More than just a big futuristic tech show, the CES is a perfect occasion to review where the connected home industry is at and what the market might look like in the next year or two. However, if you follow the connected home market like us, there was no major surprise in Vegas this year. The main takeaways from the event were the growth of the leading US service providers and the development of the retail market via cameras, thermostats, voice control and home automation. There are also some interesting trends in the market with additional user interfaces, the hype around connected door locks and the much cheaper products coming from China. Finally, we saw a few start-ups which developed solutions particularly interesting for the energy markets.
The leading US service providers are growing their customer base and adding more use cases to their portfolio
Two of the leading connected home service providers were exhibiting this year at the CES: Vivint and Xfinity (Comcast). In a country with around 125M homes, Vivint (a specialist connected home service provider) has secured around 1.2M customers and Xfinity around 0.7M. Vivint drew the most attention at the show with a nicely designed ‘mock house’ displaying different connected home use cases across the home. Its customers have on average 15 connected devices installed and are typically adding a few every year. To attract customers to buy more devices, Vivint offers financing up to 5 years. More interestingly, VivintSolar (a different company from Vivint smart home) has around 100,000 customers and the companies have announced a partnership where customers would get insights into current and historical energy usage and generation, through the Vivint smart home app. This will be used for the energy management service offered by Vivint smart home, which will also include its SkyControl panel, a smart thermostat and a range of sensors.
The retail part of the connected home market is developing through peace of mind, climate control, voice control and home automation offerings
- Connected cameras were difficult to miss at the show. They were everywhere last year and they were everywhere again this year but after all, the CES is in the US, which is a security market hotbed and cameras are the core security products. We recently reviewed the European market for connected cameras and looked at ~20 of the top cameras in the market. We would probably need to triple that number to provide a complete picture globally. I suspect the number of manufacturer contenders will reduce as the market will consolidate. One theme which came out strongly when talking to these manufacturers was that on retail channels, customers buy these devices for watching pets, monitoring babies and nannies. This is one of the findings of our connected home security report, where we found that unless you are a security service provider, you are more likely to succeed at selling cameras if your marketing messages focus on peace of mind / entertainment, rather than security itself.
- Smart thermostats: Nest is extremely popular amongst platform providers. It seems that the penetration of this product in the US is such that platform providers would miss out on a great opportunity to attract customers, if they were not able to integrate Nest. To our surprise, there were not many other thermostats showcased by service providers, and only a few manufacturers exhibited their products. For these manufacturers, one of the trends is to compete on price. For example the Vine thermostat is said to be able to ship for £50 apiece by optimising the costs of the hardware components. This could open up a new market for these products as they would be accessible to a larger amount of customers.
- Amazon Echo / Alexa: The Echo was the buzz product last year. While Amazon was not exhibiting the product, it was seen on many booths. This year the “compatible with Alexa” was everywhere, some manufacturers already having it incorporated within the device itself. This is becoming a ‘must-have’ feature for any credible platform and device provider.
- What came as a slight surprise was that the Google Home product was rather rare at the CES, and not so many products were compatible yet. While many online reviews say that Google Home is a more functional and better looking product (as an Echo user, I disagree though!), the market power that Amazon has created with Echo is huge. It is still early days to conclude on what will be the most important criteria to win the home assistant market. But the VHS versus BETAMAX story tells us that the technically best product doesn’t always succeed.
- There were also numerous brands offering basic home automation devices such as smart plugs, connected door/window sensors, connected motion sensors. I don’t think we will see just a few brands emerging as THE key brands because this market is a race to bring the costs down, with very little room for design improvement. The CES is therefore a great place to ‘shop’ if you are developing a platform and in need of these devices.
- There were a number of clear connected home trends and innovations worth mentioning, such as different user interfaces, connected door locks and competition coming from overseas.
- Different user interfaces: The industry now agrees that an app alone isn’t enough, though neither is voice control. But is the combination of the two enough? Some companies were arguing that actually there should be more interfaces developed.
- We saw Netatmo show connected switches with 4 buttons, one for all key scenarios of the day (in/out of the house, day/night) and linked to either the lights or the shutters.
- We saw a company called Knocki creating scenarios where a knock on the kitchen counter would action anything you want (for example lights or music) based on detecting the vibration on the surface.
- The connected buttons are less new but we suspect we will see more of them in the coming years. Everyone is different and everyone will want to use their connected home differently and these buttons will really help personalise some key actions / scenarios.
- We also saw plenty of home robots which could be used as virtual assistants and entertainers. But I don’t think that this market is ready to be appealing to customers yet. They all look a bit “creepy”, they have limited functionalities and don’t really work smoothly. I think it will remain an expensive toy for the time being but I look forward to seeing this market develop though.
- Door locks are also not new but it really looks like this year will be their year. Some manufacturers have created a range of solutions that should satisfy most users, incorporating various combinations of code panel, key tags, fingerprint recognition, traditional keys and phone controlled lock via Bluetooth.
- The last memorable thing of the event was the number of Chinese manufacturers exhibiting the typical range of connected home products, some of which with very familiar design, and advertising them at a much lower price point.
Here are a few innovative energy related ideas from the CES Sands Expo where hundreds of young start-ups gathered:
- Lancey: A French start-up that has developed a connected electric space heater with an integrated energy storage solution (Lithium LFP battery). The idea behind the product is that the battery is charged at times of cheap electricity and the battery is used for heating during the peaks. Lancey is also working with Enedis (the incumbent French network operator) to potentially offer flexibility to the grid in the future.
- Anywhere solution: A Danish start-up that has created a connected screw fit adapter which goes in between the lamp and the light bulb and thus enables connected control of the lighting. The screw adapter is surprisingly small and also incorporates sensors for temperature, humidity, sound and light levels. Anywhere solutions is looking to offer this solution through partners (e.g. utilities) with a key focus on using the data gathered from the device to help clients with customer engagement.
- Mistbox is a small box connected to the outside of a central AC unit and it is designed to improve the efficiency of the AC system during hot weather. Mistbox does this by spraying a fine mist around the AC unit to pre-cool the in-take air of the unit which helps the unit to run more efficiently. Mistbox claims that its technology can help reduce air-conditioning costs by up to 30%.
- Ipsum is a young Dutch demand disaggregation company that is looking to help customers better understand and manage their energy use. The idea is that it makes most sense to focus on the 5-6 big loads in a home and give insight on them and how to reduce consumption of these devices. The user can choose which actions he/she wants to take to reduce consumption and then gets the results of this in a few weeks / month. Currently Ipsum is working with EDF Energy on the innovation business unit and with one of the smaller Dutch utilities.
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