Smart Fridges – Why Consumers Will Keep Buying, Despite Hacks

by Brad Moon | January 24, 2014 12:07 pm

Smart Fridges – Why Consumers Will Keep Buying, Despite Hacks

Over the holiday season, it seems as though some refrigerators were doing more than keeping leftovers from spoiling. While the vast majority of appliances — so-called “dumb” machines whose only connection is to the power grid — were doing nothing more sinister than keeping turkey cold, a group of smart fridges were busy sending spam e-mails[1].

SmartFridge 183x300 Smart Fridges   Why Consumers Will Keep Buying, Despite Hacks[2]While we were worrying about the privacy implications of Google (GOOG[3]) buying Nest Labs[4] — and if that might lead to your web browser serving up ads based on whether your smart thermostat says you’re at home or out of the house — darker forces had been at work.

BGR says botnets commandeered smart fridges and TVs[5] as part of an attack between Dec. 23 and Jan. 6 that blasted 750,000 spam e-mails at unsuspecting businesses and individuals.

The novelty of the attacks on smart fridges resulted in headlines, but the collective public reaction has been a shoulder shrug. Chances are, you’ve seen the news, but that’s not going to stop you from buying a Wi-Fi enabled device.

If that sounds like a cocky prediction, consider our extensive history of collectively shrugging through extensive cybercrime threats:

Hacking Didn’t Start With Smart Fridges

Smartphone hacking has been a thing pretty much since Apple (AAPL[6]) started selling iPhones. Considering what people store or access from their phones — confidential e-mail, financial information and photos, just to name a few potential targets — the realization that hackers are working constantly to break into the devices has hardly slowed adoption.

Even news that the NSA can tap into the supposedly impenetrable BlackBerry (BBRY[7]) to access encrypted messages[8] has caused indignation, but failed to present even a bump on the road for smartphone sales.

Car thieves have been hacking into “smart” cars equipped with wireless unlocking technology and app-controlled convenience functions to steal them without even having to break a window[9] or hot-wire the vehicle.

Despite the risk, the thought of having to manually unlock a vehicle with a key is appalling to most consumers. Even worse, researchers have been able to prove that with all the embedded technology and wireless connectivity used by today’s cars, it’s theoretically possible for someone to spy on car occupant conversations using Bluetooth or even remotely activate brakes[10].

The response?

Car makers are in a race to pack as much technology as possible in their vehicles, while Apple and Google battle it out[11] to become the standard platform for integration of smartphones and tablets in automobiles. Consumers take the high-tech upgrades for granted, car makers promote them as a selling feature (not a security risk), and only a few auto survivalists are resorting to buying old used cars that lack the modern technology.

Need I say more? The list goes on: personal computers, credit cards, ATMs, online shopping. We know bad things can happen, but if it’s cool or convenient (or irresistibly cool and convenient) and the odds of getting physically harmed while using it are relatively low, then consumers tend to  brush off the risk.

The Internet of Everything is just getting started, but those smart TVs, smart fridges, thermostats and washing machines with their Wi-Fi access are proving to be irresistible targets for cyber criminals.

The smart appliance market had been largely limited to big ticket luxury appliances like $3,500 Samsung (SSNLF[12]) smart fridges or premium Sony (SNE[13]) smart TVs, limiting adoption and dimming the appeal to hackers — there was too much effort for too little potential payback. That equation has begun to change, though.

Recent arrivals like the $249 Nest Learning Thermostat and a Wi-Fi enabled, smartphone-controlled slow cooker show our progress toward a $25 billion smart appliance market by 2018[14].

For cyber criminals, the current state of the connected home is becoming tough to resist. So long as the status quo of Wi-Fi enabled appliances like smart fridges exists without a coherent security strategy, expect your house to continue to be a playground for tech-savvy criminals.

In the meantime, based on past reaction to cyber threats, don’t expect the exploits with smart fridges to deter consumers from adopting smart appliances.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Endnotes:
  1. a group of smart fridges were busy sending spam e-mails: http://bgr.com/2014/01/20/smart-tvs-fridge-hacked/
  2. [Image]: http://investorplace.com/wp-content/uploads/2014/01/SmartFridge.jpg
  3. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  4. buying Nest Labs: http://investorplace.com/2014/01/nest-labs-google-android/
  5. botnets commandeered smart fridges and TVs: http://bgr.com/2014/01/20/smart-tvs-fridge-hacked/
  6. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  7. BBRY: http://studio-5.financialcontent.com/investplace/quote?Symbol=BBRY
  8. access encrypted messages: http://www.fiercewireless.com/story/report-nsa-can-hack-apple-google-and-blackberry-smartphone-data/2013-09-09
  9. to steal them without even having to break a window: http://autos.aol.com/article/car-thieves-using-new-wireless-technology-to-break-into-cars/
  10. spy on car occupant conversations using Bluetooth or even remotely activate brakes: http://www.autonews.com/article/20130708/OEM11/307089993#axzz2rF8U57qo
  11. Apple and Google battle it out: http://investorplace.com/2013/07/apples-ios-in-the-car-is-far-from-a-sure-bet/#.UuFQ3Xn0DZs
  12. SSNLF: http://studio-5.financialcontent.com/investplace/quote?Symbol=SSNLF
  13. SNE: http://studio-5.financialcontent.com/investplace/quote?Symbol=SNE
  14. $25 billion smart appliance market by 2018: http://finance.yahoo.com/news/wi-fi-play-dominant-role-145700682.html

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