It's that time of year again: Tomorrow, venture capitalists, entrepreneurs looking to raise funds, journalists, bloggers, geeks, and digital executives from all over the world will be gathering at LeWeb in Paris. For a couple of days, Paris will turn into the digital Mecca.

A lot of the media and investor attention will focus on the now-traditional startup competition, looking for the new Evernote, Instagram, Nest, or Withings. Here’s the list of the 16 semi-finalists. Emblematic of the entrepreneurial spirit of the conference, David Marcus, founder of startups like Punchd (acquired by Google) and Zong (acquired by eBay) and now CEO of PayPal, will be speaking at the event and will cross paths with a long list of digital visionaries and key executives, such as Pascal Cagni, former general manager and VP of Apple EMEA.

Here are some of my observations on this year's theme — The Internet of Things — as well as a summary of some of Forrester’s latest research on this quickly evolving space.

 

The Internet of Things will merge the physical and digital worlds, bringing new products and experiences to your customers.  Back in 2010, James McQuivey published a first report on how to prepare for the era of experience – explaining how digital experiences will the extend the value of physical products. In her “Smart Body, Smart World” report, my colleague Sarah Rotman Epps explains why sensor-laden devices such as wearables (e.g., the Nike+ FuelBand and Google Glass) and embedded devices (e.g., sensors or connectivity integrated into otherwise “dumb” objects like weighing scales, thermostats, coffee machines, and parking spots) will drive the next phase of growth in personal computing. They open up new scenarios for engagement by capturing and putting to work information about our physical bodies and the physical environments we inhabit.

I believe most products will be connected and have digital companions in the form of smart apps. This is true for shoes, cars, refrigerators, consumer electronics, and anything related to energy management, home automation, or security. By 2020, when dozen of billions of devices will connect via the Internet, exchanging information and taking autonomous actions based on continuous input, we will face a paradigm change that will transform our personal lives and revolutionize business. A lot of these connections will be centralized via mobile phones and tablets. As Sarah nicely puts it in her post, mobile phones will become the brain that coordinates the signals it gets from connected objects via cellular networks, Wi-Fi, Bluetooth 4.0, or new M2M networks like Sigfox.

 

Always addressable customers will quickly become the majority of your audience. Charlie Golvin was the first to size the audience of connected people by device type and to explain why the mobile phone is the only always connected device. More recently, my colleague Melissa Parrish defined the always addressable customer as an individual who owns and personally uses at least three connected devices, accesses the Internet multiple times per day, and goes online from multiple physical locations, at least one of which is on the go.We’re entering the era of pervasive interactivity. The notion of ubiquitous marketing is not new. However, digital behaviors continue to splinter across more devices, but those behaviors are more flexible and more frequent, connecting people to each other, to increasingly connected “dumb” objects, to places in the physical world, and to brands more often and in more places. 

About four out of 10 customers are already always addressable. They represent a fantastic opportunity because they will be the first to adopt new digitally connected products and services and because brands will be able to engage them much more deeply. According to our latest Forrester Consumer Technographics® surveys, always addressable customers are more likely to be young — with 47% of those in Europe and 48% in the US ages 18-34 — be highly educated, have high earnings, and only slightly skew male. They are a massive part of your audience today, as they already represent 37% and 42% of the European and US online populations, respectively.

 

The combination of these two trends will pose unprecedented data privacy, security, and safety challenges. My colleague Andrew Rose has just published a new report: “Prepare Your Security Organization For The Internet Of Things.” He explains why the next Internet revolution is much more alarming than the last. Indeed, the huge amount of data collected via connected devices and objects and the ability to track consumer behaviors will raise challenges around identity and introduce significant privacy concerns. Similarly, as the digital world begins to interface and interact with the physical, concerns regarding safety will rapidly become a priority.

 

Product strategists and their organizations will use the contextual information collected about consumers to deliver highly personalized experiences that some consumers will view as too convenient to pass up over privacy concerns. In a blog post titled “Big Brother Or Big Mother? Depends If You Get It Right,” my colleague Julie Ask elaborated on the idea that the cost of convenience is privacy. However, I think in Europe — especially in countries like Germany and France — consumers will be more sensitive to these privacy issues. Reassuring consumers, turning data into insights, and providing more convenient experiences will be all the more critical. As my colleague Fatemeh Khatibloo wrote, widespread adoption of personal identity management (PIDM) remains a few years away. However, the ecosystem of data lockers and authorization managers is already rapidly evolving. Numerous firms, including startups that will be present at LeWeb, are looking for ways to provide consumers with more control of their personal data and privacy.