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IoT in Smart Homes: A Lucrative Opportunity

IoT in Smart Homes: A Lucrative Opportunity
Apoorv Iyer - Vice President , Engineering R&D Services | September 11, 2018
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Imagine that you’re returning home after a hot, sweaty day at work. Just a few miles from home, you switch on a few lights and the air conditioner through the phone. You arrive and enter a well-lit home with the temperature already adjusted. Wouldn’t you also rather use the phone to start the washing machine and get the laundry done by the time you are home? And in the meantime maybe even get the coffee brewing, and the garden watered? The wish list is endless, and the Smart Home is pleasantly welcomed.

The proliferation of IoT sensors in devices, the increased need to operate, monitor, and centralize control of these IoT sensors, the need for real-time analytics, connected assets, and security of machines have led to widespread adoption of Smart Homes and IoT device management technologies.

It is estimated that by 2025, 10% of households across the globe will be Smart Homes. The total Smart Home market is worth $24 bn. Though the major chunk of the growth is from end-user-facing applications, there is a need for IoT platforms to build a complete ecosystem connecting operators and enterprise networks. It’s not enough to have a Smart Home full of gadgets. The ‘smartness’ needs to extend beyond the home and that’s the reason why data needs to flow seamlessly from gadgets at home to the car, phone, cloud, and beyond. Smart Homes are the starting point to a Smart life, and this fact underpins the need for robust IoT home management platforms.

Today, there are about 450 IoT platforms with 21% of them focusing on the home segment.

The boundaries between industries are blurring because of the nature of Smart Home technology and the market (which is an amalgamation of telcos, network providers, platforms developers, and hardware manufacturers). This blurring of boundaries between industries is resulting in dynamic competition from adjacent markets. Some recent developments can be listed as:

  • Verizon develops ThingSpace, a smart home solution platform, and recently announced ThingSpace Ready
  • Cisco buys IoT platform provider Jasper and announces new IoT platform Cisco Kinetic
  • Nokia announces IMPACT, its IoT platform which connects operator and enterprise networks
  • IBM’s Watson IoT lab in Munich helps clients combines the power of AI with IoT

So, what is the big deal about Smart Home technologies? IoT and connected devices have the potential to make the shift from selling hardware to selling hardware-based services and selling commodity to selling engaging user experiences. The revenue from these services is subscription-based or recurring in nature.

How do we approach this vast market, which is, in fact, an ecosystem? Let’s take note:

  1. A platform-based approach: Relying on a single technology to deliver smart devices brings with it too much uncertainty. Consumers rapidly grasp the benefits of a platform-based approach (read software that can run on multiple hardware), once they start with a single use case and then add multiple discrete use cases creating rules across devices.
  2. Harness data to add more value: Platforms help us to harness a trove of data which we can use to create commercial value in many ways, from increasing customer loyalty, reducing customer churn to identifying usage patterns and customer motivations to enabling a recommendation engine.
  3. A connected ecosystem for seamless experience: Some must-have capabilities of an IoT platform are application enablement, the ability to activate various end-user-facing applications; device and data management, the ability to connect, monitor different devices and the data obtained from them; connectivity management, which involves connection infrastructure, networks and protocols, and security.

How does the connected ecosystem get enabled? The first generation of connected home devices, like the connected lock and light switch, was not connected to the internet. Rather, they were connected to a “bridge” (located at home) and communicated to it via protocols such as Z-Wave and ZigBee. It was only in 2004 that we could operate connected locks and lights from mobile devices. Today, with Wi-Fi (which is also a protocol), advanced protocols, IoT, and the impending 5G, the Smart Home segment is at an exciting juncture.

Since openness and shared innovation are the defining elements of IoT platforms, it is imperative that the IoT home device platform provides Software development kits (SDKs) and application programming interface (APIs) that can be used by device/sensor OEMs to connect and harmonize with the platform. This is what leading Smart Home solution providers have in common. In contrast to the conventional home solution providers which are device/product-centric, platforms like these enable newer revenue/service opportunities that were previously not possible.

The protocols supported by these devices are of paramount importance as they allow device-to-device, device-to-server, and server-to-server communication. TR-069 specified by Broadband Forum is the most widely used protocol which is device-agnostic and supports close to 800 million devices worldwide. It provides a feature-rich, remote management, and provisioning solution that makes available a reliable home network with reduced operational costs and improved subscriber experience.

The most fundamental part of this landscape lies in monetization. Smart Home technology players can benefit from a variety of models that they can implement based on the use case and outcomes. The smart home technology players have a range of options to choose from such as hardware sales, pay as you go to name a few. Any connected device can be an entry point for creating revenue generating subscription service, service bundles – bundling device management and analytics, for example, loyalty-based, freemium, etc.

The multiple revenue-making opportunities allow Smart Home technology players to play by their strengths.

Hence, we can see that Smart Home solutions, especially IoT device management, constitute a booming ecosystem. With a higher number of devices becoming connected and being aware of other devices, the connected home will be an ecosystem with combined capabilities greater than the sum of parts creating scope for customer personalization/personalized services and superior customer experience required to thrive in today’s competitive environment. A Smart Home is not a home full of smart gadgets. Rather, a Smart Home will be one that’s embedded in a smart community!

A smart home is not a home full of smart gadgets. Rather, a smart home will be one that’s embedded in a smart community.

  1. https://dzone.com/articles/home-automation-using-iot
  2. https://www.forbes.com/sites/andrewweinreich/2017/12/18/the-future-of-the-smart-home-smart-homes-iot-a-century-in-the-making/#5a203457ac2a
  3. https://www.iotforall.com/business-models-for-smart-home/

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