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Coming Surge in Innovation Won’t Be Without Dubious Developments

In the early days of new industries such as e-commerce or the Internet of Things (IoT), exuberance is often excessive and high-profile blunders aren’t uncommon. Add to that an abundance of capital and the end result can be a broad spectrum of developments ranging from brilliant to flaky to even dangerous.

Such concerns are more than just theoretical with President Trump planning to provide fiscal stimulus that could free up billions of dollars for businesses to invest in product development at a time when the IoT is already growing rapidly.

A short look at dot-com blunders illustrates what may be in store for digital marketing. After the creation of the Mosaic web browser in 1993, companies rushed to disrupt traditional business models by using the World Wide Web to deliver products or other services. The intense optimism in the World Wide Web resulted in the valuations of many companies soaring simply because the businesses included dot-com as part of their names.

In many instances companies burned capital at an alarming pace and failed to generate sufficient earnings. Online pet store Pets.com, which was famous for its Super Bowl advertisements with a doggie sock puppet, and grocery store WebVan, which let customers specify a 30-minute window for receiving deliveries, were just two companies that eventually collapsed, while other companies survived.

Cisco, for example, persevered but only after its stock tanked 86%. Amazon.com even struggled, with its stock tanking from $107 to $7 before the company eventually orchestrated a turnaround.

While the rapid growth of the IoT may not produce similar high-profile failures, speed bumps are likely to occur. Even prior to proposals by Donald Trump to boost fiscal stimulus, the IoT industry was growing rapidly. Indeed, Cisco had estimated that the number of IoT devices is likely to grow from 25 billion as of 2015 to 50 billion by 2020.

With Trump proposing to roll out massive amounts of fiscal stimulus, the growth of IoT could get a big boost from additional capital. His proposals include incentives for corporations to repatriate cash. It’s estimated that U.S. corporations hold more than $700 billion in cash in foreign countries, or about half of their cash assets.

Among industries, information technology has the largest amount of cash held abroad. The repatriation program, therefore, could substantially free up capital for companies to invest in IoT initiatives. Trump’s proposed tax cuts could also increase capital that firms can use to grow their IoT product offerings.

So far, the IoT industry has already created a handful of questionable products and with the large number of IoT devices being developed, it’s likely that at least some products will be of questionable value.

The industry has already created a few examples of dubious products. Last spring, The Wall Street Journal reported on a new smartphone-connected tampon, a drinking bottle that tracks water consumption, an umbrella that sends out reminders so it isn’t forgotten by its owner, and a bowl that measures how much water a dog drinks.

Business Insider, furthermore, has reported on a $400 smart electric toothbrush that includes a camera that lets its user watch the inside of his or her mouth while brushing.

Security is also likely to be a concern. This past holiday season, an internet connected Barbie Doll that can speak was found to have a security flaw that could have allowed hackers get past security systems. The flaw has since been corrected, but the problem illustrates how IoT devices can become security issues.

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