by 2023. IoT connected devices are currently in use worldwide, with this number expected to exceed 25 billion by 2030.

However, quality and safety continue to be the key factors for customer acceptance.

“Quality is a consumer-facing aspect,” he said. “Does a coffee maker make coffee on time? Is she making good coffee?”

While quality is considered important, safety is another essential aspect of the consumer experience when using these IoT devices.

He said: “If you look at the security standards of an iPhone, they’re well set — you can’t hack into one easily. But all these IoT devices are hacked regularly using different methods. Recently, researchers have found a way to hack Alexa or other digital home assistant devices by shining a laser light on the device. The microphones in these devices react to light and produce electrical signals as if they had received real audio commands.”

Garg notes that the largest distributed denial of service (DDoS) attack in US history occurred in 2016, when a large swath of the internet was taken down on the East Coast. This happened due to security vulnerabilities in IoT devices.

“It was propagated through Internet-connected cameras, but the password and username (of the Domain Name System provider) never changed,” he said. “Malware was propagated through these IoT devices, which opened the door for DDoS attack.”

In November, it was announced that Amazon is losing $10 billion a year on Alexa. A key reason has been reported as a trust issue with AI software. People may rely on the device to hear the local weather forecast or solve movie questions, but they don’t use it to shop.

Probably a smart move. Garg argues that consumers don’t actually trust the Alexa platform (or AI in general) to order products on their behalf, so Alexa’s monetization hasn’t happened as Amazon intended.

Garg, who joined KU this fall, first became interested in IoT research when he took a course on it in 2014 while pursuing his master’s degree in computer engineering at North Carolina State .

“I still remember in my mission statement when I applied for my PhD (at the University of Florida) that I wanted to do research on the Internet of Things and its impact on society,” he recalled.

His academic experience also includes the effects of digitization of information and products due to information technologies such as online media platforms, financial technology (FinTech) and education technology (EdTech).

In twenty years, how pervasive will IoT platforms be in our daily lives?

“Rather than going 20 years into the future, I can say right now almost everyone has some sort of smart speaker or smart digital home assistant like Alexa, Siri or Google,” Garg said. “So IoT is already incredibly pervasive.”

Top photo: Pexel