Kevin Meagher, SVP Business Development
The Internet is now such an integral part of our daily lives that we would struggle to imagine life without it. To date, internet growth has largely been driven by content and speed, but we are now entering a new phase of growth where the everyday things around us will be connected to the web.
This new phase of the Internets growth has the potential to dwarf what has gone before and be a game changer for many industries. The proliferation of data from devices will change the way consumers interact with their environment. There will be a shift in focus from the physical attributes of a product towards the delivery of services that connectivity and apps enable.
In the mass market, everyone now has a play in the IoT and smart home. Retailers like Lowes, Home Depot, Best Buy, Amazon have started to offer smart home solutions to compete with the major service providers such as AT&T, Comcast and TWC. More significantly, Apple, Google and Microsoft have made big bets with different consumer strategies.
These moves are a clear sign that the market has arrived but the jury is out on the winners and losers. Clearly, no one wants to invest in products that quickly become extinct, and although all the market entrants seem somewhat similar, there are some significant differences.
So, what should consumers look for when they think about investing to make their home smart?
Probably the most important thing a consumer needs to recognize is that having a smart device does not mean you have a smart home, so its necessary to consider interoperability and what will be needed when adding more devices.
Unfortunately, the market to date has been defined by smart devices rather than smart homes. Most early devices are best described as point-to-point solutions where the product is managed through a dedicated app. For example, Nest, Ring and August are all considered point-to-point devices. These stand alone devices have enjoyed early success in terms of sales but their lack of interoperability is a fundamental flaw.
Sadly, this is by design as companies try to tie consumers to their particular platform and product set. In reality, no single manufacturer can provide a complete smart home and expect consumers to stay loyal to their branded solutions. More importantly, it ignores the needs of consumers. No customer wants to stand on their door step, open their lock with one app, switch off the security with another, and so on. Whilst some of these devices have started to open their APIs in an effort to work as part of an eco-system, this usually introduces some significant limitations.
Most smart home providers solve the problem of interoperability by networking devices through a hub in the home to offer what is often called a curated solution; this architecture allows providers to bundle a range of products from different providers that all work together through a single app. The hubs introduce an overhead cost, but they enable the breadth of choice, make installation and support simpler, and make the system robust so it will operate even if the home loses broadband.
Whilst most key channels now have hubs at the heart of their offering, their business models can be very different so consumers need to decide what they want from their smart home.
The large cable, telcos and security companies such as AT&T, TWC and ADT have started to bundle smart home and IoT products with their other services such as professional security monitoring. However, they usually cost more, have high monthly fees, and tie consumers into long term contracts. The alternative is retailers like Lowes or Samsungs Smart Things who offer a broad range of DIY connected devices that use open standards. The good news for consumers is that both the service providers and retailers tend to use the same products, so swapping between them does not mean you need to throw away all your legacy devices it could simply mean that you need to change your hub.
Clearly, there are a bunch of other issues that consumers need to consider when entering the smart home space; for example, security, data privacy, reliability of service, etc. However, buying from the big brands should give consumers some comfort.
In summary, devices that are not interoperable will probably be among the early casualties in the smart home market as evident from the fact that even Nest has started to struggle. The more open, curated systems using hubs are likely to be the winners as the market moves from smart devices to smart home. As more connected devices come to market, big brands will deploy their own hubs and apps to make the smart home simple, affordable and scalable for consumers. Stick with the big brands if you want to avoid the risk in this early market; they may not have some of the cool factor but they offer less risk.
For more information please visit www.roc-connect.com