The Market Ticker
Commentary on The Capital Markets- Category [Technology]

Just shoot me now.....

Google buys NEST and suddenly everyone is buzzing about The Internet of Things, as if there is some grand revolution that is going to come to you in the technology world.  The next thing I see is a WiFi-enabled crock pot.

No, I'm not kidding.

Let me give you context, for those who don't read me frequently.  I've had a "connected" home for nearly 20 years in some form or fashion, with most of it being fully connected.  I can turn on my hottub from anywhere in the world and adjust its temperature, change the temperature in the house, look at the status of all the lights and other monitored things and change them as desired.  I can also watch over the security perimeter if I'm away for some reason.

I've been able to do all this for a long time.

Yet I do not propose that this is some grand thing that will take over the world.  In fact, quite the opposite; for most people this is a move backward in the main.


First, let's talk about one of the claims used to sell this stuff: It saves energy.

No it doesn't.

It in fact costs energy.  Your electric bill will go up, not down, all things being equal if you're even minimally conscious of energy use already.  The reason is that every one of those "enabled" devices, down to the individual light switch, has a parasitic load that costs you money to run every hour of every day, turned on or not -- unlike a physical switch that, when it's off, is off!

You may think this is immaterial and you're right for one device or two.  But when everything in your house has parasitic load it's very material.  Right now, today, most of us have enough parasitic loads in our home that we're paying a fair bit of money for literally nothing, and worse if you're in a warm climate you're paying twice since your air conditioner has to run to remove the heat dissipated by those parasitic loads!

How much money?  The average "smart" device has a parasitic draw of a watt or so; media devices and those with constant displays more-so.  Your TV is one, the cable box is another, your WiFi router (when idle) is a third, your microwave and stove (each with a clock in them) are two more, and so on.  Now you have 20 wall switches all online and that's 20 more watts, then you add your "smart" washer and dryer, your "NEST" thermostat and so on.

We're talking about 100 watts or so of parasitic load running for 720 hours a month, or 72 kilowatt-hours of energy.

If you're paying a dime each that's about $7.50 a month, or about $90/year, each and every year -- for which you received nothing.

That's a low estimate, by the way.  The truth in most homes today probably approaches these numbers, and that's before "The Internet of Things."  I'll bet it's double that or more by the time these devices proliferate.

Then you have two monster issues -- interoperability and security.  Today there are dozens of manufacturers and none of them talk to each other well. In just one example, that of home lighting control, you have two semi-proprietary protocols (X-10 and Zwave) and a scad more that are entirely-proprietary.  All of these devices are ten times the price of a standard wall switch -- each.  If you decide to commit to one brand or type you are locked in forever lest you throw away your entire existing investment and pay again, plus (for most people) pay an electrician to come retrofit your house again too.

Finally, there's the security problem.  It's one thing to find out that your computer got hacked and the browser goes to some porn site every time you open it.  It's quite another when you're on vacation and some jackass cranks your heat up to 95 degrees, delivering a $500 bill for energy while you're out of town, or worse shuts the heat off while you're gone in the winter, freezing your pipes and doing tens of thousands in damage.

That ignores the risk of doing things like shutting off your refer (yuck!) or cranking up the stove while you're gone (how about a fire anybody?)

Who's going to be responsible for that?  The manufacturers won't be, that's for sure.  Will your insurance cover it?  Probably, but insurance replaces things that cost money; your (gross) inconvenience is another matter, and for "soft" damages (like the aforementioned $500 heating bill) I bet it's not covered at all.

I'm a technology proponent in general but I'm not one here.

Beyond the security problems, which are possibly able to be solved (but in practice they won't be) there's no indication that anyone is working on the interoperability problem other than trying to own the space, and that has simply not worked in the past and probably won't in the future.  That approach also forces you as a consumer to make what is almost-certain to be a losing bet if you want to play at all.

From this corner this looks to me like just another bubble game that will bring you cost but no benefit, except in certain limited situations.  Those limited situations (like mine) are ones where it will make sense, but as a globally-relevant business and something that will materially impact the bottom line of large companies this simply is not going to get there.

You want to know what does make a big difference in energy use and thus cost to you as a consumer?  LED lighting. I've commented on the potential before but I'm now getting some hard numbers, and they're impressive.

Look for an update on this in the next couple of months... complete with facts and figures.

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