Navigant Research Blog

Service Providers Capitalizing on Smart Home Opportunity

— October 17, 2017

The smart home is a concept gaining hype and excitement with its futuristic promises. This market is projected to see significant growth, as Navigant Research expects smart home platform revenue to increase from $4.2 billion in 2017 to $39.5 billion in 2026. As discussed in our report, The Smart Home, a range of companies are vying for market share in this hotbed of opportunity, from startups to large tech incumbents.

Recently, I had a chance to attend the Service Delivery Innovation Summit, a conference bringing together a range of service providers to discuss innovations in the service business. Service providers are increasingly looking toward the smart home as a way to create new revenue streams as existing business models are challenged by newer offerings, such as traditional cable TV versus streaming services.

Who Can Take the Chance?

Service providers are arguably the best positioned to seize opportunity in the smart home. These companies are already trusted by consumers and have existing touchpoints and technologies deployed in the home, making it convenient and easy to go to market with smart home technologies. Because service providers are already in the home, they also have the unique position of being the gatekeeper for technologies that enter the home. Thus, service providers can profit from becoming smart home technology aggregators and can assist in solving many of the issues that exist in the smart home, such as technology interoperability, the comprehensiveness of solutions, and data privacy and security.

Additionally, broadband service providers and telcos offer products and services that support the development of smarter homes, such as cellular and broadband connectivity (which allows for the communication of connected devices and smart home data transmission). They can also use existing networks and infrastructure to offer new smart home-related services, such as professional installation and customer support.

Early Smart Home Investors

Some service providers are already making big investments in the smart home space. Comcast has been in partnership with EcoFactor to offer its EcoSaver thermostat-based energy management service to Xfinity Home customers since 2013. In 2016, the company partnered with Earth Networks (which has since spun off its home sensing and software company Whisker Labs) to bring big data and analytics to the EcoSaver service. In 2017, Comcast finished its acquisition of iControl, a home automation company. It will use the acquisition to build a Center of Excellence in Austin, Texas to wholesale its home automation and security services.

Service Providers Are Paying Attention

Comcast is just one example of a service provider ramping up activity in the smart home industry. Others such as energy providers Centrica and Vattenfall, as well as Telefonica, AT&T, Verizon, and Cox, are also offering home solutions. Service providers are increasingly recognizing the opportunity in this market and can help the progression of smarter homes.

 

Security Proves to Be a Strong Proposition for the Smart Home

— October 17, 2017

Nest has long been known as the Google-backed consumer products company responsible for the innovative and sleek Nest Learning Thermostat. The company has had a fairly limited selection of consumer products for years. It only expanded upon its original thermostat with the Nest Protect smoke detector in 2013 and the Nest Indoor and Outdoor Cams in 2015 and 2016 to bring its total portfolio to four wholly original devices.

Because the company is slow to unveil new products, any hardware releases from Nest are major news. So when Nest announced six new products last week, it made a big splash in the consumer electronics industry. However, the sheer volume of products in this latest announcement is not the most significant part of this news. Rather, it’s the fact that these products are all security related.

Smart Technology Adoption Is Increasing

Nest’s new product rollout emphasizes the growing importance of security as a value proposition for the adoption of smart home technologies. In the United States, consumers are adopting smart technologies through security providers to help increase awareness of what is going on in their homes and feel more secure and protected.

Security systems no longer include only an alarm system and sensors that monitor when a home’s perimeter is breached, but also include connected cameras, door locks, door bells, and garage door openers. These devices create an ecosystem that monitors the home in and out and can help optimize and automate the operations of a home.

Comcast’s Security Offerings

Nest isn’t the only company engaging in the smart home space through security. Comcast has increasingly become involved in the smart home space through its Xfinity Home security service. The company has invested in home automation through its acquisition of iControl and its partnership with Whisker Labs and is utilizing its existing infrastructure and resources to move further into the security and home automation business.

These moves allow Comcast to create new streams of revenue as some of its traditional business models come under threat, like its cable TV business. Vivint Smart Home is another company offering home security and automation products and services, and already has a video monitoring package similar to what Nest has just announced, alongside a suite of other smart technologies likes its Element smart thermostat.

Value Propositions and Consumer Benefits

There are many different value propositions for the smart home outside of security, including energy, comfort and convenience, automation, and health and wellness. The home energy management space was one of the first to introduce smart home technologies, including smart thermostats, but now there are different value propositions for smart home technologies by region. In the United States, security has prevailed, while energy is still the most popular in Europe.

These value propositions help demonstrate to consumers the benefits of smart technologies and how they can significantly affect their lives. Smart technologies for security can help consumers protect themselves and their families, and energy devices can help consumers save money on their energy bills and contribute to a greener planet. This helps drive the adoption of smart technologies and push the concept of a smart home closer to reality.

 

Smart Home Expanding at European Utility Week

— October 12, 2017

European Utility Week (EUW) is Europe’s flagship energy event of the year. It brings together over 10,000 delegates covering the entire smart energy value chain. I had a chance to attend this landmark event last week and was intrigued by the transition occurring in the energy industry. This event’s roots clearly lie in network operations and grid infrastructure, though it also displays cutting-edge technology and innovations transforming the energy ecosystem, as my colleague Stuart Ravens explains. Wandering between booths and networking with energy stakeholders, I noticed the energy industry becoming smarter through data analytics, services, and the smart home.

Data Analytics

Data analytics was a major theme at EUW this year. The energy industry is no different from other industries that are starting to realize the value in big data and the advanced applications it can enable. From Schneider Electric’s display of its EcoStruxture platform to a demo of REstore demand-side management software, it is clear that companies are investing in data analytics to optimize grid operations. A few of the main data-based applications that I noticed at EUW included:

  • Asset performance management, which analyzes data from sensors deployed throughout the grid to monitor assets and help utilities reduce unscheduled downtime, prevent equipment failures, reduce maintenance costs, extend equipment life, and identify underperforming assets.
  • Demand response platforms, which crunch data to determine the available capacity of residential and commercial and industrial assets that can be aggregated to participate in capacity markets.
  • Meter management software, which can be used to power customer billing tools or monitor the health of a meter.

Though many utilities are still easing into data analytics and few are actually using such advanced applications, these types of data-based solutions demonstrate the future of the energy industry.

Services

Services are emerging as a natural progression to hardware and software offerings. As much as I saw industrial-looking, complex grid hardware on display, I also saw vendors peddling software as a service (SaaS) and cloud services. One example of a vendor pursuing the services market is GE, whose booth featured its Predix Cloud service for asset performance management, grid monitoring and diagnostics, and utility field operations. Another company, Aclara, revealed during a briefing that the company is trying to become and end-to-end solution provider by not only supplying utility companies with grid infrastructure, but also offering a SaaS platform that uses data from their infrastructure to power software modules. Vendors in this space recognize the need to expand outside of hardware sales and use the infrastructure they have deployed to offer services that help make utility operations more efficient and provide new and recurring revenue.

The Smart Home

The utility/consumer relationship is becoming more important in the changing energy landscape, which was made obvious by the number of smart home booths at EUW. As traditional utility business models are challenged by distributed energy resources and more efficient energy technologies, utilities must look for other options to maintain revenue. This often involves engaging end users, which requires utilities to differentiate themselves and increase customer satisfaction. Companies like Bidgely and Smappee are helping utilities achieve this vision with device disaggregation and personalized energy consumption software. Other companies like geo recognize the need to create more active homes that can become flexible grid assets, and their booths demonstrated these values. Whether the smart home solutions on display were focused on connected energy devices, customer engagement software, or comprehensive whole home solutions, it was clear that utilities are recognizing the importance end users are playing in the energy transition.

 

Installation and Customer Support Play Vital Role in Creating Smarter Homes

— August 10, 2017

The novelty of having a smart home is driving connected device adoption among consumers, but the novelty is wearing off as the concept of a smart home becomes a reality. The smart home market, however, still has a long way to go before it reaches mainstream adoption. One of the major issues this market faces is that many consumers do not understand the value of connected devices. Many customers avoid the market entirely or exchange smart devices for dumb counterparts due to premium prices and installation challenges.

Providers Exploring New Methods

This is an issue that smart home technology providers are trying to tackle by providing additional support to customers. For example, Vivint and Best Buy recently announced a partnership to roll out Vivint employees in more than 400 Best Buy stores around the country. The Vivint employees will be able to give customers advice about smart home devices and even provide installation services. Vivint has traditionally sold its solutions through a direct-to-home approach. The company believes its partnership with Best Buy further develops this approach and its core belief in consultative sales—or human interaction to explain how smart home technologies actually work in the home. This move may help increase adoption by not only providing customers with more support and information, but also making smart home solutions more visible and accessible through availability at a large retailer.

Vivint and Best Buy are not the only companies exploring this method. Amazon is taking a similar approach to increasing smart home customer support by preparing an in-house fleet of experts to offer free Alexa consultations, professional in-home installations of smart home devices, and Wi-Fi networking systems. The fleet, which is part of Amazon Home Services, has been compared to that of Best Buy’s Geek Squad and is currently available to consumers in Seattle, Portland, San Francisco, San Diego, Los Angeles, Orange County, and San Jose.

Professional installation is not an entirely new concept in the smart home space. For example, Comcast requires its Xfinity solutions be professionally installed. It has expanded further into the space with its recent acquisition of iControl, new combination Wi-Fi router smart home hubs, and voice-activated remotes, which can control connected lighting.

Installations Are Key to the Integrated Smart Home

Professional installations and enhanced customer support are key to transitioning the smart home from an early adopter’s market to mainstream. They will also play a role in creating more dynamic, integrated homes that can play a role in a more digitized grid. Though there is no specific definition for a smart home, Navigant Research believes the more integrated connected devices become with the home, the more likely the home can be used for additional purposes like shedding load and stabilizing the grid.

Currently, the market is focused on standalone systems, point solutions, and further developing interoperability between devices to form greater connected ecosystems. However, players like Vivint, Best Buy, Amazon, and Comcast are progressing the reality of the smart home by offering more comprehensive, integrated solutions with professional installations and enhanced customer support.

 

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