DT, Orange, net oneM2M demo with Eclipse; DT talks SHaaS numbers

Deutsche Telekom announced two smart home projects recently, joining with fellow operator Orange to work with the Eclipse Foundation on a oneM2M cloud-based API for smart home devices. Speaking to DT about Smart Home as a Service (SHaaS) revealed the stickiness of the offerings, but also a sense of frustration with the slow pace of the market – which has been sluggish in both the service and direct-to-consumer retail sectors.

With Orange (which has just joined the foundation), DT will be demonstrating a new showcase that shows how an open standards approach can provide a better consumer and developer ecosystem. Specifically, the Eclipse Foundation is hoping that the demo convinces smart home developers to adopt its Eclipse oneM2M and Eclipse SmartHome frameworks.

The Eclipse Foundation, an open source organization best known for its namesake Integrated Developer Environment (IDE), and supported by over 250 members including Ericsson, IBM, Oracle, Red Hat, and SAP, is hoping to bring unification to the still rather fractured ecosystem of IoT platforms and approaches. oneM2M goes some way towards that goal, and in the smart home specifically, it has openHAB, Qivicon, aleon, JUNG, ProSyst, and Zoo Automation reference models for developers to use as foundations.

Orange combined its Datavenue IoT and Data Analytics offerings with its home gateway (running software from SoftAtHome), while DT integrated oneM2M’s cloud APIs with its Qivicon infrastructure. The demo saw third-party oneM2M applications able to run on both platforms – thanks to that defined set of APIs. oneM2M is now on v2.0 of its release, and aims to manage how higher-layer things (server-based) interact with each other.

Orange’s VP of Smart Home, Thibault de la Fresnaye, said “the service and device creation of the IoT ecosystem requires universal APIs to be shared by a core set of platform providers, open to a wide developer community. That’s why Orange launched this joint effort with DT, based on the Eclipse Framework.”

Matthias Mieves, Head of New Business, Sales, and Marketing at Deutsche Telekom’s Connected Home wing, explained that DT is looking to expand its white label offering around the Qivicon platform – but admitted that progress has not been as fast as DT would have liked.

In Germany, DT has 180,000 customers on its premium service (updated – 211,000 as of November 8th, up 94% y-o-y), billed at 10 per month on a 24-month contract, but doesn’t disclose the number of free-tier customers using Magenta. That’s a monthly revenue of 1.8m, a quarterly revenue of €5.4m, and an annual revenue of €21.6m.

With around 12.9m broadband customers in Germany (Q1 2017), that’s a penetration-rate of just 1.3%. The quarterly broadband revenue then was €986m, or €328.6m per month – meaning that the smart home services are about 0.55% of monthly broadband revenue.

Now, DT will also be getting a slice of all the per-device purchases made through its channels, and can also add the licensing revenues it collects from Qivicon licensees to that pile – which include some utilities inside Germany, as well as DT’s affiliates in Europe, as well as KPN in Holland.

But the bigger deal is the reduction in churn that a SHaaS offering like Magenta can provide. We pushed for a number, but Mieves said it could not be disclosed. He added that the SHaaS Product Loyalty Index (PLI) is the highest of all DT’s offerings – good news, as Magenta is approaching its two-year anniversary, and the beginning of the renewal period for those customers.

But Mieves is confident, noting that it is difficult to communicate the value of a SHaaS package until a customer actually lives with it. Once it’s in the door, they don’t want to give it up, he said, and DT consequently sees that its SHaaS customers are the stickiest and most loyal. Once you add up the service revenue and the device sales, it seems clear why DT is pushing SHaaS – as a means of locking in valuable customers.

As for the licensing, DT is still pushing for new customers. We asked how such deals are structured, and were told that there is an initial agreement on the feature-set and level of support, followed by a per-customer license fee.

When asked about the prevailing industry mood, Mieves said that Deutsche Telekom and other telcos had been on a learning journey – finding out just how difficult it was to sell the message to customers. Collectively, it was too abstract a concept to easily explain to potential customers, and so most telcos have shifted the messaging to focus on selling a particular use case, like connected HVAC, home monitoring cameras, or security systems.

The second step, once you’ve got through the door, is expanding on the initial use case, upselling more devices and services. Mieves said that they were killing ‘smart home’ as a concept, due to the consumer misunderstanding. This brought us on to the new Community IoT idea that DT has begun discussing in public.

The gist of the idea is to target landlords in multiple dwelling units (MDUs), to integrate SH technologies as part of a rental housing offering. A B2B model, the sales process would be markedly different – opening up new channel possibilities with construction companies and specialist home builders.

For larger buildings, there are collective benefits to be enjoyed, such as security alerts being shared between apartments, or flood sensors in a dwelling on a lower floor being able to alert upper flats to a discovered leak – and trigger the water valve shut-off. There might be large efficiency gains in the building’s HVAC systems to be had, if it could better monitor and understand its occupants’ usage, and for things like shared billing for utilities, connected meters and appliances make a lot of sense.