To recap; the smart home market is behind schedule, early-adopter enthusiasm has only taken it so far, and the next step needed to drive it forward requires a reconsidered approach to design and marketing – and the likely involvement of operators. What follows is the second part of our coverage of the European Smart Home summit.
The companies covered in the second part are: 1450, Strategy Analytics, Idratek, Maplin, Ericsson, CFT Denmark, Silk Road
Szymon Janiak, CMO of 1450, was the first presenter of the day, and told the story of Oort – a Polish startup that designed Bluetooth-based smart home devices and appliance adapters. Janiak said how Oort’s failure was not in the technology or the finance, but in the marketing – warning similar startups not to go global, as universal values do not exist and customer expectations are completely different.
Oort eventually evolved into a design partner, licensing designs to existing companies that were looking to enter the smart home market. Janiak joined 1450, and advised the audience that companies stop imitating Apple, especially as many customers do not care about the design of a product, and simply want to hide it away, despite the designer’s best attempts to expose it. In addition, Janiak said many still don’t understand the smart home concept, assuming that they should be living in a version of The Jetsons – and instead are confronted by some underwhelming products.
He added that some developers find the term ‘smart home’ problematic, as they are still in an emerging market that isn’t providing that Jetsons feeling. Because of this potential for misunderstanding, and customer resentment, there is a need to properly inform these customers about what exactly they’re buying into.
Similarly, Janiak warned that customers can’t be relied on when asked about their behavior with purchases – doing what they feel, rather than what they claim to be doing. He said that their behaviors need research, otherwise developers will start on the back foot if they build products on top of incorrect data. Giving a consumer a device and observing them is far more reliable than asking for feedback.
Selling emotions or new concepts is therefore difficult for startups, if they are operating on inaccurate data for their design, says Janiak. Understanding the customer is an absolute priority, but Janiak warns that many will fail anyway. Key to avoiding this is understanding the real needs of the customer, not simply working from your own idea.
In closing, Janiak stressed that the technology is not important from the customer’s perspective, and that marketing should focus on presenting the benefits it can provide – rather than selling figures from a spec sheet. In most cases, he said, the technology can change, but the customer and their behavior cannot. He added that the marketers need to understand this role, and present a clear and easy to understand benefit to the customer.
VP and Principal Analyst David Mercer presented a snapshot of Strategy Analytics’ smart home findings, which are based on a survey of 8,000 consumers in the US and Western Europe. The data shows that response-type features like alarms are the most demanded, with home monitoring the second-place feature. Notably, remote control features were the least demanded by the group.
The findings are certainly in line with the prevailing industry sentiment – that consumers like the idea of being able to scare off intruders remotely, or activate emergency shut-off valves if a leak is detected in a basement, for example. Remote control features are antithetical to the smart home concept, as a truly ‘smart’ home would be taking action independently, without manual input being required.
Strategy Analytics terms such a system ‘Intelligent Home,’ and expects its arrival in the next five years or so – after the initial media focus was spent on the ‘Connected Home’ that enables the distinctly undesired remote control functions.
In terms of geographical differences, Europe prefers energy-related tech to the US, and the US much prefers security-related offerings, compared to European demand. The US is also 15% more likely to choose a voice command system than Europe.
As for sales strategies, Mercer said that the bundle model is the best approach, noting that the sweet-spot is a $200 upfront cost with a $10 monthly fee – according to Strategy Analytics’ penetration estimation curves. Mercer finished by noting that the smart home trend is not a fad, akin to 3D TVs.
Next to the stage was Karam Karam, the director of 15-year-old smart home designer and integrator Idratek, who shared an in-depth presentation on how a smart home can benefit elderly occupants. Karam said that assisted living technology would be crucial for dealing with the demographic time-bomb of an aging population.
There was a balance to be struck, according to Karam, between the cost of the installation and the risk it helped mitigate, but the improvements in quality of life are tricky to measure. Aging in place, keeping a person in their familiar surroundings, can be much more comfortable for the patient, and Idratek’s portfolio is a system that can enable that style of care.
Karam noted that aging isn’t sudden, that it is a slow transition that people tend to resist. He said that overtly assertive technologies are often resisted, as things like fall-preventing pendants tend to hurt the wearer’s pride. Moving that function into the home itself is one way to get around that stigmatization, and Karam says that smart home technology can help those who don’t yet need it – introduced earlier to help encourage adoption before the learning curve might be too steep.
As for current problems, Karam said that user interfaces can often be alien and unintuitive, and that fewer interfaces are better. He stressed that they have to be reliable, as unexpected behaviors can be very confusing for less confident users. For Idratek, using voice and audio alerts from its panels was a useful feature, which allows for fewer interactions with a panel that Karam admits is quite complex.
Luckily, the Idratek system that Karam installed for his mother, the focus of the presentation, was suitably streamlined so that his mother didn’t need to use the plethora of buttons on the panel. The two-bedroom flat houses 15 connected lights, 7 connected radiators, temperature and light monitors, infra-red motion sensing, and those audio I/O panels. Installed back in 2011, and managed by the Idratek Cortex server software, Karam says the completely wired deployment has operated without a hiccup.
Karam went on to explain how his mother interacts with the system, and how it enabled himself and his sister to check-up on her wellbeing – using alerts based on her interactions with kitchen appliances, to track meal consumption, and the motion sensors, to ensure she was moving around the flat and hadn’t fallen. Karam noted that occupancy sensing was very accurate, but only in a household of one, and recounted a missed opportunity – of connecting the time-of-use data for the bathroom with health complaints, that might have led to a faster constipation diagnosis.
Oliver Meakin, CEO of UK tech retailer Maplin, offered a refreshing perspective on the smart home – noting that there had been a consumer awareness step change in 2017, thanks to Amazon’s Echo and Google’s Home. Saying that it was hard to experience, and therefore sell, smart home products online, Maplin is hoping to use its stores and staff to capture a big chunk of the UK retail market.
Saying that retailers and manufacturers need to work together, and that retailers are going to have to look at offering some sort of finance deals to fund larger purchases, Meakin said that launching own-brand devices was a strong opportunity. Maplin plans on stocking its own smart plugs next year, to help the store offer a complete solution to customers.
The other major concern for retailers, according to Meakin, is installation. Maplin uses third-party installers, and has carried out 14,000 installations in the last three months. The retailer plans on using a third-party to provide tech support, chiefly Tech Mahindra. One of the more innovative plans for Maplin involves a home visit from a worker who can then provide recommendations for the deployment.
Offered for free, the service seems like a winner – with the staff converting one out of every two visits, and the average transaction coming in at £600. For the remote workers, Meakin said Maplin breaks even if they convert 12 visits per week, and notes that they are not working on commission – helping to avoid any air of an aggressive sales pitch.
CCTV products are most popular, and Amazon is apparently way out in front for home hub demand. Maplin is also using in-store demonstration areas as a sales vehicle. Meakin also said that is staff were extremely useful for pushing sales, as Maplin often aims to turn them into early adopters by asking brands to provide hefty staff discounts. Meakin said that being able to have a staffer show someone a live view of their smart home through their smartphone was an extremely convincing demonstration.
Patrik Hedlund, a senior advisor for Ericsson’s ConsumerLab, presented findings from research carried out to gauge consumer interest and attitudes. The telecoms infrastructure provider found that 27% of homes owned a smart home product, but Hedlund noted that the bigger question should be what is the threshold for classifying a home as smart.
He pointed to a few applications that would remove headaches from a household, such as the shared family calendar on a fridge, which could be digitized inside a smart home system, as well as inventory management by the fridge, to optimize shopping lists and excursions.
In a geographic observation, Ericsson found that emerging markets were much more tech-positive, and therefore receptive to smart home products. He noted that Swedes in particular were quite hesitant when adopting new tech. Hedlund added that the main reasons for consumer disinterest in the smart home were a complete lack of interest, followed by cost concerns, and finally the system complexity.
In terms of current adopters, Hedlund said Ericsson found most were 18-34 year-old single males living in suburban areas. However, the consumer group that had the clearest need for the sorts of benefits provided by smart home systems were 21-34 year-old females, typically with children, as well as a separate group that were caring for elderly family. Hedlund noted that it would be good to see smart homes designed by women, with women in mind.
With strong consumer awareness, Hedlund said that it was the lack of interest that has to be overcome, to push the smart home market. The Big Five internet companies (Amazon, Apple, Facebook, Google, Microsoft) are going to increase their share of consumer expectation for smart home services, according to Ericsson – and are hoping to expand their brands into the new market opportunity.
In some good news for retailers like Maplin, Ericsson found that only 14% of consumers want to select and install their smart home systems themselves – evidence that these consumers are a lucrative opportunity for those that can offer a bundled installation service. Some 28% of consumers want an all-inclusive package too.
Center for Freedom Technology, Denmark:
Michelle Nielsen, Project Leader at the CFT’s Health and Care team, provided another alternative perspective, this time from a government organization that was looking to improve the care provided to elderly citizens. Nielsen painted a picture of a rather bureaucratic process, complicated by reluctance from elderly patients to use the technologies provided.
Nielsen said that wanted non-invasive tech, as they do not like reminders of their health problems. In addition, these elderly users rarely called for help adjusting their sensor-based systems, and would then give up on using them entirely. The homes all had lots of variables, and Nielsen said this often led to the system producing too many false alerts, or too few actual alerts.
With one-in-three citizens aged over 65 falling annually, the CFT recognized that there were big opportunities here – and partnered with Kamstrup and Develco to work on power consumption and motion sensing (respectively) as a way of spotting a fall. However, Nielsen said the project found that power sensing needed far more context than was available, and that programming the motion sensors to spot changes in routine was harder than anticipated.
Nielsen said that the generally positive reception of the monitoring was surprising, given the prevailing Danish sentiment, and that the system also boosted the connections between family members. But old home designs proved particularly problematic, with one of the most common problems being the lack of power sockets and residents unplugging the hubs to use a vacuum cleaner – and forgetting to plug them back in.
This required a manual reset for the gateway, and Nielsen said it was often the most low-tech problems that throw up the largest problems. A second project, aimed at cohabiting couples where one had early-stage dementia, was meant to provide the ability for the healthier member to leave the home and ensure their partner was still well. It was not a success, because the CFT had difficulty finding participants early enough, as most denied their need for it in the early stages.
The final presentation of the event came from James Fenner, owner of marketing consultancy firm Silk Road, which specializes in property. Fenner said that he was amazed at how the property industry didn’t talk to consumers – a stark difference to the automotive industry.
Silk Road realized that you can’t design the homes of the future if you don’t know what’s coming, and so it began studying market trends. Fenner noted that construction doesn’t change all that much, and that furnishings in a home change far more frequently than the structural layout – and that in the past 5 years, the consumer market had gone from 0% to around 60% penetration for tablet devices.
With such a quick potential change of pace, the home is ripe for disruption, especially as in the last decade, far more media covering interior design and homes – such as TV shows, Pinterest, Instagram, and even magazines seeing a resurgence. Saying that people were overly visually stimulated, to the extent that the wellness tourism industry is now a $450bn market, interior design is moving to one where lighting (or rather the lack of it) is becoming a feature.
Trending away from prominent screens, towards rooms with more ambient lighting, the implication is that smart home interfaces will not center around screens – using voice and touch. Compounding this shift in design was a focus on a better use of space, where newer designs featured movable walls and convertible areas, to support increased remote working and smaller square-footage in the housing stock.
Studio apartments with movable walls can provide much more bang-for-buck than a small one-bed – something that Fenner says will become more of an option as urban populations grow. In addition, multi-generational households are increasing too, as are single households – which have apparently doubled in recent years in the UK.
There has also been a shift in mindset too, from the home as a private fortress to being a public space, shared via social media and FaceTime. Home WiFi was now an option for boosting satisfaction in a house, and far cheaper than installing a pool or home theater, and in terms of upgrades, Fenner noted that a comprehensive smart home system was about the same % cost as a new bath or shower unit. He said customers will begin demanding smart home functions, in the homes they buy.