The consumer IoT and smart home industries have achieved a key long-term goal — they have generated sufficient consumer interest and subsequent purchase intentions to move adoption of smart home solutions into the early majority, along with strong increase in the number of multidevice households. Research from Parks Associates shows 17 percent of U.S. broadband households own both an internet-connected entertainment device and a smart home device, and 13 percent own both a connected health device and a smart home device.
As consumers acquire more connected solutions, and as these devices take on more prominent roles in the connected lifestyle, several key trends are emerging in the smart home ecosystem.
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Point Solutions Taking Sales From Systems
The smart home industry began by selling systems, but in recent years point solutions are taking a larger part of the sales, creating tension between point solutions versus systems. This is a trend in the U.S., in the U.K., and other major European countries.
For instance, in the U.S., more than 25 percent of broadband households own a smart home device, and more than 40 percent plan to buy one in the next 12 months. In the U.K., 16 percent own at least one smart home device. By comparison, security sales in the U.S. have stalled for years, while in the U.K., only 5 percent of households have a monitored security system and 12 percent a self-monitored one.
Voice and AI Will Drive Experience
The popularity of smart speakers with voice assistants has helped voice become an established and foundational part of the smart home. In the U.S., 28 percent of broadband households own a smart speaker with voice assistant. In the U.K., 51 percent of Echo Dot owners use the device daily, and 75 percent use it weekly. When it becomes a habit, it’s not just a gadget, and enthusiasm for voice control and smart speakers has expanded to other smart home solutions, inspiring consumers to purchase many new platforms and products.
This trend has helped create a home environment with a variety of different networking protocols and applications. Consumers are looking to control multiple connected devices in their home with their voice, and the connected home will need AI and machine learning innovations in order to coordinate and support all these devices and deliver a personalized experience to consumers.
MSO Aspirations Seek New Direction
Advanced intelligent services, which combine entertainment services with smart home solutions and control, will be the next step for service providers as telcos, cablecos, ISPs, and other MSOs are working to deliver unique value-added services to attract and retain subscribers. Many MSOs were early market leaders in introducing smart home services, but the results have been mixed. However, connectivity is the future direction for this market, and providers will continue to innovate.
Business Models Evolve from Product to Services
Many new business models are shifting from a focus on the product to delivering services. Consumers will chafe at the initial prospect of monthly service fees, but Parks Associates survey data have uncovered two conflicting findings: consumers generally don’t like monthly service fees, but when offered a choice between a single, upfront cost for a device or a hardware-as-a-service value-added offering, a strong majority prefer the latter. With a hardware-as-a-service proposal, consumers pay less upfront and establish an ongoing support and service relationship with the provider.
Many sectors in the smart home ecosystem are launching these service options. Energy companies are offering boiler maintenance using predictive analytics. Insurance companies are bundling smart home devices and systems with premiums, effectively turning insurance into a service. Access control services are transforming door lock hardware sales into a service that provides a management platform for property owners.
Data Security and Privacy
These circumstances also put companies active in the smart home at the center of data security and privacy. The level of concern among consumers varies when dealing with hypotheticals, but ultimately they recognize providers derive value for their data and expect these companies to ensure this information is protected, although only 14 percent of U.S. broadband households currently trust companies to keep their data safe. Additionally, 37 percent believe it is impossible to keep their data private from companies. Players in the smart home space that strive to be the trusted partner with their consumers will have an advantage in attracting new business. Earning consumers’ trust could be the ultimate differentiator.
The smart home ecosystem is opening new business opportunities but also requiring companies to forge new ways to connect with consumers. Crossover opportunities among security, controls, entertainment, mobile, sectors, and others can create partnerships to extend functionality of each solution, but with each expansion comes added expectations of interoperability and ease of use. Voice succeeded because its platforms deliver a simple, intuitive, and ultimately enjoyable experience in extending IoT benefits to its users. Successful future solutions will deliver similar benefits.
For more industry research, visit www.parksassociates.com.