The smart home is one of the hottest areas in tech right now. Google and Samsung are both buying their way to the forefront of home automation and connected consumer devices, while Apple’s new iOS8 operating system and it’s HomeKit central-control app comes ever closer to launch.
However, while consumer uptake of smart microwaves, connected toothbrushes and energy monitoring blinds remains limited, a new report from Gartner highlights the rampant growth expected in the sector. Investors are seeing promise in the smart homes too and StrategyEye tracked more than USD1.1bn in VC dollars being invested across 85 global deals in the 18 months ended July 2014.
500 Smart Devices By 2022
The report forecasts that a combination of falling product prices, improvements in wireless technology and greater awareness will mean that what it describes as ‘the typical family home’ could contain more than 500 smart devices by 2022. That includes everything from home media systems like consoles and smart TVs to device-connected white label goods.
"We expect that a very wide range of domestic equipment will become 'smart' in the sense of gaining some level of sensing and intelligence combined with the ability to communicate, usually wirelessly," says Nick Jones, vice president and analyst at Gartner. "More sophisticated devices will include both sensing and remote control functions. Price will seldom be an inhibitor because the cost of the internet of things enabling a consumer 'thing' will approach USD1 in the long term."
Here we take a look at the five factors that could prove key in driving business opportunities and consumer adoption in the smart home space.
1. New Products And Features
The adoption of smart home devices and appliances will only increase with the introduction of more products to the market. Giving consumers greater choice will allow them to find the product that fits best for them. That decision may be based on what platform the rest of their home’s smart devices operate on. The current disorganisation among rival tech companies and products vendors regarding what ‘language’ smart products should speak with each other must find a conclusion to drive further consumer uptake.
Products must also find ways to further prove the value of smart devices over conventional. At present consumers buy a new washing machine or oven very rarely, if smart appliances can update over time, as with things like mobile operating systems, the consumers will appreciate the long-term value of them.
2. Revenue And Cost-Saving Opportunities
The primary focus of smart home products and connected devices is, ultimately, the reduction of hassle for the consumer – your fridge reminding you to pick up milk after work etc. But cost saving is also a key selling point. Keeping the heating on longer than needed is an expensive waste of energy, smart thermostat Nest - the Google owned company at the forefront of home automation - helps to prevent that.
However, there’s also the potential for new revenue streams for product vendors with the report giving the examples of coffee machines that automatically order new capsules or smart vacuum cleaners that know when to order new bags. The idea being the reduction of hassle for the consumer, while still benefitting the manufacturer.
3. New Business Models
Smart homes will open up new revenue opportunities for companies and Berg Insights forecasts annual smart product sales of USD9.4bn by 2017. However, beyond just the sale of hardware devices new business models will become available. For example a company like Philip, a traditional hardware maker, which offers smart light bulbs might find that the data it collects form its product will become as valuable as the device sales.
The report also highlights other areas where smart home products could disrupt traditional companies giving the example of internet providers combining the information from home sensors and cameras to offer its customers home security systems that may undercut traditional home security firms.
4. Social And Government Initiatives
The potential for connected homes goes beyond just the needs of the resident consumers. There’s the potential to build entire smart cities that can manage utilities in a much more efficient way. Governments will be able to utilise domestic technologies to tax services more accurately, deploy resources, such as garbage collection, more efficiently, as well as incentivise policies connect with energy usage or recycling. For companies in the energy monitoring space, or more niche areas like smart bins, there is the potential for lucrative government contracts and widespread instillation of products in consumers' homes.
5. Analysing And Monetising Information
Big data seems to have made the transition from a buzz-phrase of 2013 to a more mature ecosystem of companies finding new uses for data science. The internet of things is really all about the data-harvesting sensors on which smart devices are built and it will continue to be a lucrative part of the space.
Companies, like Nest say, might sell the data its thermostats collect to advertisers or companies wanting to offer customers better deals based on how they use their heating. New companies may also emerge dedicated to crunching down the data gathered from smart devices. After all, it’s not how big the data is, it’s what you do with it.