Intelligent objects point to the future

The global race to embrace the Internet of Things (IoT) has seen that China has taken an early lead over the US. “It’s much faster in China — top-down and ground up,” says Jan Cho, who trod an unusual career path to head of digital for TBWA in Hong Kong from a degree in pure physics. “The government is building smart cities, and machine-to-machine connections are already bigger than in the US, while people in China are much less concerned about privacy than the rest of the world and more willing to share their data. In 10 years this gap will be even bigger.”

This won’t be news to companies like US fast-food chain Pizza Hut, which selected its 1,471 outlets in China for a massive rollout of iBeacon, an in-store sensor that communicates with arriving customers through WeChat to offer discounts, movie tickets and other goodies. The hockey puck-sized beacons are provided by Beijing-based Sensoro, which already supplies more than 6,000 stores in over 40 countries.

And earlier this year, Xiaomi suddenly became the world’s second-biggest maker of wearables with the launch of a cut-price fitness band, while Tencent, Huawei, Baidu and others are all aggressively positioning themselves with new products and services that tap into IoT.

The numbers are staggering. Some analysts expect IoT to add US$19 trillion to global revenue by 2020, when 57,000 items could be connecting to the cloud every second. China alone is expected to jump from just over 70 million machine-to-machine connections today to over 330 million by 2020.

Whether China is currently ahead of the US in developing the IoT depends on whom you ask. Elizabeth Wu, PR manager at the telecom titan Huawei, says that China has caught up with the US in hardware and R&D but remains three to five years behind in software. Vivian Li, co-founder of iBeacon provider Sensoro, says that China is 10 months ahead in location-based devices and that China will have 1 million of them within three years, tripling to 3 million in five years.

Many of those beacons will be in airports, shaping a future in which luggage may never be lost again. Chinese airlines in particular are investing heavily in IoT, according to Ilya Gutlin, president for Asia-Pacific at the multinational IT company SITA, citing a 2015 Airline IT Trends Survey that showed 83 per cent of Chinese airlines are allocating budget for IoT, well above the world average of 37 per cent.

“IoT is set to revolutionise the air transport industry globally,” Gutlin says. “We’ll see far more objects which have the capacity to generate data and the intelligence to use it … including buildings, equipment, bags, trolleys — basically all the ‘things’ that could emit a status.”

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“IoT presents enormous opportunities for companies and brands”

Elizabeth Wu, Huawei

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Few companies make more intelligent objects than Huawei, which recently pipped Xiaomi to become China’s biggest supplier of smartphones. The company used global tech shows in Barcelona and Munich this year to introduce new wearables such as the eponymous Huawei Watch and fitness devices like the TalkBand B2 and TalkBand N1, while also hinting at the development of smart glasses and device-embedded clothing.

“IoT presents enormous opportunities for companies and brands,” Wu says, adding that Huawei also sees huge potential in interconnected cars. “We [Huawei] entered into a number of strategic partnerships with major automobile brands in 2015, including Volkswagen, Mercedes-Benz and Audi, with the latter two partners appointing their third-party suppliers to use Huawei vehicle-mounted 4G communication modules in their future car-networking equipment.”

Her optimism is shared by Andy Ann, founder of Hong Kong-based digital marketing agency NDN, though he’s cautious about becoming too enamoured with new technology at the expense of engaging the customer in a meaningful way. “I am very excited about the IoT mega-trend,” he says. “We will see rapid growth in multiway comm-unication between object and consumer, and object and object.” But whiz-bang technology aside, businesses must still convince consumers that this is a conversation worth having.

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“The success of IoT needs to be customer-centric rather than technology-centric. The more user-friendly the application and hardware, the more customers will connect.”

While companies are excited about the potential of connecting with consumers through apps like WeChat and its nearly 600 million users, early experiments with customer engagement in places like Singapore have been disappointing.

“The beacons require an app to be there and Bluetooth to be turned on, but people can be a bit lazy,” says Aditya Haripurkar, co-founder of Beacon-In Singapore. “If you’re a retailer with an app that’s not getting used, you have a challenge. The incentive has to be really strong and translate into a useful user experience at the end of it.”

Statistics on app use are sobering. Analysts have said up to 75 per cent of new apps are deleted within a week. Research house Catalyst says app downloads have slumped 52 per cent this year while app deletions are up 29 per cent.

Haripurkar suggests companies may instead want to piggyback on established apps like WeChat. Sensoro, which recently tied up with Pizza Hut, said WeChat presents an opportunity to instantly engage with customers.

“Valuable data is gathered during these interactions and transactions,” explains Patrick Kim, marketing manager at Sensoro.

“Using WeChat, Sensoro Cloud can tell you how many ‘shake’ actions occurred, what coupons were obtained using the shakes, and what action was taken by the consumer based on the coupon received. The developer  also receives environmental information such as temperature and [customer] movement,” says Kim.

Francis Lam, director of creative technology at Isobar Shanghai, agrees. “We found that [WeChat] users are more willing to interact with the brand.”

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“The success of IoT needs to be customer-centric rather than technology-centric. The more user-friendly the application and hardware, the more customers will connect.”

Andy Ann, NDN

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Here, WeChat may have an advantage on apps elsewhere, like the ShopKick app in the US being used by Macy’s. Analysts say Chinese consumers are more willing than customers in North America and Europe to part with personal data (see related article).

One example of this willingness to engage with technology is an experiment on buses in Beijing earlier this year, in which the hand straps were replaced with hi-tech sensors that measured a person’s heart rate and body mass index. The data could then be transmitted to people’s phones, turning a dreary commute into a regular health check. The campaign, developed by Cheil PengTai for dairy company Yili, was used by 350,000 people on 200 buses.

There will be limits to what will be shared in China though. “This sounds ironic coming from someone in the ad industry,” says Cho. “But I have an ad blocker. In the US, there is a trend to the darknet. It’s absolutely anonymous. That’s the future. But it will affect China less.”