Peter Misek is a partner at the Business Development Bank of Canada's Venture IT Fund.
It is difficult to find an article or press release in the technology world that doesn't mention Internet of Things (IOT) or Internet of Everything (IOE) or Virtual Reality (VR). These acronyms have enthralled executives, created hundreds of start-ups and been a boon to tech journalists.
Make no mistake: I believe in the Internet of Everything very strongly. To be clear, IOE has an immediate role to play in manufacturing and heavy industry, where the value of the good or service is significant or where acceptable downtime is measured in seconds per year. But the consumer version of IOE has left me baffled as to its timing, investability and, frankly, utility. I question the need for connecting every light bulb in my house to the Internet, nor do I understand why seemingly inanimate objects such as crayons, cups, desks and the like should be connected. How much bandwidth will these devices consume? What will it cost? Who will pay for it?
We are already seeing some backlash from consumers. For me it comes down to a question of utility. Will the cost of installing the device ever be recouped by either the time or money it saves me? Or will it somehow enhance my world and the way I interact with it? Some people may have seen the IOE fridges and stoves that are coming out onto the market with great fanfare and acclaim. The Samsung fridge, for example, has a milk shelf that will automatically add that item to your virtual grocery list when it's out, or even order the milk itself. Sounds awesome, right?
Well, here is where I think practicality gets in the way. What if your milk is low because you are about to go on a holiday? Do you want another item that has to be connected to your calendar? Do you want one more thing you have to remember to do before leaving?
For mass market appeal, I have simple tests to determine if there is a strong likelihood of success: 1. Will it make your life 10 times easier or better? 2. Will your grandmother be able to use it? 3. Can you explain why you are using this service in under a minute?
I see hundreds of IOE startups, each claiming a new and exciting application. But nearly all struggle with a true value proposition. BigRoad, a Kitchener-Waterloo-based IOE company, helps the trucking industry by automating paperwork, interpreting vehicle sensors for efficiency and planning purposes. This IOE company has a very high-value proposition and an application that makes incredible sense to the users and has a near-immediate payback to those who use it. That Samsung or LG fridge? Not so much.
What about Virtual Reality (VR)? Isn't that massively hyped? Didn't Facebook pay $2-billion (U.S.) for Oculus Rift when it was a year-old startup? I believe that VR foreshadows holographic user interfaces and advanced computing and gaming platforms. Will VR be a massive global industry in the future? Absolutely. Will every household have one in one, five, or 10 years? Maybe. I believe VR is in the 5-to-10 year category in terms of timing for mass-market appeal. More importantly, it requires some engineering breakthroughs to be practical. In certain vertical industries such as gaming, medicine, biotech and places such as car showrooms we will see VR very soon.
For those who have used an Oculus or Samsung VR headset, it is a truly immersive and amazing experience. But I struggle with the price tag, the weight, form and functionality of the headset. It reminds me in some ways of the 3-D television set. The average consumer rejected 3-D TV sets not because the content wasn't cool or it wasn't a great experience, but rather the idea of wearing special glasses to watch something wasn't appealing. A promising solution – the glasses-free TVs – had another problem: narrow viewing angles to see the 3-D effect.
Additionally, not all content warrants 3-D. Watching hockey in 3-D could be great! Watching Downton Abbey in 3-D makes less sense. Facebook is a brilliant company that has a long-range vision and understands where content should and can go. So I wouldn't bet against the immersive reality realm.
But I wonder if holographic displays that don't require glasses or headsets aren't a better way to experience it. I also wonder if the average consumer has the dollars or the appetite to consume this content.
Putting the Oculus headset on my kids or grandmother is just something that isn't going to happen in the next year or two. For sure, look for 4K-resolution HD to have an immediate impact on your viewing habits. But look for VR in your living room down the road, though VR may be in the workplace much sooner.
These trends are in the mainstream media and therefore subject to the hype, hope and desperation cycle. It is important for investors to understand the use case, payback and – especially – the amount of time and money required to commercialize the application. Being really cool isn't enough.