Month: June 2016

THE US SMART HOME MARKET REPORT: Adoption forecasts, top products, and the cost and fragmentation problems that could hinder growth

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The US smart home market has yet to take off. Quirky’s recent announcement that it was filing chapter 11 bankruptcy — and selling off its smart home business, Wink — highlights this well.

At its current state, we believe the smart home market is stuck in the ‘chasm’ of the technology adoption curve, in which it is struggling to surpass the early-adopter phase and move to the mass-market phase of adoption.

There are many barriers preventing mass-market smart home adoption: high device prices, limited consumer demand and long device replacement cycles. However, the largest barrier is the technological fragmentation of the smart home ecosystem, in which consumers need multiple networking devices, apps and more to build and run their smart home.

In a new report from BI Intelligence, we analyze current US consumer demand for the smart home and barriers to widespread adoption. We also analyze and determine areas of growth, and ways to overcome barriers.

Here are some key takeaways from the report:

Smart home devices are becoming more prevalent throughout the US. We define a smart home device as any stand-alone object found in the home that is connected to the internet, can be either monitored or controlled from a remote location, and has a noncomputing primary function. Multiple smart home devices within a single home form the basis of a smart home ecosystem.
Currently, the US smart home market as a whole is in the “chasm” of the tech adoption curve. The chasm is the crucial stage between the early-adopter phase and the mass-market phase, in which manufacturers need to prove a need for their devices.
High prices, coupled with limited consumer demand and long device replacement cycles, are three of the four top barriers preventing the smart home market from moving from the early-adopter stage to the mass-market stage. For example, mass-market consumers will likely wait until their device is broken to replace it. Then they will compare a nonconnected and connected product to see if the benefits make up for the price differential.
The largest barrier is technological fragmentation within the connected home ecosystem. Currently, there are many networks, standards, and devices being used to connect the smart home, creating interoperability problems and making it confusing for the consumer to set up and control multiple devices. Until interoperability is solved, consumers will have difficulty choosing smart home devices and systems.
“Closed ecosystems” are the short-term solution to technological fragmentation. Closed ecosystems are composed of devices that are compatible with each other and which can be controlled through a single point.

http://www.businessinsider.com/the-us-smart-home-market-report-adoption-forecasts-top-products-and-the-cost-and-fragmentation-problems-that-could-hinder-growth-2015-9

New CEO at Nest has eyes on what’s needing to be fixed

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NEST’S CEO IS REPLACED: Tony Fadell is leaving his position as CEO of Nest, according to a blog post written by Fadell. He will be replaced by Marwan Fawaz, who previously led Motorola Mobility’s television set-top box business, Motorola Home. The transition has been underway since the end of 2015, and Fadell will remain involved with Alphabet (Nest’s parent company) as an advisor.

Nest and Fadell have faced a lot of criticism over the last few months.

Nest failed to meet revenue expectations. When Alphabet (formerly Google) acquired Nest in 2014 for $3.2 billion, Alphabet set Nest’s revenue target at $300 million annually. But Nest has failed to meet that revenue on its own and has only surpassed the target because of revenue from Dropcam, which it acquired for $555 million six months after Nest was acquired by Alphabet.
Nest is being pressured by Alphabet to release a smart home security system, but hasn’t yet. Nest is reportedly working on three devices — Flintstone, Pinna, and Keshi — that would work in tandem to create a smart home security system. Nest has not released a successful product since the launch of its signature smart thermostat in 2011.
Nest shut down service to the Revolv hub. In April, Nest announced it was shutting down service to Revolv smart home hubs, which were used to control smart lights, locks, thermostats, and other smart home devices. Revolv was acquired by Nest in 2014. Shutting down the Revolv hubs led to a major public backlash against Nest.
Fadell pointed the finger at Dropcam’s CEO Greg Duffy for many of Nest’s problems in an interview withThe Information. Duffy publicly responded saying that if Dropcam’s revenue was released, it would make Nest “not look good in comparison” to Dropcam.
Nest isn’t the only company struggling in the smart home market though. There are very few success stories among smart home products right now, as they tend to be expensive, gimmicky, and often don’t add enough value for the consumer. For example, the $250 price tag for the Nest Learning Thermostat is not affordable to the mass market and doesn’t add enough value to justify the cost difference compared to a $30 unconnected thermostat. Over time, the price of smart home products will drop, making them more affordable for the average consumer.