Navigant Research Blog

Big Tech Players Take Next Steps in the Smart IoT Home Space

— June 24, 2015

Boatbuilder_webNo matter what it’s called—the smart home, connected home, or Internet of Things (IoT) home—many companies are moving forward with a variety of products to enhance comfort, convenience, and energy efficiency in the home. In particular, tech giants Apple and Google (Nest) have generated significant buzz lately and are poised to remain driving forces as the market continues to evolve.

Apple, Google, and More

Apple’s vision for its HomeKit platform is starting to become more visible, with some of the first devices entering the market that can be controlled via Siri through iPhones, iPads, and Apple Watches, according to a recent story on the MacRumors website. When HomeKit was announced a year ago, it was more of a vision of the possible. But now companies like Lutron (smart lighting kit) and Insteon (home automation hub) are selling HomeKit-enabled products. In addition, ecobee (smart thermostat) and Elgato (Eve sensing system) are prepared to launch HomeKit-enabled devices in a matter of weeks. Other manufacturers are expected to follow suit.

Meanwhile, Google has forged ahead with its own platform with the announcement of Brillo, its IoT operating system based on Android. Brillo has a communication layer called Weave that is designed to enable IoT devices to talk to one another and the cloud. Weave will also be used by Nest and Nest ecosystem devices so they can interoperate. Brillo is expected to be available in the third quarter of this year, and Weave will be offered in the fourth quarter.

It is not just Apple and Google shaping the IoT and smart home space, however. Industry groups are active as well, aiming to set standards across multiple operating systems and network protocols. For instance, the AllSeen Alliance and the Open Interconnect Consortium (OIC) are two groups working on open-source standards for the IoT that will include the home as well as other industry verticals.

Multiyear Competition

A few things to remember in this chaotic space: It is still early days as the smart IoT home market takes shape and the players jockey for position. Also, this is a multiyear competition, with no clear winners at this point. It is easy to see Apple and Google setting the stage to dominate given their strong brands among consumers. But companies like Samsung, ADT, Bosch, Qualcomm, and Honeywell, to name just a few, see opportunities as well and are focusing on the growing market possibilities that are expected to eventually include billions of new devices and billions of dollars in potential revenue. What’s more, there is room for startups to emerge or new partnerships to form that take the market in a new direction. For instance, ComEd has joined with Comcast and Nest Labs for a demand response program involving smart thermostats. For some guidance on what lies ahead, Navigant Research has a new report called IoT (Internet of Things) for Residential Customers that discusses these issues and challenges facing stakeholders.

 

Google Weaving an IoT Web

— June 12, 2015

Recent announcements by Google that it is developing the Weave communication protocol are expected to make waves in the building automation ecosystem, possibly to the chagrin of incumbent equipment manufactures for commercial and home equipment. Weave is centered on Brillo, the Google-developed lightweight operating system, essentially a minimalist version of Android. With Weave, Google may be trying to quickly capture the mind-share of end consumers who want and answer to the question, “how can I quickly connect all of my home systems?”

With Weave, all Brillo devices (and Nest) are self-discoverable, making them, in theory, plug-and-play. A consumer could connect the new wireless door lock with the wireless lights, all through an Android phone. The proposed ease of connecting devices was introduced in Navigant Research’s recent Home Energy Management report, as being a challenge for consumers. This integration is contingent on the wireless protocols being interoperable, as mentioned in a recent blog.

Feeling Threatened?

For equipment manufacturers that sell into the commercial markets, Weave poses a threat in two ways. First, this is yet another communication protocol to incorporate into equipment, adding a step to the integration. On the commercial side, integration firms have been stepping up to manage that issue. Weave is not the first extensible system to be developed with an easy user interface (e.g., Android) in mind (see Apple’s Homekit). Weave’s approach is not anchored on iOS, of course, and is therefore more open.

More significantly, the entrance of Google and Weave are expected to force the small and medium commercial market suppliers into a quandary. The small and medium commercial market is vast, and is in need of energy and cost-saving solutions.  These customers do not have the funds to invest in large solutions, and in some ways are like residential consumers; HVAC does not keep them up at night. In this light, do original equipment manufacturers (OEMs) keep selling single end-to-end building automation system solutions, focusing on the value of a single integrated system, or do they appeal to the ease of integration with a solution like Weave? Most small or medium-sized commercial building owners or tenants have heard of Nest. But how many have heard of BACnet or LonTalk?

During a recent Lightfair panel discussing the promise of convergence of the Internet of Things  (IoT) and automated building controls, it was reiterated that IoT-based building integration solutions exist, and are being deployed. The linchpin in wide-scale deployment will be people wanting easy solutions. Weave is certainly going to push the adoption wave; it will be interesting to see how integration solution providers and OEMs respond.

 

The Real Estate Services Shopping Spree

— June 12, 2015

You would be forgiven for thinking that CBRE stands for Can’t Buy Rapidly Enough. The company (which actually stands for Coldwell Banker Richard Ellis as a result of an interesting history of spinoffs, mergers, and acquisitions) is the world’s largest commercial real estate service and has been on a recent acquisition binge. In March, CBRE announced a definitive agreement to acquire the Global Workplace Solutions business that Johnson Controls, Inc. announced it would divest last year. Two weeks later, CBRE announced the purchase of Environmental Systems, Inc. (ESI), an energy management and systems integration provider.

Global Workplace Solutions offers services that help companies operate facilities more efficiently, optimizing real estate performance and employee productivity, particularly in the industrial, life sciences, and technology sectors. These services include everything from site selection and design, planning, and construction management to standardizing maintenance procedures and performing inventory management.

ESI, on the other hand, designs, installs, manages, and supports integrated building automation systems and building energy management systems. In 2012, ESI was selected by IBM to manage the energy use of the 50 largest federal government buildings, linking the automation systems of the buildings together on a cloud-based platform to provide enterprise-level management.

The Complete Package

Both acquisitions highlight how providing a complete portfolio of services for corporate clients is becoming increasingly important for CBRE and the commercial real estate service industry as a whole. With growing demand for green-certified commercial office space, as well as increasing awareness of the benefits of energy efficiency in reducing operating expenses, commercial real estate service providers are moving to expand their capabilities with clients. Indeed, DTZ and CoreNet Global announced a partnership that incorporates CoreNet Global’s benchmarking service into DTZ’s commercial real estate services portfolio.

Real estate services companies have historically played a less central role in energy efficiency decision-making, energy management, and energy benchmarking than other infrastructure-focused players such as energy service companies (ESCOs) and HVAC contractors. But, that seems to be changing, as corporate clients are beginning to view energy information to be as important as the other information typically provided by real estate service companies. Though CBRE’s shopping spree may be over for now, we will likely see more acquisitions by real estate services companies to fill out their service portfolios.

 

ZigBee, Thread Find Common Ground

— April 29, 2015

Two key technology groups have taken a step toward interoperability that should make it easier for smart home devices with different capabilities to work in unison in the coming months and years. The ZigBee Alliance and the Thread Group have agreed to collaborate to enable ZigBee devices to operate over Thread’s protocol.

The two groups will define a specification that will allow the ZigBee applications layer to function over Google-backed Thread. The aim is to simplify product development for device manufacturers and give consumers a better experience as they connect devices and services in the home—an early-stage trend often called the Internet of Things (IoT).

New Connections

Specifically, the effort will make it possible for ZigBee devices, such as Philips Hue lights, to connect to a network that natively supports Internet Protocol (IP) addresses, which Thread does. The new specification will be focused on the ZigBee Cluster Library, which standardizes software functionality such as energy use, home automation, and lighting. The new specification is expected to be available sometime after June of this year.

Despite this cooperation, the two organizations are still committed to acting independently, and there’s not yet been any indication that they will merge their efforts. As pointed out by the EE Times, the move can be seen as a defensive one for ZigBee, which has been around for years but has lagged the trend toward 32-bit processors and IP networks.

Plenty of Rivals

In addition, the nascent IoT market still has many players and standards vying for dominance, or at least a significant share of the pie. Besides ZigBee and Thread, Wi-Fi, Bluetooth, Z-Wave, the AllSeen Alliance, the Open Interconnect Consortium, and the Industrial Internet Consortium all have a stake in this ecosystem. In other words, this is a crowded space, and remains fragmented for now.

Even with that fragmentation, utilities and energy management providers need to pay attention to the ZigBee-Thread détente. It could be the needed big step toward device and service interoperability that unleashes a burgeoning market of connected and intelligent devices like thermostats, appliances, and lights. This one move is not going to get it done alone. Others will need to alter their stances, or risk missing out on the expected boom. Of course, Apple could still go it alone with HomeKit, but proprietary solutions are hard to scale. And it is likely that most other vendors will seek more open standards so that the overall market can flourish, and not get stuck in silos.

 

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