Security, privacy concerns still haunt smart home market

Michael Philpott/Ovum
11 Apr 2017

Smart home technology is at last capturing consumer interest, but it has some way to go before it convinces the true mass market of its value. The bad press around things going wrong, lack of security, and customer trust and privacy being abused is building a barrier to greater adoption. Over the past few weeks, two stories have hit the news, in both cases involving Google products. And by no means are these isolated instances. In such a quickly evolving industry involving so many players, mistakes will be made and flaws overlooked. What is important for the brands concerned – as well as for the industry as a whole – is that these issues are dealt with quickly.

Vendors must act quickly to fix security flaws

Security is paramount to the success of the smart home. Feeling safe in your own home is a fundamental human need, which devices such as the Nest Dropcam aim to tap into. However, if these devices do not carry the required level of security then at best they can be rendered ineffective, and at worst can make the home more vulnerable to attack. A recent article in the Register highlighted that Nest Dropcam security cameras could be attacked via their Bluetooth connection, causing them to crash and not record a burglary.

Criminals are becoming increasingly sophisticated, and remaining one step ahead of them is a complex business, even for giants such as Google. However, when vulnerabilities are spotted, the companies concerned must act quickly to close loopholes and reassure customers that any issues have been corrected. According to the Register, Nest had been made aware of the Dropcam flaw since October 2016, but at the time of the article being published (March 2017), a patch hadn't yet been released (although it was expected soon).

Be careful not to overstep the mark when looking to monetize smart home products

Another point that smart home vendors and service providers must be aware of is that monetizing new technology devices, such as the home AI assistant, requires a delicate balancing act. Almost by definition the home assistant will become a powerful recommendation and search engine, which understandably Google and others will wish to use to further develop their advertising business. However, if companies don't get the balance between monetization and customer privacy and trust right, then such strategies could backfire, leading consumers to simply turn off the devices.

When Google recently displayed information about the movie Beauty and the Beast as part of its My Day feature, it insisted that the "feature" was not an ad. But at least from user recordings, it certainly came across as one. Inserting ads in this way doesn't go as far as breaking customer trust, but can still be intrusive and become annoying if over-used. Understandably, companies will need to experiment with how information is provided via the home assistant, but at such an early phase in the market, negative customer feedback will only stall consumer acceptance. It's yet to be seen just what role home AI assistants can play, and perhaps more importantly, what consumers will deem acceptable, when it comes to paid search and advertising. However, vendors and service providers will need to step carefully around this topic and be ready to respond quickly to customer feedback, as Google did during the Beauty and the Beast controversy.

Michael Philpott is an analyst and senior practice leader for consumer services at Ovum. For more information, visit

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