7 min read Last week, one of the leading smart home market conferences, CONNECTIONS by [...]
Last week, one of the leading smart home market conferences, CONNECTIONS by Parks Associates, took place in San Francisco. The 3-day event attracted hundreds of leading smart home products manufacturers and solution providers for keynote presentations, panel discussions, valuable networking opportunities and a variety of showcases.
Reflecting on the event, we have ‘homed’ in on the following 4 key market drivers and challenges:
Competition is intensifying as many enterprises launch innovative connected products. While adoption is steadily increasing, product makers and solution providers struggle to break through the ‘consumer confusion’ to drive real ‘consumer adoption’. The breadth of brand choices, lack of education for consumers, as well as the expanding smart home environment (e.g. indoor and outdoor products), are making it more difficult for consumers to figure out which products meet their smart home needs, while also understanding how they work together.
As use cases and homeowner profiles vary from one household to the next (e.g. young parents, first-time homeowners, seniors, ‘green’ conscious, pet lovers, safety-first, etc.) the opportunities for consumer adoption are many. But most people will be reluctant to spend hundreds of dollars on connected products until they have good reason to. Up until now, marketers and retailers have struggled to clearly communicate those reasons. Smart home products adoption will continue to depend on multiple players, but retailers have an essential role of distributing it to the end-user. Occupying a frontline position, retailers need to play a more prominent (influencer) role with consumers.
The real value of the smart home is better understood if consumers interact with the products and can experience them in action. Currently, products struggle with the ITBOTS syndrome. Retailers need to actively showcase their value, to educate and engage consumers; just looking at shelves crammed with boxes is hindering consumer adoption. These smart home products need to be on display within a ‘connected home showcase’ and supported by an informed store salesperson that can educate the consumer on how they work and the benefits they offer e.g. enhanced security/safety, water damage prevention, provide energy savings or simply offer a trendy lifestyle.
In San Francisco, Target is leading the way and providing excellent consumer education via a showcase of smart home products and user experiences for a smart home with their ‘Open House’ store – we need to see more of this!
Smart home products promises convenience and control. But to deliver on this promise, the installation process (the customer’s first experience with the product) needs to be as pain-free as possible. Too many products require complex installation processes – professional rewiring, new hardware and connectivity platforms etc. Customers want products that make their lives easier and that work seamlessly. Products that require on-going attention (i.e. regular software updates, repairing connectivity, resetting the device because the default setting is not working), will disrupt the consumer’s previously problem-free home environment and quickly lose appeal.
As an example, consider a consumer who purchases a connected thermostat to (1) reduce their energy bills and (2) have the preferred temperature set as they walk-through-the-door. Their original ‘non-smart’ thermostat worked just fine, but they were attracted to the notion of remote monitoring, cost/energy savings and personalized settings. Upon installing the thermostat, the household temperature begins to fluctuate, they encounter problems with their HVAC system and/or the lights on the device will not stop blinking… all of a sudden the device is more disruptive (and costly) than ever before! To make matters worse, most product makers don’t have in place the product feedback loop to proactively address these issues. To overcome these challenges, smart home product makers will need to invest more in the smart home experience to minimize customer effort, while delivering quality, reliable products.
Customers want products that enrich their smart home experience, not complicate it. Some of the themes and buyer behaviours that appear to be driving adoption are:
Security continues to be the biggest driver for smart home adoption and it is shifting the way consumers manage their environments. Not only does remote monitoring via home security devices (such as water leak detection, fire, and carbon monoxide monitoring etc.) safeguard the people and belongings homeowners care about the most, but with personalized user profiles and data-driven alerts, consumers are empowered with unprecedented visibility and control. In the future, security will be at the core of every smart home solution.
Not only is it reassuring and cool to keep an eye on your home, but you can lower energy costs in the process. Everything from thermostats, lighting, and appliances with temperature control, can be optimized to reduce the energy consumption and carbon footprint.
Intelligent devices that are simple and intuitive to use, that not only simplify the consumer’s life but also enrich their smart home experience, are driving adoption. Remote monitoring is great, but of greater importance are smart home products that learn from usage behaviour and proactively adapt, providing a personalized, seamless experience. For example, lights that increase (or decrease) in the evening, music that changes based on the setting (family gathering, chores, dinner etc.) and shades that automatically open on learned schedules and/or based on weather conditions.
Fragmented protocols, standards, and user applications confuse consumers and delay mainstream adoption. The smart home industry is flooded with a plethora of protocols attempting to connect disparate devices with one another. There are a number of connectivity options in the smart home space – WiFi, Z-wave, ZigBee, BLE, Thread etc. – each has their own pros and cons and will continue to co-exist for the foreseeable future but how on earth are consumers expected to understand these options, what’s best and how they work together?
Moreover, industry standards are attempting to create a framework for integrating devices and services, but players closest to the ‘field’ are still coming up with closed (and semi – closed) environments that do not support a seamless experience. Given that the app is the most frequent form of communication/monitoring, there is the challenge of bridging apps for different connected devices. Consumers navigating multiple apps within the home are plagued with a siloed home experience. This will continue to be a challenge as the smart home is evolving from a traditional indoor portfolio of smart products to a growing number of outdoor equipment e.g. solar-power systems, water sprinklers etc.
Device makers are challenged by the need to offer a unique experience that differentiates from the competition, while also integrating into existing smart home infrastructures. To deliver a truly smart home experience, devices will need to interconnect so the user has a seamless experience for device interoperability. It will also be interesting to see how voice-controlled products impact smart home adoption. Amazon’s Echo is a hot topic of discussion and debate as it has potentially triggered the beginning of the post-app era of consumer engagement.
There’s no doubt that exciting times are ahead for smart home products, platforms and service providers. The market is still in an early stage and we will continue to see consumer adoption via siloed products and experiences – the mass market adoption of an all-encompassing smart home is somewhere down the path. However, many of the challenges can be addressed by understanding the data generated by the connected products/equipment in combination with the app usage. The more we gather insights on how smart home products are being used, the quality of connectivity, proactive customer service etc., the more influence the various stakeholders can have on improving and driving consumer adoption.
Also, it will be interesting to observe how additional stakeholders make their mark based on their existing home-related businesses and services e.g. Insurance and Utility providers.
To conclude, I want to congratulate Parks Associates on their 20th Anniversary for the CONNECTIONS event – long may it continue!
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