Navigant Research Blog

Delay of HomePod Shows Signs of Weakness in Emerging Smart Home Market

— November 21, 2017

Apple has made big news this week—but not in a good way. On Friday, the company stated that it would be delaying the release of HomePod from a non-specific date in December to the even more ambiguous “early 2018.” The delay is a blow to the tech giant, which will miss the relatively high sales volume that comes with the holiday season. The new release date also means Amazon, Google, and Sonos remain largely unchallenged in the connected speaker market and will continue to gain the hearts and minds of consumers with their devices, some of which have been available for years. What may be worse for Apple is that the HomePod will be released at a price of $349, which appears obscenely high against the two rival speakers from Amazon and Google (which are currently in a price-cutting battle and peddling the miniature versions of their signature devices at approximately $34 for Black Friday). Though Apple is focused on offering a high quality speaker with advanced sound technology, this high tech move may not be enough to win consumers over and help the company gain market share in the young connected speaker market.

This type of delay is nothing new for Apple. The company regularly sets ambiguous release dates and delays product shipments, from the original Apple Watch to Apple AirPods to HomeKit-compatible devices. It is also known for entering an already developed market and disrupting it, which occurred with the release of the iPhone. This means the delay of HomePod could be nothing but a small hiccup in holiday sales for Apple and that it could still emerge as a major player in the connected speaker industry.

Time to Get Serious

However, the larger implication of this delay is that Apple is losing out on its spot in the smart home. The smart home is becoming an increasingly competitive space, with large tech incumbents, service providers, utilities, and startups all getting involved and vying for market share. The ability to own the smart home opens up a world of opportunities for companies, including new service-based revenue streams and more personalized engagement with consumers. The connected speaker has become a pivotal part of the smart home’s development by acting as a centralized hub and fostering interaction through voice activation. To lose out on this opportunity could be devastating to Apple, especially since the company already has a trusted device in people’s pockets that is a key tool for controlling the smart home. The smart home market is progressing with or without Apple, and it’s time for the company to get serious about becoming a major player in this market or letting Amazon and Google take the lead.

 

Digital Assistants Are a Stepping Stone for Artificial Intelligence in the Home

— November 21, 2017

Artificial intelligence (AI) is gaining hype and capturing headlines about its futuristic possibilities. Popular media, like Blade Runner 2049, depicts AI as a technology powering human-like robots with capabilities for taking over the world. In reality, AI is here, and it is already used in everyday lives. Today, AI is enabling ridesharing applications like Lyft and Uber, autopilot in commercial flights, mobile check deposits, online shopping, and more. The technology is making significant progress across a variety of markets and is spreading to the smart home.

The home is abundant with opportunities to automate tasks and create more personal experiences with technology. AI can be used to enhance solutions that help consumers better understand and manage energy consumption and keep homes safer and more secure. Also, it creates more intelligent and intuitive home automation by studying patterns of human behavior to operate the home more efficiently.

The Digital Assistant

One obvious way in which AI is spreading through the home is digital assistants. Digital assistants, or virtual assistants, are the human-like user interface embodying AI software and cloud services. They are fundamentally changing the way users interact with technology by creating an easy-to-use, hands-free, and conversational experience via voice activation. They also represent a platform that converges devices, data, services, computing power, and the internet to better understand and anticipate consumer needs. While the novelty of using digital assistants is driving adoption and market growth (try playing Jeopardy with Alexa), this technology has powerful implications. Many companies recognize this potential, and large tech incumbents like Amazon, Google, Apple, Samsung, and Microsoft are quickly and heavily investing in AI and digital assistants for the home.

Though digital assistants promise market disruption and a fundamental shift in the use of technology, it is important to stay realistic about AI in the home. Some would argue that traditionally defined AI does not even exist in the home—they would argue it’s all just analytics and algorithms. Others would argue that this is the reality of AI—it isn’t glamorous, it’s about automating tasks and identifying behavioral trends to make our lives more comfortable, convenient, and efficient. How this technology will play out—whether it will be a benevolent and revolutionary technology or whether it will become an existential threat to human existence—remains to be seen. For now, AI is having an impact in the home in the form of digital assistants. Check out Navigant Research’s Digital Assistants and AI in the Home report for more information.

 

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.

 

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