With consumers increasingly keen to connect every device that can possibly be made "smart", manufacturers are struggling to cope with ever-more demanding expectations, according to a new report carried out by tech analyst firm Forrester.
Toss in a global shortage in semiconductors, which are necessary to power connected devices, as well as a worrying deficit in developer talent reported by the majority of manufacturers, and there you have it: a combination of unfortunate factors has created a perfect storm for the Internet of Things (IoT) industry.
The research, which was commissioned by software company Qt, found that an overwhelming 80% of global manufacturers are currently facing challenges in producing digital products and services.
Part of the problem stems from unprecedented demand for IoT devices. There are already more connected things than people in the world, and the trend isn't showing any sign of slowing down. In fact, it's quite the contrary: tech analyst company IDC recently estimated that there will be a total 41.6 billion connected devices by 2025.
Consumers are particularly interested in using smart products in their homes – think connected plugs, lightbulbs, thermostats and even fridges. Forrester forecast that by 2025, the average US household will have 20 internet-connected devices.
In this context, it won't be enough for manufacturers to produce more of the same old things. Buyers' expectations are growing: they want easy-to-use devices with new, exclusive features, which will be continuously improved; and crucially, consumers expect that their connected products work together across different platforms and operating systems.
More than eight in ten respondents to Forrester's survey said that they need to rapidly manufacture new smart products and services to maintain or grow their market position – meaning, in most cases, that a new cycle of research and development is necessary.
"We're at a crunch point in global technology manufacture and development," said Marko Kaasila, senior vice president of product management at Qt. "We are seeing high levels of demand for products that can come quickly to market while also seamlessly meeting user experience needs."
On the one hand, therefore, there is huge demand for smarter, newer products; but on the other, manufacturers are faced with a serious shortage of brains to come up with new ideas. Three-quarters of organizations reported struggling to hire enough developers to kickstart a fresh R&D cycle.
What's more, with such high-stakes targets relying on a small pool of employees, being a developer in the IoT industry at the moment means complex processes and tight turnarounds. Developer burnout is real: more than 90% of decision makers said that they were concerned about their developer wellbeing.
"We don't have enough developers, we ask a lot from them and as the complexity of digital product development rises along with the pressure to be successful, it's all too easy to create a pressure-cooker situation for the teams we do have," Jeffrey Hammond, principal analyst at Forrester, who led the research, told ZDNet.
To make things worse, the past year has seen significant delays in the supply of semiconductors, which has rapidly grown into a serious and global shortage of chips. Demand for electronic components around the world has soared, partly due to the fast digitization of work and play triggered by the COVID-19 pandemic, and semiconductor manufacturers are struggling to keep pace.
This means that equipment manufacturers, in turn, are unable to produce devices powered by even the most basic chips. Until now, consumers have mostly seen the impact of the shortage in the form of longer waiting lists for PCs, smartphones or gaming consoles. But now the IoT industry is on the brink of being severely affected, too.
Forrester said that 61% of respondents reported that the current semiconductor shortage has negatively impacted their ability to deliver new products. "The latest CPUs and GPUs are in chronically short supply," said Hammond. "From a developer perspective, we find teams scrambling to source chips that are actually available and then adapt firmware and digital product to run on them."
For end users, this will mostly mean delays in the provision of connected products. With all of the challenges currently faced by the industry, Forrester found that 95% of manufacturers are experiencing delays in device delivery – with two-thirds of them forecasting at least a month-long holdup, and the rest anticipating up to six-months setbacks.
"Smarter products need smarter development" is both the title and conclusion of Forrester's report. Connected devices, as futuristic as they can be, still follow traditional development practices, with little collaboration, slow processes and a stubborn failure to scale software across multiple hardware platforms.
For 82% of businesses, said Forrester, the development of next-generation smart devices will require a more efficient development and delivery process.
"While there is no quick fix to skills and semiconductor shortages, businesses have to look at their ways of working to make fast and effective improvements now to avoid falling into crisis point," said Qt's Kaasila.
This process means, among other things, prioritizing cross-platform software libraries. Not only will these tools reduce the workloads of developers, who currently need to complete several different hardware targets; but it will also build resilience in manufacturers' supply chains.
With a more flexible framework, in effect, businesses will be able to support a wider variety of semiconductors, and make use of what components they can source, when they can source them. Since the majority of experts don't expect the chip crisis to subside until at least 2022, it is worth taking note of the advice.