Navigant Research Blog

Alexa Steals the Show at CES 2017

— January 16, 2017

CodeVoice activation took center stage at CES 2017, with Amazon and Alexa as the leading stars. I spent several days at the annual geek fest, and the device kept coming up in multiple conversations with industry players.

Alexa, formally called the Amazon Echo, is not new. The $180 device was first available exclusively to Amazon Prime members in November 2014. Since then, the device (along with its smaller clone, the Dot) and its cloud-based data service have been made available to anyone, steadily gaining a solid foothold in the smart home-Internet of Things (IoT) market. It has become a surprise hit, and vendors across the spectrum now clamor to include Alexa functionality in their devices. Companies like LG, Whirlpool, Samsung, Mattel, Lenovo, GE, and Ford have (or will soon have) products with Alexa voice technology.

From an energy standpoint, Alexa has already made inroads with smart thermostat makers to work directly with their products. For some months now, Alexa has enabled users to simply say a command, and a Wi-Fi-connected thermostat will alter the temperature to a new setting on a Nest, ecobee3, Honeywell Lyric, or Sensi product.

Waiting in the Wings

Even though Amazon’s Alexa is the clear leader of the voice activation trend, Alphabet’s Google Home device was waiting in the wings at CES to carve out its share of the market. The Home device has only been available to consumers since its launch in November 2016, but a number of vendors I spoke with already have products that can work with Home or are planning to add Home integration to their products in the near future.

While Amazon and now Alphabet are competing head-to-head for voice activation in the home, conspicuously absent in the space at CES were Apple and Microsoft—though that could soon change if rumors about Apple are true. Rumblings out of Cupertino indicate Apple is developing its own competitor to Alexa. Microsoft has its own voice-activated assistant engine called Cortana, but it is still unclear what the software giant’s strategy is in this part of the market and whether it wants to join a competitive hardware-cloud battle where it would likely start out as the number four player.

Other Connected Things: Mostly Incremental Gains

I saw mostly incremental advancements for smart thermostats, smart appliances, and numerous connected-smart lighting products on the show floor, which is not meant as a criticism. As manufacturers hone their skills, I would expect to see steady energy efficiency gains among these products as more sensors and data analytics combine to improve energy consumption. This kind of effort is difficult to achieve and takes time to develop.

Nonetheless, there was one notable product in terms of energy efficiency called LaDouche from French startup Solable. LaDouche is a residential water heater, and it was named as a CES 2017 Innovation Awards honoree for its heat exchange capability, which ostensibly can lower an electric hot-water bill by up to 80%. That is impressive (if it can be verified).

Voice Technology as Transformative

The 2017 CES was a showcase for voice technology as a transformative trend, and one that Navigant Research has pointed out as a key new input for the IoT and computing in general. This was CES’ 50th anniversary event, and the show remains one of the few places where transformative technology gets a megaphone and where one gets a glimpse of what potentially lies ahead in coming years—maybe even in the next 50. Flying cars—are you with me?

 

Utilities Need an Innovation Reset

— November 28, 2016

SmartCityUtilities should take a cue from customers: Go ahead and innovate. That is the clear conclusion from a recent study that says consumers want their utilities to be more innovative and expand offerings into the home.

The study, a SmartEnergy IP survey of 1,500 US customers, finds 32% of respondents expect their utilities to adopt technologies that automate energy savings and 20% expect their utilities to build smarter communities. There is a downside in the data, however; nearly 40% of respondents do not view their utilities as innovative, meaning there is room for improvement.

Not all utilities lack for innovation. At Navigant Research, we have chronicled the efforts of utilities willing to pioneer new technologies for customers. For example, Green Mountain Power in Vermont has led the charge with its eHome program, a holistic approach to home energy management that leverages technologies such as heat pumps, solar PV, storage, and EV charging, as noted in our IoT Enabled Managed Services report. Other utilities like Sacramento Municipal Utility District, Oklahoma Gas & Electric, and Kansas City Power & Light are promoting the adoption of smart thermostats as a way of helping customers reduce their bills and promote overall grid efficiency.

Among utilities innovating within their communities, San Diego Gas & Electric stands out for its efforts to create smarter cities from an energy perspective. The Southern California utility, a subsidiary of Sempra Energy, has been collaborating with local city governments on projects that leverage smart meters, demand management, and energy efficiency to lessen the impact of changing load patterns. By working together, the utility and local cities have forged an integrated approach for smarter energy use. Similarly, Duke Energy and ComEd are two other broad-thinking utilities that are leveraging ties with the cities of Charlotte, North Carolina and Chicago, Illinois to foster the same type of smarter community.

While these examples are encouraging, the SmartEnergy IP survey indicates customers in many locations have not seen much innovation from their utilities. Nearly a third are saying that it’s okay to step beyond the normal bounds and offer new products and services that help customers save money and use energy more wisely. There is a message here for regulators as well: customers are ready for innovation, and new rules that enable utilities to expand their product and service offerings would be welcome. It’s time for an innovation reset for utilities.

 

Insurance Companies Expand into Energy Management to Mitigate Risk

— November 23, 2016

Home Energy ManagementInsurance companies are starting to get smart about the smart home and energy management. Though these companies are in the very early stages of participation in this market, interest has been piqued and insurers are starting to partner with vendors to offer consumer energy management and connected home solutions. For example, State Farm has partnered with ADT Pulse and Generac to offer consumers discounts for home energy products and services. SmartThings, before it was acquired by Samsung in August 2014, had partnerships with four of the 10 largest insurance companies, including American Family Insurance, which joined with SmartThings and Microsoft to create a smart home incubator in Seattle.

Homeowner Alerts

Insurance companies can find value in data from connected devices by detecting issues and alerting homeowners before catastrophe strikes, especially with large appliances and HVAC equipment. They can also use them to develop more informed policies and offer discounts for adopting these technologies. Energy management is especially appealing to insurance companies because it allows residential customers to remotely monitor and control a range of connected energy devices such as thermostats, lighting, appliances, and electronics, which can be useful in powering down devices during emergencies and even deploying backup power during outages.

Insurance providers in particular have an incentive to offer these types of solutions because it can avoid costly payouts. A monitored, controlled, and automated home that can better mitigate risk and avoid disaster can save insurance companies a significant amount of money in avoided insurance claims.

Emerging Opportunities

While insurance providers have reason to offer consumers these solutions, they are not the only non-utility companies interested in energy management. In recent years, companies outside the traditional energy industry have engaged in this space and found value in offering energy management solutions as part of connected home offerings. These include companies such as AT&T with its Digital Life platform, Comcast with its Xfinity Home offering, and Vivint Smart Home. As Alex Hawkinson, CEO of SmartThings, has said, “The number of services that could be spun out of this is limitless. You can pick industry after industry. The ramifications of making the entire world self-aware are simply massive.”

These new players are just beginning to unlock the possibilities of connected homes to provide increased energy efficiency, comfort, and control. There is something happening in this space, but it is still in a very early stage of development. Many major insurance providers are interested in the smart home, but most are still exploring where they can find value in energy management. Expect to see more engagement from insurance companies in the near future.

 

IoT Device Manufacturers Cut Prices, Making the Smart Home More Affordable

— November 7, 2016

Home Energy ManagementThe cost of setting up a smart home with Internet of Things (IoT) devices is an expensive endeavor, even with recent increased adoption among consumers. Average selling prices for basic IoT devices are steep; in North America, smart thermostats cost about $220, smart lighting networks cost $103, security-home management systems cost $300, and smart plugs cost about $53, according to Navigant Research’s Market Data: Internet of Things for Residential Customers report. These devices are expensive on an individual basis compared to their dumb counterparts, let alone when purchased together as a connected home bundle.

However, there is recent evidence of increasing affordability, as seen from the launch of the new ecobee3 lite smart thermostat. The company has ditched room sensor support and dropped $80 from the price tag of its flagship product. This makes ecobee’s newest offering a more affordable option compared to those from competitors such as Nest, which sells its smart thermostat for $249, and Honeywell’s second generation Lyric thermostat, which runs $199. This recent trend of undercutting the competition on price is not exclusive to the smart thermostat market. Google recently announced that its Home offering, a voice-activated Wi-Fi speaker hub, will be released to the market at a price $50 cheaper than Amazon’s Echo.

Competition Breeds Accessibility

Undercutting competing smart devices may not be the case across the board, as Google also recently announced its Pixel smartphone at a price equivalent to the new iPhone 7 from Apple, surprising industry specialists who expected the Pixel to be priced lower than both Apple and Samsung offerings. Nonetheless, the decline in prices of connected home hardware is expected to perpetuate as industry players try to grasp hold of market share and become leaders in this space. This level of competition is making the smart home concept more accessible and affordable to consumers. Price cuts are pushing the market that much closer to a mainstream reality instead of a futuristic dream.

What this means for the energy industry is increased adoption of energy management devices and greater engagement among consumers. Devices such as smart thermostats are increasingly being bundled as connected home solutions, and as these solutions become more affordable and mainstream, energy management is expected to see increased uptake. Consumers are now finding energy management devices available through connected home solutions framed as security, entertainment, automation, or telecommunications offerings. Utilities can take advantage of this shift in the market by partnering with vendors incorporating energy devices into their connected home solutions, and by using these devices to better engage customers with energy efficiency and demand response programs.

See Navigant Research’s recently published Market Data: Home Energy Management report for more information on the nexus of energy management and the connected home.

 

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