Nest Labs has just announced the launch of its smart thermostat in the UK for November 2013. After selling a few hundred thousand of its units in the US, will it now drive growth in the UK’s embryonic HEMh market?
Will Nest’s US success translate to the UK?
Nest Labs has created an ‘I-phone on the wall’ and has demonstrated clear market demand for a product costing over US$200. It is well designed, good looking and simple to use. Having sold a few hundred thousand, it is now teaming up with US utilities and building in demand response functionality.
Today, only a third of UK homes are equipped with heating controls. On the one hand, this could indicate that the UK is one of Europe’s weakest potential markets for smart controls. On the other, the low base highlights a great opportunity to leapfrog conventional heating controls to smarter products.
There are a few smart thermostats already available …
Delta-ee’s recent HEM multi-client study uncovered an expanding range of the products that are available in the market today. Companies like Climote, Alertme, Tado, Ecobee, Passiv or Owl are currently selling their smart thermostats in the UK. All these products are ’smart’ – some delivered solely through a smartphone interface, others akin to an ‘android on your wall’.
Potential energy retail partners can be slow moving…
The UK’s ‘big six’ energy suppliers could be perfect partners for HEMh manufacturers to reach a large number of customers. British Gas is leading the pack with its remote heating control product launched last year. Others are all engaged (most of them trialling products), but slower moving. Alternative routes-to-market also exist (we expect to see at least one announcement soon), and channel partners will likely be critical to the success of HEMh companies that are unable to create markets for themselves.
Nest’s competitors need Nest…
In the way that Android smart phones needed the I-phone to raise customer pull, at this stage of market development we believe that the market needs several HEMh players to help develop customer awareness and demand. Then it’s a battle for market share.
So, we believe that Nest launching in the UK is good news for all companies active in Home Energy Management. If the market grows strongly, incumbents in this space – energy retailers, heating appliance manufacturers, thermostat and controls manufacturers – may need to make their moves sooner rather than later. Partnerships, acquisitions, and internal innovation are all routes for these companies to play in this potentially large market.