Hacking Fears Are Making Consumers Skittish About Smart Home Devices
Smart home device adoption is on the rise, but users are also increasingly concerned about hackers gaining control of connected devices or getting access to personal information.
Uptake in smart home devices is growing year-to-year, although consumer concern over data security and privacy breaches may be stunting adoption or potentially serving as a barrier to wider mass market acceptance.
By Rodney Bosch · April 19, 2017
FRAMINGHAM, Mass. — The rising occurrence of high-profile security hacks and privacy breaches, as well as being personally victimized, are contributing to ever-increasing consumer anxiety about smart home devices and platforms, according to new research.
Parks Associates’ latest quarterly survey of 10,000 U.S. broadband households found that almost half of consumers rank data security and privacy issues as their greatest concerns about connecting devices to the Internet, compared to other problems they may encounter, such as with tech support. Forty percent of the respondents say they have experienced a privacy or security problem with a connected device in the past year, most commonly viruses and malware.
“Our most recent data reveals that almost half of U.S. broadband households are ‘very concerned’ [rating 6-7 on a 7-point scale] about hackers getting control of connected devices and hackers getting access to data from the device,” says Parks Associates Research Analyst Brad Russell. “In tracing trending changes on these consumer attitudes from 2014 to 2016, we find that while the total share of consumers who are ‘concerned’ [rating 5-7] has not appreciably changed, the share of those that are ‘very concerned’ has grown by 6% to 7%. Similarly, the share of consumers who are ‘not concerned [rating 1-3] has shrunk by about half.”
Because adoption of connected devices is growing year-to-year, these concerns are obviously not enough to dissuade early adopters of smart home technology, Russell says. They may, however, be stunting adoption that could be growing faster or serve as a barrier to wider mass market acceptance.
“Of all the smart home devices, no single device has a higher level of penetration than 12%. We are still in the early adopter stage,” he says. “These concerns may well be slowing adoption, though, where adoption should have or would have happened faster if these concerns weren’t so much in the headlines.”
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Last month, Gartner released results from a survey of 10,000 online respondents that also shows connected home solutions remain squarely within the early-adopter phase with only about 10% of households in the U.S., United Kingdom and Australia having purchased smart home gear.
“Messaging needs to be focused on the real value proposition that the complete connected home ecosystem provides, encompassing devices, service and experience,” says Jessica Ekholm, research director at Gartner. “The emphasis needs to be on how the connected home can helps solve daily tasks rather than just being a novelty collection of devices and apps.”
The Gartner survey found that about 65% of respondents are concerned about residential Internet of Things (IoT) devices listening in on their conversations. All that apprehension is not unwarranted. Widespread media reports of data security and privacy breaches are becoming commonplace.
Recent reports include the teddy bears from CloudPets, which are equipped with an Internet-connected microphone, that were said to have exposed more than 2 million voice messages sent and recorded between parents and children to online hackers.
In February, the Federal Trade Commission (FTC) said it fined Vizio $2.2 million after determining the company’s Internet-connected televisions were secretly collecting personal data and recorded viewers’ television, streaming and DVD information on a “second by second basis.” The data, which had been collected since 2014, was then sold to advertisers and media companies.
Smart Home Standards Cometh
Although some manufacturers have begun to proactively engineer security measures into their software and hardware at the beginning of product development — an approach the industry calls “security by design” — a vital missing component is standards.
Arup Barat, chief commercial officer at San Ramon, Calif.-based Infiswift, a leading enterprise IoT platform provider, recently wrote in techzone360.com about the increasing demand for standards adapted to industry-specific needs related to connectivity, security, hardware and more. For instance, users within the smart home sector work with shorter distances and can rely more on the Cloud, whereas the agriculture industry values long-distance connectivity and more edge operation.
“Each industry will start to settle on protocols, hardware and more to define their specific standard,” Barat writes.
The day when security standards for IoT devices arrive in the smart home may be much sooner than other industry niches. Consumer Reports announced in March it is collaborating with several cyber experts to create an open-source industry standard to make connected devices safer.
In a time when routers, security cameras and almost anything connected to the Internet can be hacked, consumers have become hesitant when it comes to buying smart home technology, according to the consumer watchdog organization.
Consumer Reports is aiming to reduce these fears by creating a new standard that it says “safeguards consumers’ security and privacy.”
The goal is to help consumers understand which digital products do the most to protect their privacy and security and give them the most control over their personal data. The standard can also eventually be used by the organization and others in developing test protocols to evaluate and rate products, which will help consumers make more informed purchasing decisions, according to the organization.
“All kinds of products and services collect consumer data and rely on software to work,” says Maria Rerecich, director, electronics testing team, Consumer Reports. “But no one has defined how companies should build these products to really be good for consumers in terms of privacy and other issues.”