We’re finally approaching the Jetsons era, where technology seemingly fulfills our dreams to make video calls from wristwatches and automate house cleaning with robots. Yet in this sensor-riddled world, emerging smart home services have created a dizzying array of tech gadgets. If smart home tech is anything like smartphone tech, we can expect product trends to saturate the market, and change according to consumer demand in the blink of an eye.
Such rapid growth potential for the smart home market could mean a fast-churning product cycle for product makers and app developers. ABI Research Inc. predicts that the installed base of active wireless connected devices exceeded 16 billion in 2014, about 20 percent more than in 2013. The number of connected devices is expected to reach 40.9 billion by 2020, with 75 percent of that growth attributed to non-hub devices like sensor nodes.
That’s a massive opportunity for smart home service providers looking to tap into an existing market of connected devices, a market that only continues to grow. Gartner Inc. estimates that Internet of Things product and service suppliers will generate incremental revenue exceeding $300 billion in 2020.
According to marketing group Acquity Group LLC, smart home solutions are expected to see the greatest growth in adoption with two-thirds of consumers planning to purchase connected technology for their homes by 2019, and 43 percent expected to adopt smart thermostats in the next five years.
Yet consumers can be highly selective about changes in the home, especially if those changes come with the potentially high price tag of new devices, appliances and related subscription services. In fact, 40 percent of companies surveyed in this Accenture plc study said a primary barrier to changing consumer behavior is “the inherent unpredictability of consumers.”
Preparing for choosy consumers
In a rapidly evolving market with a fickle consumer base, how can today’s businesses ensure longevity when tech can become outdated in the blink of an eye, or cheaper manufacturing and computing costs enable rivals at every turn? As one smart home provider discovered, consumers are constantly changing their minds. This is an aspect of market behavior that any company should prepare for.
“There’s no such thing as future-proofing a business. The world changes so quickly,” said Jeremy Warren, VP of Innovation at Vivint, Inc. “What really matters is making sure you’re giving customers a product they want. And what customers want may change. For example, they keep saying they want a faster horse until the car is good enough. And then they don’t want the horse.”
Uncovering customer needs
While Vivint thinks the idea of future-proofing is insuperable, it finds inspiration in one of the oldest forms of customer research. Starting as a home security company, Vivint used door-to-door sales tactics to grow its customer base. It has continued to use that culture of interaction to sit down with homeowners to learn their needs.
“We sit with consumers in their homes and watch and learn, see what causes challenges and what they’re happy and unhappy with,” Warren explained. “From there we understand jobs to be done.”
Zonoff, Inc., a software provider powering Staples Inc.’s smart home platform, is also keen on customer needs, beginning its product design process with the end goal in mind.
CEO Mike Harris said the key is to not lead with technology but to understand the base motivations that inspire people to act. “It’s around [the question] ‘what am I trying to solve? Is this a peace-of-mind application, understanding when my kids are safely home and off the bus? Or is it making sure I feel that my house is safe and secure when I’m away at work?’”
Retail partners for mainstream appeal
Lowe’s Companies, Inc. is working to ensure its retail strategy is future-proof by providing an open platform that scales to meet customer needs over time. “We took technology that is perceived as expensive and difficult to install and made it available and easy-to-use by creating simple Do-it-Yourself (DIY) kits at affordable price points,” said Kevin Meagher, VP and GM of, Lowe’s Smart Home Division.
These consumer-friendly kits from the familiar Lowe’s brand centers around its own Iris Hub, acting as a core product that powers the many smart home add-ons to perform various functions for security, lighting and temperature control. From there, Lowe’s can build its ecosystem by inviting retail partners to build products compatible with the Iris Hub, reaching mainstream consumers through the Lowe’s retail channel.
Some of the Lowe’s kits include the Safe & Secure Kit for monitoring activity around the home, the Comfort and Control Kit for regulating the home’s temperature, and the Smart Kit that combines security, smart plugs and temperature control features into a single package.
Making software accessible to the ecosystem
This strategy also speaks to the necessity of software accessibility, delivered through the right ecosystem of both retail partners and software developers. Such an ecosystem, built around core products and software, is necessary if smart home providers hope to future-proof retail opportunities and continuously present buyer opportunities.
Last June, Nest Labs Inc. announced its Nest Developer Program that gives third-party developers access to its API to allow them to integrate their products with Nest and become a part of the Works with Nest ecosystem. At CES 2015, Nest announced 15 new partners for its Works with Nest program from Whirlpool Corp., smart lock providers Kwikset Corp. and August Home, Inc. and VOIP service provider Ooma Inc.
iControl Networks Inc. has been proactive in cultivating an ecosystem of supporting products around its core software, launching its OpenHome App Program in 2013. The initiative connects app developers with cable service providers for in-home app distribution. This allows mobile apps to be readily certified as compatible with iControl’s Converge solution, which powers smart home offerings from familiar brands including Comcast, Time Warner and Rogers, to name a few.
Open platforms future-proof industry standards
An increasing number of smart home business executives are recognizing the importance of an open developer platform to smart home adoption. In fact, Samsung Electronics Co. Ltd. CEO Boo-Keun Yoon recently talked about how consumer electronics companies must embrace open standards in smart home innovations. At IFA 2014, the Samung head honcho said, “By collaborating with industry partners, Samsung is well positioned to lead and drive this transformation.”
Samsung certainly has a grand plan for the future of the connected home. The company promises to have 90 percent of its devices, from televisions to mobile devices, Internet-enabled by 2017 with the remaining 10 percent coming by 2020. The company also promises to keep its platforms entirely open to allow software developers and hardware manufacturers have the freedom to tinker as they please, thereby also creating better home automation solutions for the future.
According to Jason Domangue, VP of Ecosystem Development at iControl Networks, the progress of the developer community is critical to the success of the smart home market. “The open ecosystem program for devices, developers, etc., continues to gain steam in the marketplace,” Domangue said. “But even though the market demand is there, early stage connected home developers face an uphill battle in making their product vision a reality.”
Change the software, not the user
So future-proofing means having an agnostic product that will stand the test of time and minimize retrofitting needs in the future. For technology-driven products powering home automation, that means apps should work on all the major platforms, and extend access to as many devices as possible.
“Whether it be through a portal on an iPad, through my Web browser, or through my TV, I will have the ability to control these different services in my home,” said Andrew Tauhert, Executive VP of Marketing and Business Development at Prodea Systems, Inc., a company that is seeking to provide seamless access to the broad range of connected-home services. “We don’t want to tell the consumer that you must buy this one sensor or thermostat. We want to allow the consumer to engage on multiple types of devices.”
One useful method of cultivating software standards to minimize retrofitting needs is through open source, where even rivals can mutually benefit from shared processes.
One of the largest open source initiatives is being hosted by the Linux Foundation and is called the AllSeen Alliance. The initiative, which was announced back in December 2013, is made up of various tech companies such as Haier Group Corp., LG Electronics Inc., Panasonic Corp., Qualcomm Inc., Sharp Corp., Silicon Image Inc., TP-LINK Technologies Co. Ltd., with secondary members including Canary, Cisco Systems Inc., D-Link Corp., doubleTwist Corp., Fon Wireless Ltd., Harman International Industries Inc., HTC Corp., LeTV, LIFX Labs, Lite-on, Moxtreme, Musaic, Sears Brands Management Corporation, Sproutling, The Sprosty Network, Weaved and Wilocity. AT&T Digital Life, Affinegy, Gowex, iControl Networks, Kii, Muzzley, Patavina Technologies, 2lementry, Tuxera and Vestel Group, have since joined.
Members of the alliance have pledged to use the code underlying Qualcomm’s AllJoyn protocol to create new products that not only can communicate with one another but also offer a more automated programming environment for the devices. The group has created a sub-group called the Connected Lighting Working Group which is responsible for the creation of an open framework that allows smart lighting solutions to communicate with each other, users and other connected devices.
“The industry is making a push to do similar things that were done when the Internet first gained importance; they made rules so everyone could utilize the same standards and protocols,” said Omer Faiyaz, CEO of, Remo Software Private Ltd. “The IoT needs are the same, and we currently need common protocols to communicate and control devices. The urgency and need for standards to be set for IoT can be easily seen, and efforts are moving in the right direction to create a framework for the industry.”
For example, software engineers developing home automation hubs like openHAB and Home Assist with the goal of matching product capabilities of tools like Apple’s HomeKit. According to openHAB, its pluggable architecture supports more then 50 different technologies and systems. The Home Assist website says, “The goal of Home Assistant is to be able to track and control all devices at home and offer a platform for automating control.”
Two other open source initiatives worth mentioning are the Open Internet Consortium, which seeks to “define a common communication framework based on industry standard technologies to wirelessly connect and intelligently manage the flow of information among devices, regardless of form factor, operating system or service provider” and the Intel IoT platform which is an end-to-end reference model designed to unify and simplify connectivity and security for the Internet of Things.
While the future is an unknown variable, taking cues from past behavior and current market trends can enable the smart home startup and established service provider alike to develop a likely path to success.
Contributors: Mellisa Tolentino & Cheryl Knight