Editor’s Note: SSI has partnered with Parks Associates for the creation of DIY FYI, a column designed to help dealers keep track of important smart home market developments, what the competition is and whether they want to jump into something they see as a new opportunity.
From May 21-23, more than 600 executives from around the world gathered in San Francisco for the 23rd annual CONNECTIONS: The Premier Connected Home Conference, hosted by leading IoT research firm Parks Associates.
The executive research conference hosted over 300 companies from the smart home and security industry and featured presentations from Parks Associates’ leading analysts and visionary sessions featuring executives in the connected entertainment and digital home technology industries.
Throughout the event, analysts and IoT executives addressed several key points highlighting the growth in the connected home industries:
- There is an increased interest in the connected health market. Event attendees were highly interested in independent living and remote health monitoring, with particularly high interest in home automation solutions for seniors.
One of the key themes that emerged during the CONNECTIONS panels on connected health and independent living was a need to define what exactly independent living entailed. Are these solutions aimed at the adult children of seniors, with the goal of making their lives more convenient and improving their peace of mind, or are the solutions targeted to the seniors themselves?
If the latter, how should these solutions be designed to take seniors’ needs and wishes into account? Utilizing senior designers and developers making products for themselves and their families is a good start.
Parks Associates Data: Currently, 40% of U.S. broadband households own at least one connected health device.
- Consumers need to see an expertise in smart home and security for them to consider integrated services from specific brands. This insight, made by Anne Ferguson, vice president of marketing, Alarm.com, expands beyond the security industry to other channels bringing smart home services to market. It is likely one of the (underexplored) reasons why service providers that were among the first to bring smart home products to market, such as Verizon and AT&T, did not experience the success they anticipated.
This also has implications for other emerging channels such as builders and insurance companies seeking to offer smart home devices to differentiate their products and services. It implies that offering products and services in partnership with proven brands is likely a better approach to the market than to white label or offer proprietary products.
Parks Associates Data: Having multiple IoT devices in the home is becoming common — among consumers who own either a connected entertainment or smart home device, more than 60% have more than one.
- A key opportunity exists in the MDU and home builder spaces for smart home technology. New residential properties provide a prime opportunity to incorporate smart home features from the ground up to increase home value, differentiate housing products and create operational efficiencies for property managers.
These opportunities have been long discussed in the smart home industry; however, more and more companies are discovering the potential impact these spaces can have on device adoption and increased RMR. Increased targeting of property managers for apartments, student housing, assisted living and others represents a chance to sell devices by the thousands rather than to individual consumers.
The home builder channel is another area to explore. While home builders are traditionally risk-averse when it comes to adding new technologies in their homes, many players in the smart home industry perceive home builders as an effective channel to introduce smart home products and services to a broad range of customers, including those who are not traditionally tech enthusiasts.
Parks Associates Data: 45% of likely home buyers would choose a home with smart products over one without.
- Consumers who own smart home devices are buying more smart home products. The average number of smart home devices owned, among all U.S. broadband households, increased to 1.4 in 2018. Households owning at least one smart home device (28% of all broadband households) own an average of 6.0 smart home devices, an 18% increase year-over-year.
As consumers purchase more devices, home control systems become more prevalent. Over half of homes owning three or more devices also own a home control system, and 81% of those owning 10 or more devices own a home control system. While one-third of owners still own only 1-2 smart home devices, the future will be consist of households with multiple smart home devices.
- DIY solutions are impacting the traditional security industry. Self-installed security solutions have the potential to significantly lower the cost of security, create new monitoring use cases, and, in doing so, expand the market beyond the traditional 20-25% of US households that have professionally monitored security. Parks Associates estimates, conservatively, that DIY security systems and no-contract, hybrid monitoring solutions enabled by DIY security will expand professional monitoring services to an additional 5% of US households.
Monitoring has become a commodity in the residential security market, and companies are looking at ways to differentiate themselves and stay competitive long-term. Approaches to differentiation include shifting business model, incorporating DIY solutions and adding additional RMR-generating opportunities through adjacent services.
Parks Associates Data: Twice as many consumers intend to purchase a stand-alone security product than a professionally monitored system.
- Continued investments in startups, new technologies, new services and cutting-edge software will drive the next wave of connected solutions. Startups are targeting every aspect of consumers’ lives from our homes to our vehicles. Applications vary from safety and security to comfort, convenience, and health and wellness. The emergence of AI, blockchain and other new technologies opens up many new solutions for both horizontal and vertical applications. These innovations and business models target pain points for consumers and customers and disrupt incumbent players’ business models.
Parks Associates Data: The average number of connected devices per U.S. broadband household is 10.5, and the majority are connected entertainment and consumer electronics devices.
Smart home device manufacturers and providers have had success enticing current owners with additional purchases. New buyers remain more elusive and will need alternative messaging that focuses on compelling use case stories rather than dwelling exclusively on technology.
Ultimately, consumer interest in smart home products and services is driving innovation in multiple channels, including home builders, security, connected health and wellness, and others, with leading players crafting diverse strategies to leverage smart home tech that enhances their brand, differentiates their product lines and drives recurring revenue.
Elizabeth Parks is President, Parks Associates
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