Connected Home Wrap Up
Author: Derek Kerton, Managing Partner of Kerton Group & Chairman of Telecom Council
The Telecom Council enjoyed a packed audience for our Connected Home meeting this week, hosted at Marvell’s campus in Santa Clara. To summarize the meeting with the two predominant points:
- Mass-market consumers are going to require security and privacy be assured before ever jumping into the connected home with both feet.
- The complexity if buying, installing, cross-connecting, and macro programming will need to be completely removed before we reach a mass market.
With those hurdles exposed, if done right, the market could be as big as $71 Billion dollars, according to Bill Ablondi, Director of Smart Home for Strategy Analytics. Mr. Ablondi also showed research that customers would prefer to get Smart Home solutions from existing security service vendors, insurers, or telecom service providers in that order. Despite the ranking from consumers, Thomas Neubert, VP of Partnering at Deutsche Telekom explained how carriers are very well positioned to address the market:
- existing retail locations
- existing trucks that can do installs and support
- existing billing and customer relationships
- existing connectivity and smartphone leverage
Mr. Neubert and Mr. Ablondi both talked about the financial upside for carriers to capture this business, and Mr. Neubert added that it is strategically important for carriers to create new service relationships with customers, especially in the era of OTT. This deeper service relationship enables ownership of a customer relationship. That said, DT has launched their Smart Home service, branded Qivicon, in Germany, with a plethora of (the usual suspect) products such as bulbs, smoke alarms, water and temperature sensors, motion sensors, plugs, cameras and more.
Vertical or Horizontal? Proprietary or Standard?
It seems that the original silos of one product<->one app, and an app for each product have evolved somewhat over the past year. Now it’s more common to see families of products, either through alliances, mergers, or bundling. For example, Nest with Dropcam
and the later launched Nest smoke alarm. Google has, of course, bought these in order to make a compelling starter package, now joined by their OnHub home gateway. Other families of packages are assembled by retailers such as Iris at Lowe’s, proprietary forays including WeMo from Belkin. Other ways to assemble a family of interoperable products are standards like OIC, or AllSeen Alliance, or a telecom service provider could assemble, test, and guarantee interoperability from devices they retail. The last way is for the homeowner to install a hub, such as the products from Revolv or Smarthings, which can speak multiprotocol and patch together various individual devices.
While the above represents progress, it’s still a pretty big mess. Interoperability is anything but assured, and the ability to control your devices with one app hasn’t arrived yet. The only solution for consumers is to commit to one family, or one standard — but as we learned from the battle between HD-DVD vs. BlueRay, consumers want to buy useful products, NOT place bets. So, until we see the removal of complexity for consumers, this market will be stifled by uncertainty, and not reach its full potential.
Our bet is that in the short term, pockets of adoption will form around the families, whether Apple, Google, Deutsche Telekom Qivicon, WeMo, AllSeen, or other. This loyalty to a family is the only way the average consumer will be able to get things to work…but it will not unleash the full benefit of the IoT. Longer term, we expect that Open models will slowly gain steam, and emerge as bigger rivals to the early winners.
The last key topic covered was the question of security. Maya Strelar-Migotti, SVP at our host Marvell, stressed that security and respect for customer privacy needs to be at the heart of every product, and not relegated to just one vendor that overlays security. That said, most speakers at the meeting agreed that the carriers may be a logical place to host an over-arching security platform as a value-added service. They should make this part of their brand’s value going forward, and Strelar-Migotti added carriers could offer the customers a dashboard to tweak their privacy settings. Power to the consumer, backed by the power of the telco.
Thanks again to all our panelists, speakers, and rapid fire pitches. Lots of good information and contacts to chew on until our next IoT discussion.