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.

 

Ubiquitous Broadband vs. States’ Rights—and What It Means for Utilities

— September 26, 2016

Ethernet CablesThe Federal Communications Commission’s (FCC’s) net neutrality rules were upheld earlier this year, though challenges are likely to take that fight all the way to the Supreme Court. However, the Commission recently suffered a setback on another broadband-related front. In February 2015, the FCC issued an Order preempting state laws that restrict the growth of municipal broadband networks beyond their borders. But in August, the US Court of Appeals for the Sixth Circuit reversed that Order, giving states the right to block muni broadband expansion.

The original Order came after two municipal electric utilities—EPB Chattanooga in Tennessee and the City of Wilson in North Carolina—petitioned the FCC to remove restrictive state laws that prevented them from extending their broadband network to areas outside of their utility territory. Such rules exist in some 19 US states, thanks largely to lobbying efforts on the part of incumbent telecommunications and cable providers. Given the relatively high percentage of rural areas across the country where broadband service has limited availability (or is so slow as to hardly qualify as broadband), this reversal flies in the face of the government’s ubiquitous broadband goals.

Energy Superhighway

I’ve been urging utilities to consider the provision of broadband services (via fiber-to-the-meter, 4G LTE, private licensed spectrum options, and/or, eventually, 5G) as the way to financially justify a territory-wide, high bandwidth, low latency network. Said network, dubbed the Energy Superhighway in my recent white paper, can support not only smart grid applications like smart metering and substation and distribution automation, but also smart city applications (lighting, waste, parking, etc.) as well as EV charging station networks and smart solar management. It’s future-proof, unlike the networks utilities tend to build in an ad hoc, application-centric, silo-based manner.

Many of the emerging technologies mentioned above are a long way from being widespread in most geographies. A utility’s ability to offer Triple Play (video, voice, and broadband) services—much like EPB has so successfully done in Chattanooga—supports the economic equation in the near-term while allowing the utility to aggressively plan for the more dynamic, two-way energy economy of the future.

The utilities in the suit (or the FCC) may well appeal this recent reversal, but the conflict between federal goals for broadband connectivity and states’ rights proponents is sure to drag on, to the detriment of both utilities (and other Internet of Things-centric verticals) and consumers.

 

Is the Smart City Market Entering an Acquisition Phase?

— September 19, 2016

Intelligent BuildingIn my last blog, I wrote about how the smart city market is at an important point in its evolution. In that blog, I focused on the changing priorities for smart city projects. Another side to this evolution is the changing market dynamics as suppliers refine their approach to the market and look to extend their capabilities. The most recent Navigant Research Leaderboard Report on smart city suppliers shows the continuing evolution in strategy and offerings among key players in the market.

One important indicator of the maturity of any technology market is the level and focus of merger and acquisition (M&A) activity. It is a sign of the relative immaturity and uncertainty associated with smart cities as a market that there has been little activity in recent years. But there are indications this is changing.

Internet of Things Focus

The acquisition of sensor network company Sensity by telecoms giant Verizon is the latest example—and one of the most significant. Sensity provides sensors and network controls for street lighting systems and has been targeting the emerging market for city platforms. For Verizon, the move marks a step up in its Internet of Things (IoT) and smart cities strategy and gives it the ability to offer a range of city solutions beyond intelligent street lighting, such as traffic management, smart parking, security, and air quality monitoring. It also increases Verizon’s attractiveness as a partner in the complex ecosystem of smart city and IoT suppliers. The alignment with the company’s broader IoT strategy is important to this acquisition, as well. Indeed, the growing focus on IoT capabilities across the technology industry is one of the main reasons why the smart city acquisition picture is changing. Cisco’s $1.4 billion acquisition of IoT platform provider Jasper Technologies in early 2016 can be seen as part of the same pattern. While enhancing their ability to play a bigger role in the IoT space, Verizon and Cisco are also developing strong smart city platforms. Moves from other big players for sensor technology and IoT platform providers are likely to be on the cards.

Analytics Companies

It is not only IoT technologies that are being acquired; analytics companies are also on the shopping list. Urban Engines, a specialist in the use of advanced analytics for the Internet of Moving Things, has announced that it is to become part of Google Maps. Founded by former Google employees, this may be more of a homecoming than an acquisition. However, it suggests that some of the more niche analytics providers in the smart city space will eventually find their home as part of a broader platform offering from bigger players.

Application-Specific Solutions

The third area of the market that we can expect to see more M&A activity is in application-specific solutions. This is an area with a greater history of activity. IBM, for example, has been adding to its roster of government solutions for a number of years in areas like intelligence and social care. But there has been less activity in new application areas. One exception is Silver Springs Networks’ move to strengthen its hand with the acquisition of street lighting software specialist Streetlight.Vision. If acquisition activity is stepping up across the market, the next phase could see more activity in other emerging solution areas such as smart parking and smart waste, for example.

These important developments will add spice to the conversation at Smart Cities Week in Washington, DC next week. I will be attending with other colleagues from Navigant Research and look forward to discussing these and other issues. Let me know if you would like to meet up at the event.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Electric Vehicles, Finance & Investing, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Smart Transportation Program, Transportation Efficiencies, Utility Innovations

By Author


{"userID":"","pageName":"Internet of Things","path":"\/tag\/internet-of-things","date":"9\/28\/2016"}