Household Certificates: The New Economic Reality

Household Certificates Everywhere
Certificate Market Share

How many of you remember your first economics class? For most, it was a macroeconomics survey course that met a behavioral and social sciences requirement. But whether you took an econ class, became an econ major, or you are just a participating member of the economy, you have likely heard about the “law” of supply and demand. [Actually, there is no “law”, per se. But there are real outcomes that are necessary results of the actions that we take.] In a market where resources are limited, increased demand for a good (or service) will almost always result in increased prices. At the same time, an increased supply of that good (or service) will drive the price lower.  And when that price declines, the demand for that good (or service) will probably increase. Simple, right? The same thing is true for the car market, the computer market, and the market for household certificates (i.e., secure services in the home).

The Security Market

Most people have not yet implemented household certificates (or other security mechanisms) because the “cost” was way too high. Historically, the exorbitant cost for a good home security system meant that only those with disposable income could afford these devices (and services). Some people bypassed the initial outlay by building it into the price of a new home. That way, the costs could be distributed over fifteen (or thirty) years. But either way, the number of willing customers remained small.

The same reality is true for digital security and household certificates. You might have heard about two-factor authentication. But you may not have the skills – nor do you have the money – to implement a digitally secure household. So you left those kinds of security steps for others to implement. Basically, you want digital security, but you can’t afford to install or support it.

Household Certificates: Mandatory…and Cheap

The times are changing. As any technology is introduced, early adopters pay excessive amounts of money to have a tool that is cool. If this weren’t the case, then how could anyone justify a $1,200 iPhone?  Yes, the iPhone is cool. But you can get something similar for $800-$900. And if you bypass just a couple of features, you can get a good phone for between $300 and $500. [This is exactly what Dell did when it disrupted the desktop computer market that was previously owned by Apple and IBM.

In security circles, the cost of security certificates (and the learning curve associated with their use) has meant that corporations would be the only users of this kind of technology. But just as the iPhone spurred cheaper competitors, the Internet security industry is also beginning to get its price disruption. You no longer have to go to the “big players” to install household hubs. You can build them yourself. And you don’t have to get certificates from the same places as the big corporations: you can get workable certificates for free from Let’s Encrypt.

You may be asking yourself why you would need security certificates. And if you don’t have any services running at home, then you may not need certificates. But if you have a Plex server, or if you use home automation, or if you have mainstream home security tools (from folks like SimpliSafe, or August, or Blink, or Netgear), then you really do need household certificates.

Why are household certificates important? Because when you connect to services at home, you will want to make sure that it is your home services that are responding to you. Without certificates, there is a real risk that someone will step in between you and your household services. Hackers do this so they can impersonate your servers – and collect valuable data directly from you.  [In security parlance, this is called a man-in-the-middle attack.] By having household certificates, your systems can present secure ‘credentials’ to ensure that the server is who it reports itself to be.

Secure Authentication

Similarly, you may want to ensure that anyone trying to log into your household must present a trusted token to access the treasures inside your house. [Think of this as the digital equivalent of a front door key.]  This can be done with strong passwords. But it can also be done with digital certificates. And almost every implementation of two-factor authentication uses encryption (and certificates) to validate a user’s identity. Without certificates, the only thing that lies between your treasures and digital assailants is your password.  [Let’s hope that your password is both strong and totally unique.]

And with Google’s recent announcement that they will be producing security tokens (i.e., the Google Titan key), the authentication market is finally being commoditized. Prices will no longer be set by only one or two vendors (like RSA or Yubico). And I am sure that other vendors will take advantage of the reduced costs that will be a necessary result of increased key production (needed to meet the Google demand).

Let’s Encrypt: Supply-side Answers

According to Wikipedia, ” The Let’s Encrypt project was started in 2012 by two Mozilla employees, Josh Aas and Eric Rescorla, together with Peter Eckersley at the Electronic Frontier Foundation and J. Alex Halderman at the University of Michigan.” The first public product launch was on April 12, 2016. At the time of launch, Let’s Encrypt entered a market that was dominated by Symantec, GoDaddy, and Comodo

The Let’s Encrypt price point is simple: zero cost certificates. The catch is that these certificates are only good for three months. But with a little scripting (and a few tools from the EFF), the certificate refresh process is almost effortless. And Let’s Encrypt is being built into most household management systems. So with no production costs and with decreasing skill requirements, household certificates are becoming impossible to ignore.

Bottom Line

If you have a little technical know-how, then now is the time to start using Let’s Encrypt on your household servers. And if you aren’t technically savvy, then expect the hardware and software providers to start bundling this security technology into their products. For them, the cost is limited. And adding real security features can only improve customer satisfaction – if it is completely friction-less.

Alexa Dominance: Who Can Compete?

Alexa Dominance
Amazon Echo devices now have a foothold in most American homes.

Voice control is the ‘holy grail’ of UI interaction. You need only look at old movies and television to see that voice is indeed king. [For example, the Robinson family used voice commands to control their robot. And Heywood Floyd used voice as his means of teaching and communicating with HAL.] Today, there are many voice assistants available on the market. These include: Amazon Alexa, Apple Siri, Google Assistant (aka Google Home), Microsoft Cortana, Nuance Nina, Samsung Bixby, and even the Voxagent Silvia.  But the real leaders are only now starting to emerge from this crowded market. And as of this moment, Alexa dominance in third-party voice integration is apparent.

Apple Creates The Market

Apple was the first out-of-the-gate with the Apple Siri assistant. Siri first arrived on the iPhone and later on the iPad. But since its introduction, it is now available as part of the entire Apple i-cosystem. If you are an Apple enthusiast, Siri is on your wrist (with the watch). Siri is on your computer. And Siri is on your HomePod speaker. It is even on your earbuds. And in the past six months, we are finally starting to see some third-party integration with Siri.

Amazon Seizes The Market

Amazon used an entirely different approach to entrench its voice assistant. Rather than launch the service across all Amazon-branded products, Amazon chose to first launch a voice assistant inside a speaker. This was a clever strategy. With a fairly small investment, you could have an assistant in the room with you. Wherever you spent time, your assistant would probably be close enough for routine interactions.

This strategy did not rely upon your phone always being in your pocket.  Unlike Apple, the table stakes for getting a voice assistant were relatively trivial. And more importantly, your investment was not limited to one and only one ecosystem.  When the Echo Dot was released at a trivial price point (including heavy discounts), Alexa started showing up everywhere. 

From the very outset, an Amazon voice assistant investment required funds for a simple speaker (and not an expensive smartphone). You could put the speaker in a room with a Samsung TV. Or you could set it in your kitchen. So as you listened to music (while cooking), you could add items to your next shopping list.  And you could set the timers for all of your cooking.  In short, you had a hands-free method of augmenting routine tasks.   In fact, it was this integration between normal household chores coupled with the lower entry price that helped to spur consumer purchases of the Amazon Echo (and Echo Dot).

A second key feature of Amazon’s success was its open architecture. Alexa dominance was amplified as additional hardware vendors adopted the Alexa ecosystem. And the young Internet-of-Things (IoT) marketplace adopted Alexa as its first integration platform. Yes, many companies also provided Siri and Google Assistant integration. But Alexa was their first ‘target’ platform.

The reason for Alexa integration was (and is) simple: most vendors sell their products through Amazon. So vendors gained synergies with their main supplier. Unlike the Apple model, you didn’t have to go to a brick and mortar store (whether it be the Apple Store, the carriers’ stores, or even BestBuy/Target/Walmart).  Nor did a vendor need to use another company’s supply chain. Instead, they could bundle the whole experience through an established sales/supply channel.

Google Arrives Late To The Party

While Apple and Amazon sparred with one another, Google jumped into the market. They doubled-down on ‘openness’ and interoperability.  And at this moment, the general consensus is that the Google offering is the most open. But to date, they have not gained traction because their entry price was much higher than Amazon’s. We find this to be tremendously interesting. Google got the low price part down when they offered a $20-$30 video streamer.

But with the broader household assistant, Google focused first upon the phone (choosing to fight with Apple) rather than a hands-free device that everyone could use throughout the house. And rather than follow the pricing model that they adopted with the Chromecast, Google chose to offer a more capable (and more expensive) speaker product. So while they used one part of the Amazon formula (i.e., interoperability), they avoided the price-sensitive part of the formula.

Furthermore, Google could not offer synergies with the supply chain. Consequently, Google still remains a third-place contender. For them to leap back into a more prominent position, they will either have to beat ‘all-comers’ on price or they will have to offer something really innovative that the other vendors haven’t yet delivered.

Alexa Dominance

Amazon dominance in third-party voice integration is apparent. Not only can you use Alexa on your Amazon ‘speakers’, you can use it on third-party speakers (like Sonos). You can launch actions on your phone and on your computer. And these days, you can use it with your thermostat, your light bulbs, your power sockets, your garage door, your blinds, and even your oven. In my case, I just finished integrating Alexa with Hue lights and with an ecobee thermostat.

Bottom Line

Market dominance is very fleeting. I remember when IBM was the dominant technology provider. After IBM, Microsoft dominated the computer market. At that time, companies like IBM, HP, and Sun dominated the server market. And dominance in the software market is just as fleeting. Without continually focusing on new and emerging trends, leadership can devolve back into a competitive melee, followed by the obsolescence of the leader. Indeed, this has been the rule as dominant players have struggled to maintain existing revenue streams while trying to remain innovative.

Apple is approaching the same point of transition. Their dominance of the phone market is slowly coming to an end. Unless they can pivot to something truly innovative, they may suffer the same fate as IBM, Sun, HP, Dell, Microsoft, and a host of others.

Google may be facing the same fate – though this is far less certain. Since Google’s main source of revenue is ‘search-related’ adverstising, they may see some sniping around the edges (e.g., Bing, DuckDuckGo, etc). But there is no serious challenge to their core business – at this time.

And Amazon is in a similar position: their core revenue is the supply chain ‘tax’ that they impose upon retail sales. So they may not see the same impact on their voice-related offerings. But they dare not rest upon their laurels. In candor, the Amazon position is far more appealing than the Google position. The Amazon model relies upon other companies building products that Amazon can sell. So interoperability will always be a part of any product that Amazon brands – including voice assistants. 

Only time will sort out the winners and losers. And I daresay that there is room enough for multiple ‘winners’ in this space. But for me, I am now making all of my personal and business investments based upon the continued dominance of Alexa.