There are over 75M boilers installed in Western Europe today, and the annual boiler installation market accounts for around €8B. Out of all the boilers installed, around a quarter have a maintenance and/or repair contract, giving a market value of around €2B, excluding all the replacement parts and uncontracted repairs or maintenance.

Connectivity and digitalisation of boilers will transform this market and reshuffle the cards between all the players. It will take time, but signs of this transformation are already visible, with giant heating servicing companies like British Gas and Engie Home Services betting on connectivity to enable remote monitoring and diagnostics of their boilers.

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In my view, these early movers will improve their commercial performance and gain valuable insights meaning that, when the cards are reshuffled, they might hold the aces. But only if they develop the right strategy for their business.

The commercial benefits are clear for these companies; they can for example:

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Boiler manufacturers have understood the opportunity to tap into this market, as they ultimately hold the data and diagnostic insights from their boilers. Today, the largest heating manufacturers have some sort of offering in the market. Bosch with British Gas in the UK or on its own in other countries, Ariston with its own platform offered to any servicing companies, Vaillant and Viessmann offering this service to their installers, Intergas has almost fully integrated connectivity in Feenstra’s boiler rental parc… The list goes on.

Despite these early moves, the real questions haven’t been clearly decided, and if I was in the board room of a boiler manufacturer, I would put the remote diagnostics topic on top of my agenda. My question would be “What should our boiler data strategy be going forward?”.  Options include:

The large heating servicing companies are very likely to influence the strategies chosen by boiler manufacturers, for the reasons mentioned above and, as these companies are often brand agnostic, therefore service sometimes 5 or more different boiler types. But to develop a remote diagnostics platform, all have told us it is easier to start with one boiler brand, to learn how to handle the data, how to use the insights to feed the field force operations, how to adapt the customer interactions etc. In the future, they plan to incorporate as many brands as possible, as long as boiler manufacturers agree to share their data and / or boiler insights in a standardised way accommodating the service company.

Likewise, a secondary target group for remote diagnostics will be the housing developers, the social landlords or the facilities management companies. Each would benefit from remote diagnostics over time, but none can develop their own boiler monitoring platform. They will therefore either use a brand agnostic platform, or one developed by a boiler manufacturer and which works exclusively with its boilers.

Choosing the right strategy will require some careful thinking on which client group to target and what they will be willing to buy from boiler companies. But it isn’t as simple as that of course, and there are other factors to consider:

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We estimate that over 1.3M homes will be equipped with remote boiler diagnostics by 2021 and the growth is likely to continue exponentially going forward. But who is going to dominate this space in the next years as boiler manufacturers, controls companies and large heating services organisations position themselves in the battle for the remote diagnostics platform? We believe large heating service companies currently hold a position of strength, thanks to their boiler installation business, but innovation in technologies, business models and maybe even alliances (why not?) could completely change this market…