We don't have to chose between functionality and privacy as more and more of our things get connected. Personal clouds provide an architecture that supports both at the same time.
There's a big battle going on between Tesla Motors' Elon Musk and the New York Times over a review that Tesla took issue with. If you haven't been following along, Tesla published data that purported to show the Times reviewer had fabricated certain parts of the review. For most of us, the big story isn't whether the review was accurate or even whether the Tesla car is any good. The big story is that Tesla can spy on its customers!
The data collected and correlated is shocking. Where you drove. How fast you went. Even if you ran the heaters. Of course Tesla claims that the data will only be used in certain situations like customer service, police requests, or in a lawsuit. But the police will surely need a warrant. No?
If that's not scarey enough, think about a world where more and more of your things are connected and they're not really working for you so much as for their manufacturer. Sending back data on how they're used, helping the manufacturer defend itself against a lawsuit, or build a better product (that they'll market to you).
The answer to this problem is available now: a personal cloud. The car ought to have one. My dishwasher ought to have one. Every connected device ought to have one. And I, as the person who bought the product, ought to have control of them. I might be willing to share some of the data in those clouds with the manufacturer when it suits me. But it ought to be under my control, not someone else's.
Architectures that can provide us with privacy and functionality are available right now. I know how to build them and so do others. Don't believe manufacturers when they say that functionality must come at the cost of privacy. It doesn't have to. We should be building the Internet of me and my things, not the Internet of Tesla's things.
Bonus: Read Drummond Reed's The Real Killer App for Personal Clouds.