Navigant Research Blog

Competition Heats Up in the Smart Home Space

— September 27, 2016

Computer and TabletThe Google Home has been an idea looming in the distance since Sundar Pichai introduced the product at Google’s I/O conference earlier this year. Rumor has it that the product will finally make its official debut at an event in October 2016, where it is expected to be formally announced alongside a variety of other new hardware. The Google Home is a Wi-Fi connected smart home speaker that answers questions, plays music requests, and controls a user’s home Internet of Things devices by summoning Google Assistant, a component of Google’s Allo messaging app, through voice recognition.

Google Home is the company’s answer to Amazon’s Echo, which is reportedly already in the hands of some 3 million users. The Amazon Echo has done surprisingly well since its unveiling in 2014, which begs the question: How will Google do it better? For starters, the Google Home will reportedly be priced at $129, which is $40 less than Amazon’s Echo and a match to Amazon’s lower-end Tap product. Google is also trying to one-up its competitor by offering customizable bases in different colors and materials to match the user’s style and décor. The company also hopes to be better at controlling other smart home devices, starting with Nest and Google Cast-enabled devices.

Competitors Abound

Amazon and Google are not the only companies battling for smart home device market share. Apple is moving forward with the development of its own smart home device based on the Siri voice assistant, transitioning the product from the R&D phase to prototyping. The release of the Amazon Echo was a surprise hit to Apple, which has been working on developing its product for more than 2 years. Apple is reportedly attempting to differentiate itself from Echo and Home with more advanced microphone and speaker technology. If and when Apple makes it to market with this product, it could potentially have an advantage due to the company’s investment in the Apple HomeKit. HomeKit already has a network of third-party connected smart home devices controllable through Siri, though the product has received less-than-favorable reviews and does not appear to have gained much traction in the market since its launch.

With big name players like Amazon, Google, and Apple vying to lead the smart home device market, the winner will be determined by factors such as interoperability with other devices, the user experience, and basic functionality (i.e., how well does the product actually respond to a user’s voice?). The company that wins will be the one that meets these criteria most effectively. Amazon is already ahead of the game, but Google and Apple both have the potential to succeed. Regardless, competition among these three giants should be a win for consumers who are likely to see better products at more competitive prices.


Gauging Apple’s Smart Home Strategy

— September 27, 2016

Home Energy ManagementLike a circling hawk, Apple has been hovering above the smart home/Internet of Things (IoT) home marketplace, waiting for the right moment to pounce. That moment arrived when Apple released iOS 10 to the public early September 2016. The iOS 10 update includes a dedicated Home app, which is given prime screen real estate on the iPhone. It is a clear sign that Apple is ready to drop down to earth and fully engage, and even compete, in the emerging smart home market.

To be sure, Apple was not absent entirely from this particular marketplace prior to the update. The Cupertino, California-based company first announced its HomeKit platform more than 2 years ago. In the meantime, Apple has quietly waited for new compatible hardware products to become available so the platform could flourish. Currently, several dozen HomeKit-friendly devices are on sale, such as the ecobee3 smart thermostat, a smart lock from August, and Philips Hue wireless light bulbs. Apple expects nearly 100 more similar products from multiple vendors to come out before year’s end, which would further extend its ecosystem.

The essence of Apple’s Home app is its ability to integrate disparate devices in a single application, and do so in quintessential Apple fashion with an easily understood interface that hides complexity in the background. No longer does a user need to juggle several third-party apps to control devices. Instead these can be managed with just one app, as long as the device has the required works-with-Apple seal of approval. This is par for the course for the company that likes to maintain a proprietary world. However, a wireless thermostat or smart plug not part of Apple’s realm would have to be manipulated with a different application.

Apple’s Home App

Apple Home

(Source: Apple)

Amazon Echo’s Smart Home Skills

Alexa home

(Source: Amazon)

Much has changed since HomeKit’s unveiling. Competitors have seized the opportunity to forge ahead, Amazon in particular. The online retail giant has scored a hit with its voice-controlled Echo device, which can connect easily with many of the same devices (e.g., Philips Hue bulbs and ecobee3 smart thermostats) that work with Apple’s Home app. Moreover, Alphabet-Google is about to launch its voice-activated Google Home device to compete directly with Echo. Formidable competitors have taken some market and mind-share ahead of Apple, and the market for smart home/IoT functionality will be intense.

Early Market

Still, there is an upside for Apple. The market is early-stage, and millions of customers have yet to buy products or use connected-home devices. Competitors have helped pave the way and validate a market that has been elusive for many years, primarily targeting people with the money to pay for expensive devices and professional installers, or do-it-yourself geeks willing to fiddle with complex devices and systems. Mainstream adoption appears to be just around the corner.

Savvy energy market stakeholders are paying attention to all of this. Devices and applications that residential and commercial customers adopt can have an important effect on lives and businesses. Witness the growth of bring-your-own thermostat programs offered by utilities (see Navigant Research’s Bring Your Own Thermostat Demand Response report). Utilities need to stay current with what customers are doing behind the meter to automate premises and help them use energy more efficiently. It is a smart strategy for customer engagement, since disregarding trends is risky in a world where Silicon Valley heavyweights and disrupters see ways to leverage a transforming energy market (see Navigant’s Navigating the Energy Transformation white paper). Apple is not the only bird in the sky seeking new markets and growing revenue opportunities.


Moving Toward Building Systems Integration with New Market Offerings

— September 26, 2016

HVAC RoofThe More Things Change?  

Energy efficient building market trends in 2011 included the increased adoption of intelligent systems throughout commercial buildings. The main focus of these systems was to more effectively manage energy consumption. Today, most vendors serving the commercial buildings market have moved toward intelligent building systems and controls. These systems not only manage building energy consumption, but also critical aspects of a building’s operations, including tenant comfort, asset management, wayfinding, predictive maintenance, and a host of other functions. It’s now a strategic necessity for commercial buildings to have some form of software monitoring, data collection, visualization, and control of key systems as this market evolves.

The Convergence of Building Equipment and Operational Silos

The industry as a whole is recognizing the benefits of taking a more holistic view of managing disparate building systems and processes. New construction design is made simpler by dealing with fewer vendors and systems that may not easily communicate with one another. Retrofits can also be made simpler and less costly with Wi-Fi wireless networking technologies. Overall, maintenance and serviceability can be managed more easily, and duplication of sensors, software monitoring solutions, controls, and other system infrastructures can be eliminated.

Earlier this month, Acuity Brands, Inc. introduced the nLight ECLYPSE controller, which allows the integration of commercial building lighting systems with a building’s heating, ventilation, and air conditioning (HVAC) controls onto one common platform. Acuity follows Daintree Networks, which offers ControlScope, a programmable wireless HVAC thermostat that connects to any conventional or heat pump HVAC system. These advanced tools give building owners and managers the ability to configure, monitor, and control an integrated set of critical building equipment systems using a common interface. With real-time data acquisition and monitoring, the efficiency of critical building systems and operational processes can be maximized while maintaining optimal energy consumption.

Adoption Hurdles Still Exist

These benefits do not preclude the presence of hurdles to the adoption of integrated building systems. As with any technology adoption cycle, early adopters see the benefits of these types of technologies, but others are slower on the uptake. Facilities managers can be hesitant to change and be trained on the most effective use of integrated systems with a common interface. The vast amount of data collected by a multitude of sensors is effective only if it is being used, and used appropriately. Connected devices of any kind increase the risk of security breaches, necessitating the coordination of facilities management and IT departments—a historically uncommon pairing. Finally, proving that the financial ROI and payback period estimates are within acceptable corporate standards continues to be a significant vendor challenge.

Acuity Brands and Daintree Networks have taken an important strategic step with their integrated technology offerings. It all makes sense and should see increasing adoption in the market over time. But commercial building operations has been one of the industries that is historically slow to adapt to technological change. With strategies and technologies that help vendors access both new construction and retrofits in commercial buildings, it may be inevitable that fully integrated building systems become commonplace in the coming decade.


Scotland Exemplifies European Energy Transition with Tidal Generation

— September 26, 2016

Energy CloudImagine a landscape dotted with wind turbines and homes supporting rooftop solar—that’s what  I noticed during a recent trip to Scotland. What I couldn’t see was power being exported to the grid through offshore tidal stations. Nova Innovation has succeeded in deploying the world’s first fully operational array of tidal power turbines in the Bluemull Sound, which are now successfully feeding electricity to local Shetland homes. The project began in March 2016, when the first in a series of three turbines was deployed. When the second turbine was deployed and activated in late August 2016, the project became the first offshore tidal array in the world to actually deliver electricity to the grid.

Scotland has had its fair share of failed attempts in the marine power industry, including the collapse of two wave power companies, Pelarmis and Aquamarine. However, the country has some of the most powerful tides in Europe, and Nova Innovation’s achievement shows promise for further development of tidal power as a renewable generation source.

Energy Transformation

Scotland’s recent success in tidal generation also highlights the region’s dedication to distributed energy resources (DER), renewables, and adapting to a transforming energy industry. A recent series of blogs highlights Europe as a region helping to lead the way in a changing energy environment, and arguably transitioning faster than anywhere else in the world. The megatrends that are revolutionizing the way power is produced and used in Europe include shifting power-generating resources to renewables, new market entrants focused on investing in renewables, DER, and energy management, and the power of consumer choice as demands change among customers who want to control their electricity usage and decide what power to purchase.

Navigant expects DER to grow more than 5 times faster than new central station generation in the next 10 years in Europe; its uptake is anticipated to be widespread and one of the most disruptive factors affecting the grid. Additionally, utility-scale and distributed renewables are expected to account for 50%-100% of generation, with net new capacity currently reaching virtually 100% renewables.

Europe is a vibrant and fertile market for DER and renewables, from small generation pilots in Scotland, to cities like Copenhagen and Munich committing to 100% clean energy, to growing carbon emissions reductions policies and regulations that affect the entire European Union. This is a region dedicated to transitioning in a changing energy environment, and it’s worth following along as its energy future develops.


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