Internet of Things financial sustainability depends on quality and security

LAWRENCE — Modern technology terms such as “data mining,” “cryptocurrency” and “influencer” went 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.

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

“Even before this term came into existence, lots of things were getting connected to the internet, and the idea behind IoT was to connect dumb things — those which are not supposed to be connected to the internet — like a coffeemaker, for example. It can be connected so that you can set the timer, make coffee while you’re sleeping 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 security” finds that despite the proliferation of platforms such as Amazon Alexa and Google Home, customers do not perceive them as valuable unless experiencing adequate levels of quality and security. This research studies the financial viability of the platform provider (like Amazon’s Alexa) and app developers, finding collaboration between these two sides plays a significant role in the profitability of all parties. It appears in the journal Production and Operations Management.

Garg, who co-wrote the paper with Emre Demirezen, Kutsal Dogan and Hsing Kenneth Cheng of the University of Florida, notes IoT spending is expected to reach $1.1 trillion globally by 2023. More than 10 billion connected IoT devices are currently used worldwide, with this number estimated to exceed 25 billion by 2030.

Yet quality and security continue to be the key drivers for customer acceptance.

“Quality is a consumer-facing aspect,” he said. “Is a coffee maker making the coffee right on time? Is it making good-tasting coffee?”

While quality is viewed as important, security 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, these are well set – you cannot hack into one easily. But all these IoT devices are being hacked regularly using different methods. Recently, researchers found a way to hack Alexa or other digital home assistant devices by pointing a laser light at the device. The mics in these devices react to the light and produce electrical signals as if they have received real audio commands.”

Garg observes that the largest DDoS (distributed denial of service) attack in U.S. history occurred in 2016 when a large chunk of the internet was brought down on the Eastern Seaboard. This happened because of security vulnerabilities in IoT devices.

“It was propagated through the cameras connected to the internet, 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 the DDoS attack.”

In November, it was announced Amazon is losing $10 billion a year on Alexa. A key reason was reported as a trust issue with the AI software. People may rely on the device to hear local weather forecasts or solve film trivia questions, but they aren’t using it to make purchases.

Probably a smart move. Garg argues that consumers do not actually trust the Alexa platform (or AI in general) to order products on their behalf, thus the monetization of Alexa did not happen as Amazon planned.

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

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

His academic expertise 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).

Twenty years from now, how pervasive will IoT platforms be in our everyday lives?

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

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