Navigant Research Blog

What Amazon’s Acquisition of Ring Means

— April 5, 2018

At the beginning of 2018, I wrote a blog covering Amazon’s Key delivery service, which was introduced to enhance package delivery by allowing couriers access to customer’s homes to ensure safe package delivery regardless of customer availability. Amazon’s latest innovation raised concerns about how far the boundaries of technology can be pushed to make consumers lives more convenient by letting strangers through their front door. Despite this scrutiny, Amazon is pushing ahead with this service through its latest acquisition of Ring, the camera-enabled smart doorbell startup.

Enhancing the Key Service with Ring

Before Amazon’s acquisition of Ring, it relied on the Amazon Cloud Cam, which it developed to release the Key delivery service, and partnerships with existing lock makers. Ring’s doorbells extend this service’s existing capabilities through an additional camera, and through audio equipment that allows customers to chat with delivery people and answer the doorbell remotely. This deal was reportedly worth more than $1 billion, making it the company’s second-largest acquisition behind its $13.7 billion purchase of Whole Foods Market in 2017, which bolstered Amazon’s Fresh food delivery service.

A Message to the Competition

This move—and its acquisition of Whole Foods—not only strengthens the company’s Internet of Things offerings by extending its selection of connected devices, but also sends a message about Amazon’s commitment to business-to-consumer (B2C) services. By enhancing its Key service with Ring, it is more competitive with other tech incumbents engaged in the smart home like Google (which acquired Nest in 2014 and now owns a range of energy and security products), Apple, and Samsung. B2C services are quickly becoming the business model of choice across a variety of industries, and Amazon is one company that is taking it seriously and executing it well.

In the energy industry, Navigant Research has seen a transformation toward this model, as is highlighted in the Energy Cloud 4.0 white paper. Several utilities are already taking steps toward offering B2C services, including Dutch utility Eneco, which offers monthly energy monitoring services to its customers through Quby’s Toon platform. In the security sector, Comcast is increasingly diversifying and shifting toward offering security and automation services in the home to increase revenue (as US consumers drop traditional cable television packages) and customer satisfaction. Not to mention the variety of other service-based businesses that have skyrocketed in popularity, like Uber, Netflix, and Spotify. Once an online retailer, Amazon has become a diverse service-based business, and the company’s acquisition of Ring to support its Key service is a signal to other retailers that it intends to push forward and innovate in the home services space.

 

Integrated Ecosystem Partnerships Are Critical to Innovative Residential Customer Solutions

— March 29, 2018

My recent blog regarding Southern Company’s Smart Neighborhoods initiatives with Alabama Power and Georgia Power demonstrated that innovative customer solutions can have customer benefits as well as utility value. These types of customer-focused solutions in both the residential and commercial and industrial sectors are the focus of our new Utility Customer Solutions Research Service. Further, these Smart Neighborhoods initiatives are featured in my recently released Strategy Insight report titled Maximizing the Residential Energy Customer Experience with Emerging Solutions.

Smart Neighborhoods Initiative Taking Shape in Atlanta

Since that first blog release, Georgia Power has released details on the roles that individual technology providers are playing in the Atlanta initiative. These partner roles include:

  • Alarm.com focuses on smart home security solutions and can connect smart home devices to make them accessible through a smartphone app for homeowners.
  • GreenMarbles is a connected home systems integrator that is a channel provider for Alarm.com that specializing in home automation and energy management solutions that can manage homeowner’s thermostats, door locks, lights, garage doors, and water sensors.
  • Hannah Solar is a Georgia-based solar PV plus energy storage installer for residential, commercial, and agricultural sectors.
  • Mercedes-Benz Energy provides home energy solutions related to EV charging, solar PV and battery energy storage that can help provide resilient backup power.
  • Sunverge Energy has developed a distributed energy resources (DER) software and hardware controls platform that allows for the integration of solar PV, battery energy storage, and home energy management systems (HEMS) across multiple residences across a virtual power plant.

Sunverge Energy Helping to Find Savings for Customers

As part of the Atlanta Smart Neighborhoods program, Sunverge Energy’s platform will help customers by forecasting and scheduling residential activities to provide energy bill savings based on Georgia Power’s Smart Usage or Nights & Weekends energy rates. Further, Sunverge Energy’s platform will help Georgia Power and Southern Company understand how aggregated DER such as solar PV, battery energy storage, and HEMSs can interact across multiple residences to optimize the local grid.

Innovative Partnerships Will Transform the Role of the Home

Both regulated utilities and deregulated utility services companies are now exploring new energy-related solutions such as the DER optimization demonstrated by Georgia Power. Further, technology disruptors with smart home/home energy solutions are also looking to deploy their new solutions—either directly with customers or in partnerships with utilities—to make homes more safe, convenient, and comfortable. Navigant Research anticipates that an innovative ecosystem of partnerships between customers, utilities, and vendors will come together to expand the role a home can play in safety, convenience, comfort, and the transition of the grid from traditional, centralized generation to part of an Energy Cloud platform.

 

Amazon’s Key Service Echoes Growing Concerns Over Privacy and Security

— January 2, 2018

Amazon’s latest service innovation has raised questions about how far the boundaries of technology can be pushed to make consumers’ lives more convenient. The Amazon Key delivery service, along with the Amazon Cloud Cam and a compatible smart lock, allow users to grant access for in-home deliveries. The service solves issues around package theft and customer availability to receive a package. It works by sending the user a 4-hour window on the day of delivery and confirming the assigned courier is at the correct address at the intended time by scanning the package barcode. When the package is scanned, the user receives a notification of the imminent delivery, the Cloud Cam is activated, the door unlocks, and the user can watch the delivery in real-time or check back later to ensure the delivery went well. The service was made available in 37 cities for tens of millions of items in November 2017. This sounds simple and straightforward, but media and industry specialists are scrutinizing the limits this service approaches by letting strangers into people’s homes. And to be fair, there are already issues with it, including a flaw that allows couriers to disable the security camera and door lock (which Amazon has promised it will fix).

Can Security Solutions Tamper Concerns?  

This new service is one among many offerings in the residential sector that emphasizes growing concerns over consumer privacy and security. From the common belief that our beloved social media sites are spying on users to publicized hacks of big name brands resulting in leaked personal data, consumers are increasingly wary as technology becomes a more intimate part of their lives. Stakeholders across the value chain recognize the need to implement more robust security solutions, and new regulations that aim to protect consumer data are emerging, such as the General Data Protection Regulation (GDPR). But for many, cybersecurity is only starting to become a priority, and companies are still figuring out how to deal with growing threats.

Threats of Scale

Data privacy and security become especially complex in the consumer electronics world because the home is a sanctuary and should be private and secure. At the same time, the hacking of a Wi-Fi router has much lower stakes than the hacking of a power plant and can be considered less of a priority for investment in security. Manufacturers promise data privacy and secure devices, but customer sentiment does not always resonate with these assurances. There is also the question of responsibility and whether the manufacturer, chip provider, wireless protocol alliance, or the consumer should be held responsible for security and data privacy. Consumers want to partake in social media, adopt smart home devices, and lead more convenient lives, but don’t want to feel like they are being watched, listened to, or followed, and they don’t always understand the risks associated with using technologies (such as the collection and sales of personal data).

Convenience vs. Safety

Privacy and security are increasingly affecting consumers at home. Residential customers are skeptical of technologies that have the potential to compromise privacy and security, which is affecting market growth. In order to progress the Internet of Things in the home, it is important for stakeholders in the residential space to be transparent with users about the measures they take to ensure the security of devices, software, services, and data privacy.

 

As Summer Winds Down, a Look at Residential Demand Response Leaders

— September 19, 2017

Summer 2017 was relatively light from a demand response (DR) perspective in North America—aside from California, which saw extreme heat waves. There were not a lot of opportunities to test the capabilities of DR resources that utilities, regional transmission organizations, and retail electric providers had stockpiled to prepare for high load levels or energy prices. However, there was still plenty of merger and acquisition (M&A), technology development and new program design activity taking place.

Navigant Research took this opportunity to compile a Leaderboard that examines the current vendor landscape for residential DR (RDR). The report analyzes the strengths and weaknesses of the key players in this global industry and displays those rankings visually in the Navigant Research Leaderboard Grid. This Leaderboard utilized broad guidelines to determine which market participants should be included to allow for companies that offer hardware and/or software and focus on technology or include program implementation services.

The Navigant Research Leaderboard Grid

(Source: Navigant Research)

This Leaderboard evaluated 15 companies based on 10 criteria to determine which competitors are Leaders, Contenders, Challengers, or Followers in the market. As the global RDR market has heated up in recent years, leading companies have invested heavily to develop their capabilities and strategy. There are a number of companies focused on other aspects of the smart grid arena now beginning to tackle the DR space, as well as many startup companies with new hardware and software offerings that take advantage of the plethora of available energy data and communication options for devices and customer messaging. Some of the incumbent RDR vendors are finding that they need to partner with these new players to keep pace with the changing marketplace.

The RDR industry is still maturing relative to the energy industry in general, but great strides have been made in turning DR into an operational resource for grid operators. In addition, this report combines both software and hardware offerings, as well as technology providers and program implementation services, which are all different segments that require diverse skill sets. Few companies attempt to serve all sides, thereby offering a complete solution.

As Navigant Research has published a series of DR-related Leaderboards over the past few years, it has been interesting to see the high level of new players and new technologies that enter the market on a regular basis. By the time the next is published, I expect to see more companies come on to the radar screen and disrupt the market, along with more M&As as successful startups are swallowed up by large energy players looking to expand their reach in the space.

 

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