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.

 

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.

 

Key Hurdle Stifling Smart Home Adoption Starts to Crumble

— July 11, 2017

New signs for the potential of enhanced harmony and interoperability among smart Internet of things (IoT) devices and platforms have emerged. If true, a key hurdle slowing smart home adoption would begin to crumble.

Alphabet, Apple, and Amazon

At the heart of the interoperability movement are two important market players—Alphabet’s Nest and Apple. Both actions and words indicate a willingness to make it easier for disparate devices to work together. First, Apple recently announced it will no longer require a chip called MFi to be installed in a device for the device to work with Apple’s HomeKit platform. Then, Nest followed up by telling the website 9TO5Mac that it is at least considering support for HomeKit in the wake of Apple’s newly announced iOS 11 features (that makes supporting HomeKit easier) and the fact that Apple is dropping the MFi chip requirement.

Though it is not a done deal between these two tech giants, it looks like interoperability is closer than we expected. This could help unleash a market growth phase, as buyers will not have to choose only devices that work on a single platform, but will be able to more easily mix and match from multiple vendors.

Meanwhile, a competing IoT platform, the Amazon Echo (Alexa), keeps adding important device manufacturers willing to integrate with the leading voice-activated assistant. Bosch and Kenmore have announced some products will work with Alexa. Bosch will soon sell Alexa-enabled major appliances, and a new line of Kenmore Wi-Fi-ready smart air conditioners will work with Alexa, as well.

The Future of Interoperability

The need for enhanced interoperability has been a constant theme in Navigant Research’s IoT market reports, including the one titled Market Data: IoT Devices for Energy Management, which noted the issue. These interoperability steps by key market players are encouraging, and stakeholders should take note if they want to reap benefits from a widening market.

Nonetheless, consumers have some ways to go before committing to IoT smart home technology. A recent survey among American respondents shows 85% would prefer products from a single brand, indicating they understand the problems associated with a lack of products from diverse vendors that do not interoperate. The survey, sponsored by the UK brand Hive, also highlighted two other barriers: higher prices for products and the difficulty involved when it comes to installing the latest gear that leads to the potential need for professionals to lend a hand.

As my colleague Paige Leuschner pointed out in a recent blog, the need is evident for interoperability among products from the same vendor. Manufacturers need to keep this notion in mind as people integrate older versions of devices by making the devices backwardly compatible when at all possible.

Despite the market friction, there is reason for optimism given these signs of greater IoT or smart home product interoperability. For several years, I’ve been saying devices and systems need to play nicer together, and the message seems to be sinking in, at least among some product vendors. However, market stakeholders need to pay attention to consumer thinking. The Hive survey tells us many potential buyers are not convinced the technology is ready and affordable for them to adopt—and that’s a problem.

 

IKEA Expands in Smart Home Market with Lighting

— June 16, 2017

The smart home market is filled with big name companies like Amazon, Google, Apple, Honeywell, Comcast, Lowe’s, and AT&T, and now another large incumbent is expanding into the smart home space. Traditionally known for its well-designed, inexpensive, and easy-to-assemble furniture, IKEA recently introduced a line of smart lighting products called TRÅDFRI, or “wireless” in Swedish. The TRÅDFRI smart lighting product line includes a ZigBee gateway device, connected bulbs, a remote control, and a motion sensing dimmer switch, as well as LED lighting doors and panels. The dimming kit starts at 749 kr, or about $85. A similar offering from Philips includes a gateway, two Hue bulbs, and a dimming switch and starts at a price of $129.99.

Home Tech Innovation

IKEA claims that this new product line is part of its long-term commitment to its home tech innovation initiative Home Smart. The company first began offering smart products in 2015 with furniture and accessories that include wireless charging for compatible smartphones. The company is furthering this vision not only with its TRÅDFRI lights, but also by integrating the smart lighting products with voice control through Google Home, Apple HomeKit, and Amazon Echo devices. Voice control capabilities will be available beginning this summer. IKEA’s goal is to make smart home products easy to use and affordable for everybody, and its expansion in this space with its smart lighting shows this commitment.

Relative to other various smart home technology markets such as smart thermostats, smart plugs, security cameras, door locks, and smart meters, the smart lighting market is still in its early stages. Navigant Research’s recent Leaderboard Report: Residential Connected Lighting currently pegs Philips as the market leader; however, there is plenty of room for other companies to gain traction in this space, and activity is ramping up. Some lighting incumbents have yet to offer connected lighting products in the residential lighting space, and startup companies never before involved in the lighting are becoming engaged, such as ecobee with its new Alexa-integrated light switch. Thus, big name companies like IKEA can still gain traction and become leaders in the space through more innovative and affordable products.

 

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