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Smart Home Adoption: The Good; The Bad; and The Ugly

The “Smart Home” has the potential to unleash unprecedented data-driven value in the form of cost savings and quality of life improvements. The sheer volume and velocity of manufacturers, service providers and tech companies racing to capture this new value speaks to the size of the opportunity.

The term “smart” implies intelligent, but you wouldn’t know it from today’s home technology market – a fragmented landscape full of narrow point-solutions, time-sink gadgetry, entertainment obsession, and software/platform incompatibility. Because of this, the next wave of the “Smart Home” is still faced with significant roadblocks and barriers to adoption.

Visions of the “Home of the Future” have been in abundant supply for decades now. Buckminster Fuller, the famous creator of the geodesic dome, was writing about the house as a “machine for living” as early as the 1930s. The “automated home” has been the dwelling place of futurist fiction characters since at least the 1950s, the subject of blueprints and schematics in Popular Mechanics and Popular Electronics, and a feature attraction at the 1964 World’s Fair in New York City, where visitors were transported through the “Home of Tomorrow” complete with domestic robotics and the perennially imminent videophone.

The “Smart Home” has always had the potential to unleash unprecedented value for comfort and convenience as well as safety and security.  The sheer volume of manufacturers, service providers and tech companies addressing the residential arena is a testament to its potential. However, today’s smart home market remains fragmented with competing networking standards, a myriad of hubs that claim to control just about everything you can imagine in a home, and legacy entrenched technology from yesteryear focused on home security, energy, media services and well, you name it.

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The Future We Keep Waiting For

Ever since the 1964 World’s Fair, waves of promises about the “connected home,” the “networked home,” and “the digital home” have emerged every few years. The software industry has a term for such promises: vaporware. In the typical American home, products and systems are not much more connected today, and certainly less orchestrated, than they were in 1964.

Consumers consequently now view the “intelligent home” as a mere merchandising slogan for bewildering and marginal capabilities that often turn out not to be real anyway. For consumer product companies, the phrase “home automation” has become so discredited that it now provokes fear and loathing rather than visions of glorious innovation.  Yes, we’ve had a long history of residential futurism. But to date, almost nothing of real significance has come of it.

Here We Go Again – Infinitely Complicated Systems

The drive to develop technology can inspire grandiose visions that make simple thinking seem somehow embarrassing or not worthwhile. That’s understandable in science fiction or in the futuristic exhibits of a World’s Fair, but it’s not a good thing when defining real-world technology standards or delivering tangible value in marketed products.

Good product development should always spring from genuine empathy with consumer needs, not merely from a desire to create new markets. That persistent icon of the future called the videophone, for example, is not a real consumer need; it’s a technologist’s quest. Residential customers would be better served by something like universal connectivity for anything (we still don’t have it), whereby all communications intended for any home or consumer device—cameras, appliances, lighting, thermostats, or mixed media—could be managed by a single, seamless “self-provisioning” interface to the network. That’s decidedly less “sexy” than a videophone, but it offers a much higher intrinsic value to the consumer.

Over the decades, the seductive images of the “home of tomorrow” have become part of public mythology. The Smart Home has to be a dwelling that “does things for you” in dramatic, futuristic ways. And so, for the last 40 years, the smart home has been expected to run before it ever learned to crawl. Not surprisingly, it has failed to meet that expectation.

Typical home automation is not about ease of use or peace of mind; it’s about gadgetry, complexity and control. Various quasi-standards and connection protocols have been available for years. You can buy kits and hubs at the big-box retailers and online. If you haven’t heard about most of these products, it may be because you have a life to lead.

Complicated systems that require self-installation and maintenance make all but the most technically-proficient consumers wary to adopt these technologies. This complexity results in backlash from early adopters with complaints of too many steps for installation and use, along with frequent malfunctions. If a layman cannot setup, interact and troubleshoot these systems, widespread adoption will never occur.

Player Highlight: Today there can be many ways to on-board a device to a network, and consumers get confused or frustrated, so they return products because they can’t get the device to connect and work. Cirrent, which officially launched in May 2016, is addressing this barrier to adoption by leveraging existing infrastructure from broadband providers to help consumers expedite the network permissioning and commissioning process for smart home devices. In the U.S. and Western Europe, millions of network routers have separate hotspots which provide a secure Wi-Fi connection that is managed independently of the subscriber’s private network. Cirrent eliminates on-boarding barriers by helping companies that make Wi-Fi connected products use these hotspots to connect their products automatically without having to deal with provisioning and commissioning a device.

Well Designed Home Tech Should Be Simple, Seamless and Truly Interoperable

Without these features, the true value of smart and autonomous home systems will never be realized. Several adoption hurdles, where the underlying interoperability of devices is the primary roadblock, need to be addressed, including:

  • Lack of Integration. For all of their sophistication, many of today’s Smart Home technologies are direct descendants of the traditional cellular telephony model where each device acts in a “hub and spoke” system. The inability of today’s popular Smart Home systems to interoperate and perform well with heterogeneous [multi-vendor] devices and environments is a significant obstacle to wide-spread adoption of these systems.  What happens when you also want remote awareness of your electric garage door, your stove, your hot water heater, or your lighting system? Would you want separate connections and proprietary interfaces for all these things? How many user manuals do you really want to read?
  • Poor User Experience. The lack of interoperability has a direct and distinct impact on user experience. From a technical perspective, consumers desire ease of use and seamlessness across platforms and services. When consumers have to use dozens of different applications to control each of their connected devices, the user experience of one device is muddled by the experience of the disjointed nature of the entire Smart Home experience. Further, consumer commitment to an isolated system or device is risky in the current fragmented residential market. As exemplified by Nest’s recent announcement that it will discontinue support for the Revolv Smart Home hub in 2016 (Nest acquired Revolv in 2014). Revolv customers who had connected all of their devices to the hub are now simply out of luck; not only is the product no longer supported, it will no longer function. This event and others like it are forcing consumers to think twice about the Smart Home products they are buying, or think twice about buying any smart home products at all until user experience is improved.
  • Limited Functionality & Value-Added Services. For the most part, manufacturers are not thinking about user experience relative to all the connected devices in users’ homes; instead, they’re thinking only considering consumers using their devices, but without the context of the network and the product in use relative to other peer devices. Players who want to encourage market development need to consider the opportunity to sell elegant and unobtrusive—sometimes even invisible—networked service experiences. This will often mean de-emphasizing products per se, which is an understandably difficult thing for product companies to do. After all, if they aren’t selling material objects full of features that buyers touch and interact with and admire physically, then what are they selling?  Well-designed technology for the home should:
    • Be inexpensive, easy to install, intuitive, and pleasurable to use.
    • Add adequate “smartness” to existing home devices, appliances and systems without a wasteful, bewildering array of features.
    • Be modular and easy to extend throughout the home over time, integrating multiple parallel manufacturers devices.
    • Be extensible (new sensors and devices work with the existing system, preserving buyer investment).
    • Offer varying degrees of [remote] control where desired (such as activating a water shut-off in the event of a leak).
    • Deliver value without “infinitely incremental” third-party monitoring fees (but can inform third parties if desired).
    • Deliver value transparently, in the background, without requiring full owner attention.

As more and more devices come to home market, they will need to function more like orchestrated systems to effectively provide value to consumers. If you have to control or interact with each device individually to make it work, the underlying needs of automation and personalization will not be met, preventing these systems—and the market itself—from reaching their true potential. Players across the Smart Home market are just beginning to realize the implications of interoperability, and are starting to organize to address the issue. While there are some instances of collaboration between and amongst ecosystem segments, the “I can do this alone” mentality still reigns supreme. 

Player Highlight: Ayla Networks’ platform provides the connectivity, managed backend infrastructure, and consumer-facing mobile experience development tools that support manufacturers in their Smart Home initiatives. Most importantly, Ayla’s platform helps enable device interoperability. As a third party, Ayla can help ensure products from different manufacturers can communicate with each other and other third-party services, such as asset management and maintenance, energy management, and security management. One example of a unique partnership is the alliance between  Ayla Networks and Zonoff, where these two companies are leveraging an open cloud-to-cloud partnership to greatly simplify the effort currently involved in enabling smart home systems and solutions.

Security & Privacy are Top Concerns for Consumers

With the growth of networks in the home, virtually any electronic product can automatically send periodic signals about its status, with no human intervention or understanding needed. But, just as enhanced awareness from home systems can be a driver of adoption, the fear of hacking and need for increased cybersecurity and privacy, if unmet, are significant barriers. Cybersecurity in the home may not be the most dramatic application of intelligence and connectivity, but it is indisputably a highly useful one. Simply put, peace of mind technology for the home needs to include more focus on security and privacy. If my connected garage door opener collects data about my comings and goings, which can translate into a vulnerability if the data were to land in the wrong hands; or if my baby monitor gets hacked, the spotlight this will place on security and privacy will continue to inhibit market development.  We have not seen very many players at all addressing these needs in any meaningful way.

The Need for Collaboration

With so many competing communication, connectivity, and security standards present in the home, coalitions, partnerships and alliances will dictate the success and evolution of the space. Organizations must push the boundaries of collaboration to include many new and unfamiliar participants; what Harbor Research calls “strange bedfellows.” Creative, far-sighted business alliances and partnerships will be one of the most important factors in the creation and acceptance of networked home systems and services.

Smart Home platform vendors that provide the backend connections and enable consumer-facing applications are in a unique position to facilitate this collaboration. Given the diversity of devices, software, services and support that must be addressed from the consumer standpoint, alliances between suppliers represent the best and possibly the only available means to address the issues facing the consumer and also create maximum value for all parties involved.  While the clear winners have yet to arise, one thing is certain: in this next phase of market development, innovation will result from collaboration more than any single system or solution.

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