VP IOT Gene Han

Perspectives: Gene Han on the Internet of Things: Consumers Like What They See, but Aren’t Ready to Step Into the Future (Yet)

A Bullseye View “Perspectives is a forum for Target’s top executives to share their point of view on everything from industry trends to best business practices. In the story below, Gene Han, vice president of Consumer Internet of Things (IOT) and head of Target’s San Francisco innovation office, gives his take on the top four questions he receives.

Last month, we celebrated the one-year anniversary of Open House: Target’s lab store in downtown San Francisco that lets consumers physically experience connected living. We created the space to learn how the nascent IoT industry might solve problems for everyday consumers.

While we strongly believe that one day the IoT industry will change everything about how we live (even inside our bodies) – it’s still early. Really early. Mass adoption is not happening yet.

And, speaking candidly, we’re seeing first-hand that a lot about IoT is simply less than awesome. To give you a sense of where consumers’ heads are on IoT, here are the most commonly asked questions we hear and our thoughts on how we can tackle them as an industry.

#1 “Why do I need this?”  

Great question. We saw nearly 1,000 IoT products in the last year (yes, there are more than 1,000 IoT products that exist for consumers!). Many of them are great ideas…but many of them are not. Recently, we reviewed a kids’ sippy cup (for non-kid people: that’s a kid-friendly, no-spill plastic cup). The cup tracked how much liquid a child was drinking. During a Demo Day we hosted at our San Francisco innovation office, where we heard pitches from startups with new baby products, Steven Dunn, CEO of innovative kids’ product maker Munchkin, commented, “Isn’t that what the lines on side of bottle are for?” I think we may have crushed a startup CEO’s dreams that day, but Steven asked the most important question about IoT: "Do we really need that?” We have to constantly evaluate: What problem does it solve?    

Not surprisingly, simplicity resonates with consumers. A great example is our bestseller Tile, a lost-item finder. Anyone can understand it, even my 67-year-old, non-tech-savvy, flip-phone-carrying mom. You attach the small square device to something important like your keys, and it helps you locate the item via your smartphone (I even attached it to a necklace around my kid’s neck to help me find her in the neighborhood). Simple. Solves a real problem. People love this product so much I wish I’d participated in their A round… Good job, Tile.

Simple use cases like these, where a product fits into how consumers currently live—mark the sweet spot of products we think will get more consumers interested in connected devices. Get really clear on who your product is for and design for them in a way that fits their current habits. Only over time, as consumers enter the category and see the value of “smartening” their life, will they be willing to tackle more complex use cases.

#2 “Why is this product so expensive?”

Our Open House Team gets to hear a lot of what’s on consumers’ minds. And we hear the same two responses every time: “wow, that is pretty cool,” followed by, “wow, that is pretty expensive.”

People want to know if it’s worth it. In some cases, the answer is a resounding yes. Technically, Nest is like the Steve Austin of thermostats (The $6 Million Man…anyone?) compared to the current ordinary human version. The device has intelligence that adapts to your life and can save you money with very little effort on your part. But families are being asked to make a pretty big tradeoff if they’re paying $250 for a smart thermostat versus $40 for a programmable thermostat. Over time, we know that manufacturing scale will drive the cost down, just like it did for flat screen TVs or LED lightbulbs, but there are also overt product strategies to offer lower pricing.  Consider how Tesla introduced their Model 3 at a price point less than 50% of than their flagship Model S.  (The Model 3 pre-order waitlist stands at about 400,000.) Lower prices help adoption.  

#3 “How does it work?

Packaging is the first thing consumers see, but often the last thing startups are thinking about.  Whether it’s a cardboard box, cellophane envelope or acetate clamshell, the packaging needs to highlight how the product works, what’s innovative and how it will add value to consumers’ lives.

Consumers also want to see the products turned on and play with them out of the box (And consumers seeing the product out of the box will assess what it’ll take to install it: a screwdriver, a handyman or MacGyver). Consider how products are presented in retail stores or online to help tell the product’s story.  At Open House, we have two experiences to help consumers understand the products. First, we’ve created experiential routines, including a morning routine that shows what happens in a connected home when the sun comes up (the coffee machine whirs to life, a stereo in the baby’s room plays soft music). Second, we built digital information surface tables full of information on each of the products. Guests can play with the touch tables to understand how each product works and if it connects with other products.

#4 “Do these things actually work together?”

Everyone in IoT knows interoperability—that is, all these gizmos actually connecting to each other—is the sticking point. We can’t afford a VHS-versus-Beta or HD-versus-Blu-Ray showdown. We’ve got to come together and rally around open standards. I admire the leaders behinds groups like OCF and Allseen for what they’re aiming to do.

Across the thousands of startup products we’re seeing, many are trying to become a platform unto themselves. And we can’t blame them – platforms create incredibly defensible positions. But, we need to get more creative about how we think about platforms. Proprietary communication protocols that make it difficult for other devices to connect to each other? These don’t help the consumer. We don’t have to all hold hands and sing Kumbaya, but we do have to proactively adopt standards that will help the consumer. That’s why we’re here, right?

So now what?

If you have great IoT products, the Target Open House team wants to see them.  We’ve set up a team in San Francisco specifically focused on IoT (think of it as a motley group of technologist and innovators, like a “Rogue One,” for IoT).  More important, we want to help bring great products to the market that make lives easier. Reach out to us at OpenHouse@target.com. Or, if you want to submit a product idea, click here: http://openhouse.target.com/app/#/shareanidea#top

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