The "internet of things" (IoT) has been the next big thing for a while now. However, its path to ubiquity and full integration into the lives of consumers, citizens and businesses has not been as smooth or as rapid as many commentators once predicted. However, that is not to say that the IoT has failed, is failing or is likely to fail. It does, though reflect the array of technical, commercial, legal and even behavioural issues that must be addressed and overcome if the IoT is (depending on your perspective) to (a) fulfil its potential, or (b) live up to the hype.

The consumer market has seen some significant developments. Examples include the autumn 2016 introduction of Amazon's "Dash" buttons for repeat orders of specific products, and of their "Echo" speakers and "Alexis" personal assistant. Both point towards the objective of fully connected and "smart homes". However, there has to date been relatively little meaningful integration of devices and it is a reasonable criticism of many "smart home" devices such as lighting, thermostats and environmental controls and security devices that they are, in essence, little more than remote-control gadgets. Amazon's "Dash" buttons are a relatively limited example of the sort of development most frequently discussed in the now-clichéd context of connected fridges that can detect when milk or cheese is running out, and place orders on a wholly machine-to-machine (M2M) basis.

It is, perhaps, not easy to make a compelling case for "smart homes" as a consumer must-have if they are, in reality, just expensive gadgets with little interconnectivity or intelligence. The case becomes even more difficult to make if the economic benefits of the IoT prove to be illusory or over-sold. For example, the UK roll-out of smart meters has been heavily criticised as a result of significant cost-overruns (a £4.5 billion project has spiralled into an £11 billion project which, as at September 2016, remains subject to delays in implementation). Perhaps even worse, from a consumer perspective, smart meters do not necessarily mean lower energy bills, while the collapse of funding mechanisms such as the Green Deal means that the early promise of energy efficiency improvements without upfront costs has evaporated.

A degree of consumer resistance can also be attributed to concerns over security and privacy. Connected lighting and home security systems offer relatively soft targets for hacking, and consumer concerns have been raised by reports of baby monitors being hacked and security systems being used to identify when the path is clear for burglary. Even more Orwellian worries have been sparked by reports of smart tvs eavesdropping on conversations. Experts might well point out that the risk of hacking is often exacerbated by users' failure to implement strong password protection, or that the terms of use agreed to in relation to smart tvs may expressly permit listening. However, such issues represent a major barrier to the development of that crucial element – trust.

Smart homes are likely to move into the consumer mainstream over time, but there is some way to go before there is a sufficiently mature and compelling user-case.

Confidence in other leading-edge IoT applications may also take time to develop. 7 May 2016 saw a fatal accident involving a Tesla Model S driving in autopilot mode with a dip in investor confidence becoming apparent in the following months. Nonetheless, other automobile manufacturers continue to develop autonomous vehicles, with freight vehicles and taxis emerging as significant focal points. Services such as Under and Lyft continue to grow at pace, though Uber's model seems to follow a familiar silicon valley path – go for growth now, and worry about making money later. In August 2016 Bloomberg tech reported Uber's losses for the first half of 2016 as being in excess of $1.2 billion. Significant elements of that loss are reportedly attributable to driver subsidies, clearly incentivising a move towards driverless cars.

Where driverless cars are concerned, the law cannot lag behind technological development, In particular, key questions relating to liability and insurability must be addressed, along with traffic regulations, before autonomous vehicles can enter into widespread use. In July 2016 the UK government launched a consultation: Pathway to Driverless Cars: Proposals to support advanced driver assistance systems and automated vehicle technologies. Key proposals included:

  • Legislative amendments to allow product liability for automated vehicles within Road Traffic Act 1988,
  • Amendments to the Highway Code, and
  • Amendments to vehicle construction and use regulations.

The consultation also included questions and proposals concerning security from third party hacking and other forms of cyber-attack. As with any other sector, security looms large in any list of concerns.

For real progress, look beyond the consumer market. The IoT is a reality in manufacturing, logistics and distribution, transport and smart city projects around the world. Those sectors share some of the shortcomings of the consumer market – including silo-development and security concerns. However, it has in many places proved far easier to make a business case for IoT than to make a use-case for consumer applications. For business, cost savings and efficiency gains have already driven radical changes, and create a credible basis for the "fourth industrial revolution".

Of course concerns and barriers remain. In a recent survey of the US retail sector BDO reported that 100% of respondents were concerned about online security. Across sectors, compliance costs and the risks that flow from data breaches remain a significant concern – not least as the EU moves towards the full operation of the General Data Protection Regulation from 25 May 2018, and as data transfers between the EU and the US rest on the precarious foundations of Privacy Shield and of the model clauses – both under legal challenge following the European court's finding against the EU-US "Safe Harbor" regime in 2015. However, in business compliance risks tend to command less attention than reduced costs and increased efficiency.

Consequently, our focus is currently far more on the IoT in business than on its consumer applications. We consider that the business case for IoT has reached a stage at which we need to give serious thought – and some creativity – to the legal questions and challenges that flow from the move to "Industry 4.0".