The pervasiveness of high-speed broadband, smartphones and tablets is having a remarkable effect on home networking technologies. Practically every home appliance and piece of consumer electronics is moving towards acquiring an Internet Protocol (IP) address, making it addressable and connected on the net. Consumers today already own multiple types of connected devices and this number will continue to increase over the next few years.
Connected homes are rapidly moving towards reality; the age of smart, automated homes is here.
We have already seen remote automation technologies such as controlling a thermostat on an air-conditioning unit via SMS or a security camera sending images to a remote monitor. More recently, TV sets are becoming Internet enabled, blurring the boundaries between a TV and a PC, bringing together a host of services such as online shopping, checking email, video calling and banking.
There are other facets of connected home that are interesting from an enterprise perspective. Smart metering and remote infrastructure monitoring is already a mature concept in many developed markets. And with appliances connected to the manufacturer's servers it will be possible for manufacturers to prevent break downs through remote diagnostics, provide predictive maintenance and thereby provide enhanced warranties ensuring a competitive edge. In addition, advances in cloud computing technologies and applying big-data analysis to the appliance data exhaust can help provide real-time service responses, and significant insights on usage patterns for various demographics to help create new products, services and business models.
Major innovation for service providers, device manufacturers and consumers is on the way. We are about to witness an exciting revolution, the catalyst for which is the emerging opportunity of connected home.
According to ABI Research, connected home devices are potentially the “Next Big Thing” in the consumer electronics industry and could reach a global market value of US$10 billion by 2014. The figure will balloon with growth in sensor and control technologies, mobile applications, network traffic, big data management, analytics and cloud computing
The drivers of connected homes
According to Nielsen1 , 46% of the mobile subscribers have smartphones while an enormous 60% of recent acquirers are opting for smartphones. The numbers point to a vast population that already owns remote “monitoring” and “controller” devices with connectivity.
Consumers are demanding more mobility, monitoring and controlling capabilities, centered on their desire for an always-on digital lifestyle. Manufacturers have already recognized an opportunity in the demand for such services and are re-engineering their products to be IP capable (refer figure 1 above for demand forecast by sector). Communication service providers are also driving transformations that can help them create and deliver innovative services, as theyexplore new avenues for growth due to the saturation in mature markets and increasing margin pressures. In addition, 4G deployments and advent of all-IP networks will further trigger the growth of connected home with increased capacity and infrastructure available.
Figure 1: Connected Home Opportunity Forecast by Services
There are several other factors driving the demand for connected home. With growing energy consumption, rising energy costs and environmental concerns, consumers want to have better control over their energy management. Residences in the US account for nearly a quarter of the total energy demand, while globally, residences use about 15% of the total energy consumed, indicating an opportunity in energy-related remote management solutions (see figure 2).
Figure 2: Share of Energy Consumed by Sectors of the Economy, US, 2010
Interestingly, consumers are also willing to pay for such solutions. A recent survey by Ovum found that - although the uptake of home security and monitoring, smart energy control and media sharing services is currently low, they offer tremendous potential, with consumers expressing strong interest in receiving them in future.
The emerging opportunities
Key challenges to scaling: Fragmented systems, regulations, bottlenecks and consumer education
Connected home solutions have the potential to provide an unprecedented opportunity for Service Providers and other ecosystem players to reach new markets and add sustainable revenue streams. However, rapid technological evolution, fragmented systems and devices, security and privacy concerns present a challenge (see figure 3 above for Wipro's analysis of the key business and technology related issues for connected home offerings). Amongst the major concerns for players are regulatory requirements centered on privacy and security. With such vast amounts of user data being captured and stored, data management and security will need a very cautious approach. Compromised data could lead to legal costs and reputation damage.
While the mobile lifestyle of consumers is at the core of the connected homes development, consumer education is the key to success. Consumers are willing to pay – they already do for connectivity, content and other services – but they may not be able to select the optimum bundle of services. With the prospect of ecosystem players to reach new markets and add sustainable revenue streams. However, rapid technological evolution, fragmented systems and devices, security and privacy concerns present a challenge (see figure 3 above for Wipro's analysis of the key business and technology related issues for connected home offerings).
Figure 3: Key Business and Technology Challenges in Offering Connected Home
Amongst the major concerns for players are regulatory requirements centered on privacy and security. With such vast amounts of user data being captured and stored, data management and security will addressing a new breed of connected home users, creating competitive and easy-to-understand service packs will be essential. Additionally, with a plethora of devices on the net (see figure 4), consumers must be insulated from device complexity.
In an age when app installations on mobile devices have become painless, consumers will want unified, seamless, simple-to-use interfaces with interoperability across appliances and devices.
Figure 4: Diversity of Devices Responsible for Mobile Data Growth, Global Forecast, 2011
The war for home turf has already begun. However, winners and losers will be decided on the basis of their agility to embrace new technology, ability to create seamless experiences and their innovativeness. Service providers are making advances to embrace the opportunity, but they need to drive transformations that can help them deliver superior service and quickly rollout new services in a multi-party environment. For success:
Conclusion: It's about providing control, independence and peace of mind
The consumer demand for a digital lifestyle is driving the adoption of connected home; and it is poised to grow; but the users of connected homes may not necessarily be tech savvy. These are not consumers who will want to grapple with the complexities of Wi-Fi and Bluetooth, 4G and IR and RFID and so on. They just want control, independence and peace of mind as they go about their daily lives. Reducing technological complexity and providing compelling experiences could easily be the winning strategy.
1. Source: Q4, 2011 Nielsen Mobile Insights
Alan has a diverse background in the satcoms, financial services, media and telecoms industries across the globe. He is currently an independent consultant advising Wipro on telecoms and media matters. Most recently, he was Chief Technology Officer of SES WorldSkies where amongst other things he led product development including the development and implementation of the IP PRIME IPTV platform. Previously, he held executive positions at Citigroup in New York where he led development of mobile banking and then led the information security services group. A proven innovator with two patents to his name and two others applied for.
Manoj brings over 18 years of experience with more than 7 years in design and deployment of Media services in telco networks. During these years, he has worked across R&D, Product Management and Implementation in various technology domains including legacy PSTN, GSM, VOIP, Broadband and IPTV. He brings vast experience in various domains of media including CDN, Apps, STBs and API platforms. He has been an invited speaker in various industry forums including ITU conference on NGN. He is also a co-lead in “IPv6 task force” of Indian Govt.
Satish Singla is currently the Head for Connected Home Solution in the communication service provider business unit. He has over 16 years of experience in telecommunications industry in roles ranging from Lead Solution Architect, Program Manager to Solution Delivery head. He has extensive experience of architecting large end-to-end IT solutions as well as business transformation programs.