This guest column is authored by Thomas Groell, Business Development Manager, Naran
This title might sound to you like the perfect clickbait title, and you’re quite right. We’ve read so many articles last year about how 2016 would be the year of the Internet of Things (and more specifically of the smart home market that attracts all the attention) that we thought it was time to ask ourselves if it really happened this year. And what if 2017 wouldn’t rather be the year of the great breakthrough?
Trends and expectations of the Smart Home
For the last 5-6 years, the Internet of Things has been a great subject of debate, expectations and forecasts. The number of studies and press articles about IoT is constantly growing and every single week brings a new list of connected and smart devices coming to the market.
The IoT market is seen as a major revolution (some even call it the Industrial Revolution 4.0) because it transcends the simple tech market and can be applied in almost every field, allowing huge improvements of quality and productivity, bringing new features and new opportunities. The IoT is planned to disrupt urbanism, the way we work, the way we live and our health, our factories and our entire economy. Everything starts to become smart, from smart grids to smart cities and offices, and with it comes new expectations of a smarter and more savvy future.
The major research agencies have all made their own studies on the IoT trend, planning the number of connected devices to hit exponential trends in the coming years. The forecasts are truly impressive, with numbers going from 25 to 50 billion of connected objects by 2020, with a forecasted market to be valued in trillions of dollars.
The reality in 2016
Let’s cut to the chase, the reality is far less promising. Most of the research agencies have significantly reduced their forecasts in the last years. Gartner went from an expected 26 billion devices in 2020 down to 20 billion in just two years (in its forecasts between 2013 and 2015), while it’s planned level by 2016 never fitted this year’s actual estimates (which should be around 6 billion connected devices excluding smartphones, tablets and computers).
Despite all articles from experts that said in the end of 2015 that 2016 would be the year of IoT and despite the optimistic forecasts of research agencies, we now see that we’re still far from widely adopted technology. The Internet of Things and the smart home still remain either a mystery or a gadget for most people and – for what truly matters to us – the smart home seems to be still a dream barely accessible to few tech passionate.
While there might be various reasons to that failed expectation, the major explanation remain the discrepancy between the needs of the main customers and what main smart home companies actually create and offer on the market. Recent market studies showed how inaccessible most of the products are for the average consumer, who is little or not at all educated on the many aspects of the smart home and needs a simple product that doesn’t require any technical knowledges to use or understand. Most products available on the market are complex and expensive devices, which is fine for a small minority of early adopters/tech enthusiasts but does not fit at all the demand of the rest of the market.
What should be done differently?
All marketing teachers in the world would answer this question in the same way: listen to your customers!
So let’s have a look at two top selling smart home products:
- Nest Thermostat: this smart thermostat is according to Nest so easy to install that most people do so in 30 minutes. As the leading product of Nest, it’s considered as a centerpiece of the “Work with Nest” ecosystem and therefore brings on interconnectivity on the forefront. The main argument of this device remains its return on investment, with the idea that it “pays itself” with the considerable savings it should bring.
- Amazon Echo Dot: currently sold out on Amazon due to a huge demand for Christmas, Amazon Echo owes its success to three main points. Priced at $49 (even $39 currently), it’s a very affordable product that offers a great first step into the smart home world for newcomers. Its wide compatibility with partner products and via IFTTT is also a great plus, while it’s simplicity of use (with voice control) makes it pretty accessible to the average consumer.
From the teachings of those two successful products, it appears two major elements are refraining consumers: connectivity and price.
Connectivity: Customers tend to buy their smart home products separately, which often means that after accumulating several smart devices, there might be issues with inter-connectivity between them. With major manufacturers taking over the market in the last two years (Apple, Google with Nest and Samsung with SmartThings), we’ve seen new ecosystems rising, with a constant preoccupation to create special partnerships with certain brands and limit other products to connect. HomeKit only works on Apple smartphone/tablet, while Nest makes its own products a required centerpiece of their smart ecosystem.
Price: It’s long been commonly accepted in the tech industry that price isn’t central as long as the features are innovative and useful. Although some thought wise to apply this rule to the smart home, it would be a misunderstanding of what truly is the smart home, a technology that is supposed revolutionize everyone’s daily life and everyone’s home (not just tech nerds). And because price is so central, adding a premium of hundreds of dollars just to make something “connected” (like kettles, ovens, ACs) tend to refrain consumer’s attraction for connected devices, which explain the failures of many smart kitchen appliances like connected fridges or ovens. Moreover, the price should always be understood relatively to the use perceived by the user, which means efforts should also be done on the simplicity of use and overall usefulness.
The products and companies to follow in 2017
There is actually little chance we will see a major breakthrough of the smart home market in 2017 or any specific year. Looking at what’s happened so far, it is more likely that smart home will progressively accelerate its expanse through the following five to ten years.
Nonetheless, 2017 will probably bring a good amount of surprises and great innovations, partly thanks to those three companies you’d be wise to keep an eye on for the year to come.
If This Then That or IFTTT is a San Francisco based startup that developed a technology that connects services together through the concept of trigger/action. Its considerable and still growing catalogue of partners and its very intuitive and accessible interface makes it probably the best positioned company to take a central role in the growth of IOT and become the leading intercommunication tool for connected devices. With its newly opened IFTTT partner program, it also gives its partners a perfect tool to better understand its users and their behavior, their average use of the device and with what they combine it. With its new focus on partnerships with smart home solutions, IFTTT could quite possibly become a big deal on that market.
The battle for the smart home market will mainly take place on the voice assistant field, as our current interfaces on desktop and smartphones will soon be outdated to allow a more automated, more intelligent and more accessible smart home. But while Apple’s Siri, Amazon’s Alexa and Google Home are all based on hardware devices built by those same companies, Microsoft made the choice to develop an AI assistant that can be integrated in any smart home device and would include PCs and Windows smartphones as brains of this new ecosystem (which represent a huge number of compatible devices directly compatible after the release). With a majority of smart devices that aren’t currently covered by a digital assistant, this could mean huge opportunities for Cortana. We should see what’s what in the next coming months.
South Korean startup Naran (where I work) developed the Prota S smart hub and its tiny robotic elements called MicroBots. These allow the user to turn all the home appliances into a connected device by installing an add-on device that remotely turns it on and off, while the Prota S smart hub with its wide compatibility integrates those appliances with all other smart devices into smart home automation workflows. For a fraction of the cost of replacing old appliances by new connected ones.