Home Automation.... who's buying it?
The home automation market is big business, growing over 30% a year and expected to be worth $9.5 (£6) billion worldwide in 2015, according to Berg Insight. In 2012 it remains an immature and fragmented market but one that is attracting the attention of major new suppliers such as multinational telecommunications enterprises.
Until recently the main opportunity for home automation appeared to be in new build, high-end homes. House building has been one of the casualties of the economic downturn, however, and this has accelerated the trend for a more pragmatic approach to home automation. Retrofitting systems is now an important market driver along with a real-world approach to costs.
Utility and telco suppliers
Home energy management remains a largely discrete application, with solutions provided by utility companies and their B2B suppliers. According to IMS Research, in the next five years over £2.4 billion will be spent in the UK alone on smart home energy management devices – ranging from smart meters themselves, to in-home devices that can communicate with them.
Home energy management systems will see moderate worldwide growth through to 2013, according to ABI Research. From 2014 shipments of home energy management systems are expected to accelerate rapidly. In 2016 nearly 44 million systems will hit world markets, generating revenue of about $2 (£1.26) billion.
Motorola and Verizon have teamed up to target the wireless home energy market, bypassing the utility companies by managing energy use via a wireless device. Verizon’s Home Monitoring and Control service uses Motorola’s 4Home technology to allow consumers to see who’s at the front door on their phone. They can also turn off the lights and control their thermostat using their smartphone.
The increased interest in retrofitting homes rather than hardwiring in a network at the build stage has driven interest in wireless technologies and standards. A wireless network has to balance requirements such as range, power consumption, reliability, bandwidth and cost and there are a number of wireless options, each with their own benefits and limitations.
Verizon has thrown its hand in with the Z-Wave Alliance, an open consortium of global companies dedicated to promoting Z-Wave as the standard in wireless home control. Z-Wave is a low power, mesh networking technology, as is Zigbee, and most smart energy meters installed in the US are being fitted with Zigbee chips.
The latest standard comes from Google’s mobile operating system. Android@home is a set of protocols for controlling wireless or connected devices such as light switches, alarm clocks and other home appliances, using any Android device.
Mobile and cloud
Home automation is following the business world into the cloud as processing power is transferred to cloud-based servers enabling a ‘pay per use’ service approach to home automation that does away with high upfront costs. Mobile devices from smartphones to tablets working in the cloud via applications (apps) is fast emerging as the way consumers will want to control their home automation systems.
Eccobee climate control systems can be managed via the consumer’s iPhone, for example, while the Schlage LiNK system lets consumers manage Z-Wave enabled wireless locks, lights and components such as the Trane Remote Energy Management Thermostat via smartphones.
Home automation apps that can engage consumers and realise recurring revenue streams while building customer loyalty and reducing churn are the new holy grail.
Broadband operators are also jostling for bandwidth in the home automation sector. “While the home automation market is still young, major operators, including Verizon, AT&T, Comcast, Time Warner Cable, and China Telecom, have already made public announcements regarding home automation services and some have begun initial rollouts, and many more will jump into the game this year,” says Jeff Heynen, directing analyst for broadband access and video at Infonetics Research.
The potential customer loyalty and incremental revenue attached to home automation services, particularly home security and home energy management, are too enticing for any operator to pass up, Heynen believes.
“Many broadband operators are starting out small, offering remote control of lighting, doors, thermostats, audio, video, and security systems. The goal will then be to layer on additional revenue-generating services, such as a full-fledged home security system,” Heynen says.
The home automation market is maturing fast. As more big players enter the market, it looks likely that the sector will follow a well-trodden path in technology innovation: standards will start to converge, prices will come down as competition rises and products and services will become more refined, robust and hi-tech.