Table of Contents
The Role of ICT Solutions at the Household Level
This analysis investigates why the platform in the home is an important step to win in the smart home opportunity. It also highlights the opportunities for IT and Communications Technologies (ICT) industry as the smart home market evolves to fit in a connected world future. Frost & Sullivan believes that transformation in the energy industry will accelerate the progress towards smart home in Europe. As a result, ICT is needed to help energy companies achieve this vision, as ICT vendors are in a prime position to push the development of a universal platform that will be the cornerstone of a smart home offering.
Frost & Sullivan believes that transformation in the energy industry will accelerate the progress towards smart homes in Europe. As a result, we believe that the IT and Communication Technologies (ICT) industry is in a good position to tap into market opportunities either through new sales needed to meet demand from enabling smart home services or through new revenue from providing smart home services directly to households. Furthermore, there is a critical role for the ICT industry—through the technology and ecosystems that it can bring—to further develop the smart homes market. In particular, the ICT industry is also in a prime position to push the development of a universal platform that will be the cornerstone of a smart home offering. A universal platform is extremely critical for the development of smart homes because it overcomes many of the current obstacles to household adoption and innovative application developments. We believe the platform will be a fiercely contested component in the overall architecture of a smart home concept.
This analysis describes why getting the platform right is an important step to win in the smart home business. It also aims to highlight what this universal platform needs to consist of that will be fit for purpose in a true smart home vision. Finally, through a discussion on the competitive dynamics of a smart home market, the analysis will also highlight the opportunities that ICT companies can exploit.
The Current Service Landscape is Conducive for Energy to Play an Important Role. In Europe, the marketplace for smart homes is highly fragmented without a significant market share by any particular group of service providers providing smart home services. Unlike the situation in the United States where home security is predominantly the main ‘smart homes’ service that households buy on top of telecommunication services and energy supply, the penetration of home security solutions in European households is low. Therefore, the two current main service providers are energy or utilities companies and telecommunication providers.
Energy-based Smart Homes Offer can Provide Households an Instantly Recognisable and Tangible Benefit. In Europe, there is also a residential inertia towards significant home improvements, as this is a function of the overall economic climate. However, out of all the value that a household can derive from any new services provided by the four main groups of service providers, energy’s offering is the one that has a tangible benefit—that of having energy efficiency solutions installed in the home. The energy’s proposition towards a smart home will offer a more direct benefit to a household and galvanise to make a significant change. This drive will also push market innovations towards easier-to-use user interface to encourage household members’ participation.
Market Entrants Create Competitive Pressure for Innovations. New market entrants are expected to create some market development momentum in the smart homes market. These market entrants will come with a push for energy- based smart homes offering (through energy service companies or ESCOs) or telecoms with a futuristic smart home offering.
The ICT industry is in a good position to tap into market opportunities either through new sales needed to meet demand from enabling smart home services or through new revenue generated by offering smart home services directly to households. There is a critical role for the ICT industry through the technology and ecosystems that it can bring to further develop the smart homes market. In addition, the ICT industry is in a prime position to push the development of a universal platform that will be the cornerstone of a smart home offering due to the following reasons:
• The ICT industry has the bulk of technology necessary to achieve a smart home vision, from connectivity to applications to middleware to home data analytics.
• It has the understanding of the roadmap essential to smart transformation.
• It has built billing relationships with its target customers.
• It is familiar with enhancing customer experience and interacting with target customers.
• It has access to R&D and the financial capital for innovation, particularly towards future smart homes or smart communities.
• It has a wide ecosystem that will contribute to standardisation and interoperability.
• It has access to a widespread distribution network that is useful for white goods sales.
• It has the strongest internal drive, among the service providers to smart homes, to capture smart opportunities.
This analysis should answer the following questions for a European audience.
• How can we accelerate the adoption of smart homes in Europe?
• How can we overcome the severe fragmentation of the ecosystem for smart homes?
• What is an appropriate ICT solution to facilitate the development of smart homes fit for 2050?
Frost & Sullivan defines a smart home as one that integrates automation and intelligence to control and monitor household functions, such as environmental controls, security, home entertainment, home appliances, connectivity as well as home healthcare and well-being. The eventual aim of a smart home concept is to enable remote monitoring and control of all functions that a household makes or might make in the future. Specifically, we also expect mobility and home-based healthcare and well-being to be included in a smart home offering in the next decade. By 2050, we expect the smart home to become another intelligent node in a connected community. For example, its energy consumption is tightly integrated with the community’s energy systems, its security is linked to a neighbourhood watch and prescribed list of family and friends and is easily monitored and managed in real time and on various devices, its healthcare and well-being contributes to the communities’ overall care function, its entertainment is socially consumed (e.g., through social networks), excess broadband capacity is shared or leased according to demand, citizens’ out-of-home presence is factored into the community’s public transport infrastructure, including road capacity.
A universal platform is critical to facilitate the development of these new services and applications, and to enable monetisation for the various stakeholders involved in a smart home environment. As such, we believe the platform will be a fiercely contested component in the overall architecture of a smart home concept.
There are many different stakeholders involved in a smart home proposition. They can come from a variety of industries, such as:
• Communications: Telecoms service providers and digital entertainment providers, such as broadband, pay TV, mobile communications companies
• Energy: Retail energy or utilities suppliers, and Energy Service Companies (ESCOs)
• Healthcare: Service providers and consumerised well-being product manufacturers
• Home Automation: Vendors of home automation systems and solutions for controlling home environmental systems
• Home Security: Alarms and home security solutions companies
• White Goods: Home appliances manufacturers
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