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Smart Homes: Haven’t We Been Here Before?

Telecoms operators – and their technology partners – are getting excited (again) about the potential of the smart home. Several operators have launched services and service providers in Asian markets such as South Korea, Japan, and Hong Kong have been building momentum for the last two to three years.

The smart-home concept has been around for some time. So, why does the telecoms sector feel that it is now ripe for exploitation and what has changed since the last wave of interest? There are a number of factors. First, it is part of the wider buzz around the Internet of Things. Several Internet firms have made investments in this space. Secondly, the smartphone and tablet have emerged as devices that can act as remote controls for the home. The technology itself is now affordable – at least for the higher end of the consumer market. And thirdly, broadband access speeds are no longer a bottleneck.

Spanish operator Telefonica has been trialing its smart-home service with a number of its customers. When asked who is best-placed to provide smart-home solutions, these customers placed telecoms operators in second place (behind consumer electronics firms but ahead of utilities and Internet companies). Telefonica has taken encouragement from this and believes that it has a fair shot at becoming a leading smart-home provider.

But does the “smart home” concept resonate with the wider consumer market? Do the individual components of a smart home deliver value that home-owners are prepared to pay for?

There are a number of services that sit under the smart-home umbrella – automation, entertainment, security and monitoring, energy management and usage, and healthcare. Even within a category such as healthcare there are different ideas and concepts. From a service provider’s perspective it makes sense to deliver a solution that supports a whole range of different services. But there is a risk that a lack of specificity in the value that each individual service can bring will weaken the overall proposition.

Telefonica’s smart-home solution is based on AT&T’s Digital Life platform. This has been positioned in the US as a home security and monitoring service. The hope is that people will subsequently buy additional services that sit on the Digital Life platform. Ovum expects that Telefonica will take the same approach in Europe, but it is by no means clear that there is the same established market for home security solutions.

If the market for home security solutions turns out to be smaller than service providers had hoped, it may make more sense to market other specific services rather than the more generic smart-home concept. The ability to better manage energy consumption and to remotely control heating and air conditioning is a service concept that delivers clear, tangible benefits. But competition is fierce. Utility companies see this as a natural extension of their core business.

To find out more contact us here.

Mark Newman is chief research officer for Telecoms and Media at Ovum.

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    Brent Davis:

    I’m somewhat surprised there’s no mention at all of Google Nest and Apple HomeKit. I’m most interested in developer opportunities rather than big telecom opportunities.

      Joe Panettieri:

      Hey Brent: We have extensive experience covering the ISV industry and the app industry. And yes, we’re interested in Apple HomeKit and Google Nest (see earlier perspective from our sister site, After Nines Inc.). Fast forward to the present and we’re not all that confident that Apple will get HomeKit right… Seems to be a slow burn so far.

    Keith Carson:

    Frankly, I’ve seen far too much coverage about the goog and aapl IoT strategies. Are the strategies really going anywhere? As part of Google’s recent reorganization under the “Alphabet” company, nest and the new google onhub router aren’t even in the same business unit. As for apple, homekit is an underperformer so far. Under steve jobs, apple kept new products and tools a secret until they are ready (or “Just about there”) for a true launch. Under cook as CEO that’s no longer the case.

    Thank you to Mark Newman for bringing an international view to the IoT, smart home and telecom discussion. With the exception of the article above, the US media is far too focused on trying to sensationalize R&D at Apple and Google.

      Joe Panettieri:

      Hi Keith,

      Thanks for weighing in. We agree: It’s strange that Google NEST and Google OnHub (the router) are in different buckets over at the newly reorganized Alphabet company. And we’re also pleased to have Mark and team Ovum contributing to ChannelE2E. They bring some great global perspectives to our readership, which is mostly US (though we only launched 3 days ago…).

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