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Podcast S04E07

In conversation with Mario Moura, Resideo

In conversation with Mario Moura, Resideo

This week on the podcast, Jon Slowe is joined by Mario Moura, Managing Director – EMEA at Resideo (formerly Honeywell Home). They discuss the business of home technology.

Episode transcript

Jon Slowe – Director – Delta-EE

Mario Moura - Managing Director – EMEA - Resideo

[00:00:00.000] - Jon Slowe

Welcome to Talking to Energy, a podcast from Delta-EE, the new energy experts. We will be talking about how the energy transition is developing across Europe, with guests who are working at the leading edge of this transition.

[00:00:21.800] - Jon Slowe

Hello and welcome to the podcast. Today we're looking at the world of connected homes.

[00:00:27.230] - Jon Slowe

And I'm in conversation with Mario Moura who is managing director for Europe Middle East and Africa with Resideo the Smart home or connected home spinoff of Honeywell. Hello Mario.

[00:00:39.920] - Mario Moura

Hi, Jon. Pleasure, to be here. Thanks for inviting me.

[00:00:43.200] - Jon Slowe

And thanks for joining us. Now, Honeywell, everyone will have heard of Resideo. My guess is some of our listeners may not have heard so much about. So, can you start by just giving us a very quick introduction to Resideo and your role at Resideo?

[00:01:01.820] - Mario Moura

Absolutely Jon. Resideo is a fairly new company. We are you know 13 months old but obviously we have a close the 150 years heritage as a spin-off from Honeywell. We are a public trade company, listed in the New York Stock Exchange since 1st of November last year. And basically, we are a combination of businesses in Honeywell that had residential markets as in markets. So, the company decided to refocus into commercial-industrial areas. They decided to spin off everything that has to do with residential markets and automotive markets.

[00:01:50.570] - Mario Moura

So we are, Resideo is one of the two companies that were spun off from Honeywell.

[00:01:55.970] - Jon Slowe

Okay. So Resideo has got this focus only on the home. Is that right? You're solely focused on products and services to do with the home?

[00:02:05.300] - Mario Moura

That's correct. We only focused on the home. We have some minor businesses in what we would call light commercial but in essence what we try to do is expand the products and solutions that we have in the home to the grey area that's not buildings, not homes.

[00:02:30.290] - Jon Slowe

Okay, and how do you divide up the different products and services within the home. How do you organise yourselves? Is it around energy and security or what are your verticals or organisation within the home?

[00:02:44.860] - Mario Moura

Yeah. So, we would try to deal with the home as a whole-home approach. And we do have a focus on four main products and solutions areas. One of them is air. So basically, Indoor Air Quality Systems, humidifier, dehumidifiers indoor air quality monitors, air purifiers. We do have another area of focus which we call water. So basically, we are talking about hydraulic controls, hydraulic valves and portable water systems. We have another area which we call and focus on energy efficiency. So that's basically you know the controls and electronics and services around boilers.

[00:03:47.920] - Mario Moura

And we do have a security business as well. So those are four areas, that's how we slice the home. And we try to link all that into a whole-home approach.

[00:04:01.390] - Jon Slowe

So, if Resideo, linking that together as you say into a whole-home approach and packaging them up do you have a strapline or how would you try and position Resideo ultimately in the market to either installers or homeowners.

[00:04:19.240] - Mario Moura

Yes. So, what we're trying to do Jon is in just a few words, you know gave the home a pulse. So imagine a human being right has a pulse, if the person is alive obviously has a pulse at any point in time and you have professionals right or so-called doctors that will measure the pulse at any given time and try to understand the situation of that human being if it's healthy or not and what potentially he could have. So we're trying to do the same thing with home it's a much more complex system or market.

[00:05:09.640] - Mario Moura

I think we have many people you know focusing in different areas, but we don't have a professional that can go to your home and measure you know if the home is performing according to your needs. So, we do want to create that. I'm sorry we do it to enable professionals to measure that pulse and bring solutions to improve situations where their home is not performing as well as we would want. So, we do want to enable installers, professional installers out there as doctors of the home.

[00:05:57.910] - Mario Moura

So that is included in our vision.

[00:06:01.780] - Jon Slowe

So, Mario, I'd like to delve in a minute into the concept of the supported or connected home and I really liked this analogy of the home having a pulse and looking after the home in that way. But before I do that I just like to come back to the spinoff of Resideo from Honeywell. Now when I look at the energy sector in general, I can see companies struggling to decide how broad their focus should be. Some like E.ON have taken active decisions to focus down particular parts of the energy market so E.ON sold off generation and focused very much now on customers and distribution networks.

[00:06:49.870] - Jon Slowe

What's your take on the spinoff of Resideo from Honeywell? Honeywell was broad it was as you say industrial, commercial, residential. So, do you see, what are the pros and cons of now having a smaller more focused company? Is it making your job easier or what have you lost from being part of a bigger organisation?

[00:07:12.750] - Mario Moura

Yeah, it is an interesting question. The intention here is to focus solidly on this sector is to move faster than we were moving at Honeywell that became the core of our business or the only core really of our business whereas as part of Honeywell we were on an adjacent to a very robust commercial industrial business. So, we although I would say we had a fairly good rotation you know at the Honeywell leadership team and we invested, and we are where we are right now because of Honeywell.

[00:08:02.980] - Mario Moura

But the perception was that we'll be able to move a lot faster than if we were part of a honeymoon.

[00:08:13.440] - Jon Slowe

Mario do you see that speed becoming more important. So, the smart home, the connected home is a very fast-moving dynamic environment. So, do you think it is just getting really hard for slow-moving really large corporations like the old Honeywell to play in this fast-moving dynamic sector?

[00:08:36.780] - Mario Moura

Absolutely. Speed is key customer needs change faster than in other areas. You know in which Honeywell is primarily focused. So we believe that entrepreneurial culture that we're trying to build and a sole focus on the residential areas with the advantage of having in Honeywell DNA in a very process-oriented company will help us big time in addressing this market in a much more comprehensive way than we did before.

[00:09:22.520] - Jon Slowe

Okay, and I guess time will tell. But a year into it. How do you feel if you rewind to a year or so ago when the spin-off happened and where you are now? How do you feel that year gone has it changed in the way you thought, or have you been surprised by some other changes that you've seen?

[00:09:44.650] - Mario Moura

Well, we've been surprised with the speed coming back to your point. We were able to launch now two new platforms. One for our comfort business or market segments and one for our security segment. We launched that in the US, in North America very recently. So, I don't think we'd be able to develop in launch that as fast as we did now as part of Resideo. Another area that I'd like to also point out is that we have made three acquisitions in 2018, three fairly you know smaller acquisitions, start-ups basically.

[00:10:37.420] - Mario Moura

And that was not really the approach of Honeywell. So, I do see a lot of really decision making especially in the areas that the Honeywell traditionally took a different approach.

[00:10:52.540] - Jon Slowe

Great. Okay. Let's come back to the connected home and listeners may use a smart home, supported home, lots of different acronyms. Now, this sector promises so much and maybe the trigger for the excitement within many ways Google's acquisition of Nest all those years ago but it's still very much a niche market. Some I'm really interested Mario from your perspective. Your being in the home, your products Honeywell/Resideo's products have been in the home for many years. How do you see this smart home, connected home market? Is it still niche in your eyes?

[00:11:39.490] - Jon Slowe

How quickly will it become? Will it grow and become more significant and how quickly can it scale?

[00:11:47.300] - Mario Moura

Yep, I do believe that we are still in a niche phase. Precisely. You know as you said we are, we've been there for a long time, but we have around five billion dollars in revenue only selling to residential you know a market. So, it's a fairly large presence and even in the connected or smart or supported the home is using the acronyms that you just mentioned. We do have 17 connected customers at the moment worldwide even with all that scale. I think this is a niche student ish market for us and for a number of other players out there and we do believe and I do believe honestly that to keep the humble pulse it's one area to focus to make this you know a mass market.

[00:12:57.160] - Mario Moura

We won't be able to create a mass-market without evolving, without training, without equipping, the professionals out there to trade you know the house if the house has as a problem in a meaningful way. So, we do need to get the whole home control live with the right piece of hardware, the right apps, analytics, subscription services you name it. But integration with the pro will be key to me.

[00:13:36.020] - Jon Slowe

Okay. And a view if you look back, Mario. Have you been surprised that the connected home sector hasn't grown quicker or actually when you look at the challenges now? Is it in line with your expectations if you rewind to four or five years ago when much of the excitement really kicked off with connected homes?

[00:13:59.880] - Mario Moura

Well, you can go back a lot longer than four or five years right. I think 15, 20 years ago we were already talking about smart homes. So, I'm still a little bit surprised that this market didn't take off as other markets if you compare with all the innovation that we have out there like mobile phones or like personal computers, right. I do remember someone that probably in the 80s that the personal computers were too complex to work with and now look at where we are right.

 

[00:14:43.670] - Mario Moura

We can't live without personal computers or mobile phones so I think the level of complexity there when you talk about a home is much higher therefore much more complicated to get that from a niche to a mass market you know you have a myriad of systems out there regulations, cultures, climate, socioeconomic you know conditions in different areas in the world so it is a complex market by nature.

[00:15:23.180] - Jon Slowe

How does that play Mario for Resideo when in your job you're looking at EMEA I don't know how many countries there are in that region or that you look after but many tens of countries and as you say every country is different in terms of the type of heating system or the nature of installers or the culture. If you look at computers in your analogy there that's a global market you can create one product for tens of countries. How difficult is it in a company like Resideo to cope with all those differences when you would ideally want one platform or one product set for your countries?

[00:16:03.270] - Mario Moura

Yeah, it is a different market to deal with. We do have many different systems for many different geographies, and I don't think that will change that rapidly. I think customer needs changed much faster than regulation in many cases. The softer layer, the integration with pro layer is something that needs to be standardised. In my view and you know the hardware it will need to have we need to conserve its big peculiarities or sorry also in other words that particularities so often there is where you need to integrate all that.

[00:16:56.000] - Mario Moura

In a much more meaningful way.

Jon Slowe - So you will need bespoke products and services for different countries. But then behind that if I'm understanding correctly if you can have a standard platform that stores the data, does the analytics, provides the services a platform that can provide their services then that can provide you with the scale benefits but you're always going to have this bespoke nature of different countries to deal with.

[00:17:27.210] - Mario Moura

Absolutely. The digitalisation will help us on this aspect connecting these bespoke products to customers or to other appliances in the house or others right even outside your home. As we mentioned professionals in the beginning of our conversation. So that's where this standardisation will occur faster and help us move from a niche market to a mass market.

[00:18:02.670] - Jon Slowe

Now you've mentioned, we've talked about customers a couple of times and you've talked about the pro channels the professionals, the installers. Who do you really see as your customer? Or is that a difficult question to answer. Is it the end customer? Is it the professional?

[00:18:20.730] - Jon Slowe

How do you balance the needs of your professional customers and the end customer?

Mario Moura - Our customers at the end of the day are our end customers. Our people like you and me that want to be comfortable and safe inside the home. And will we reach that by a complex chain, of a complex value chain. We are not selling directly to end customers, but we would like to enable professional community to serve that end-user the best way they can with our products and services.

[00:19:07.030] - Mario Moura

That's how we see the market but everything we do is really taking into consideration the end-user out there.

[00:19:15.550] - Jon Slowe

Do you think that the pro channels will keep being the dominant channel or do you see with digitalisation with more direct routes to market companies now often going more direct to customers? Do you think Resideo will or part of Resideo will go more direct customers or do you think you will the pro channels will always be the dominant channel in this connected home in this home sector?

[00:19:44.920] - Mario Moura

The way you look at the market is the professional channel being stronger being more supported by us.

[00:19:53.320] - Mario Moura

So, we really will continue to focus, and this is part of the Honeywell DNA that we inherited on the on the professional channel. Nothing wrong with the wires out there but the areas but we are looking at like air, water, energy efficiency, security those things combined will give the home a pulse back to our conversation. That to us is primarily a focus of the professional. So, going back to our analogy with a human being you go and try to get a pulse when you're feeling that something is it's not OK with your body for minor things you can sometimes even medicate yourself.

[00:20:47.320] - Mario Moura

I'm not a doctor I want to go into this route, but a lot of people medicate themselves when they feel that something is going a little bit the other way you go look for a professional. So, that's, those are the needs that will try to you know fulfil and tackle with our product solutions via the professional channel.

[00:21:16.800] - Jon Slowe

OK. And that because you will always need as professionals. This involves hardware in the home and there's just no shortcut to having a professional dealing with the hardware in the home. Is that the dominant thought or is the thought more that customers will always turn to a professional, a local installer or an installation chain when they have a need around their home or is you know the analogy of going to a doctor they go to a local installer or local professional.

[00:21:49.020] - Mario Moura

Well, we want to go beyond this. We want to provide the best connection between the professional and our mutual customers out there in a way that they predict if something is wrong or something is about to get wrong and fix or inform the customer on how to fix before, those things become a problem. We will also want to give the control you know the information obviously to the customers so that they can potentially decide to fix themselves. But our main route is equipping, training, connecting the pros so that we can offer you know that the whole home care when it's needed.

[00:22:49.180] - Jon Slowe

Okay. That brings me to my next question Mario. Which is the nature of a company like Resideo and you're probably known for hardware? Many listeners will be able to see a Honeywell product in their home in some form. And what we've been talking about the service, the diagnostics this involves platforms, it involves software it will involve A.I. a machine learning to analyse the data that you're getting back from the home. So how would you describe Resideo? A hardware company? A software company? Or do these categorisations not really work anymore.

[00:23:30.300] - Jon Slowe

Are you a blend of all of the sorts of skills I've mentioned?

[00:23:32.910] - Mario Moura

Back to the Honeywell DNA. You're absolutely right. Your listeners and the markets regard us as a hardware company but be behind the scenes we're investing a lot in software capability. We know most of our hires at the moment is are on this area and know that all the software capability area and we will not be able to realise that vision of the home the house only with the hardware. We won't be able to connect pros with consumers only with the hardware.

[00:24:23.670] - Mario Moura

So the idea is that pros can connect via ideally one single app, one single portal our water service you know sorry, our water services, our energy-efficient services, our indoor air quality services, are critical appliance monitor services and our secured services through one platform and I mean by that is one app and one portal and to get there we are investing a lot in our software capabilities much faster than we were when we were part of Honeywell.

[00:25:12.270] - Jon Slowe

Okay, and you won’t be at all the only company making this transition or focusing more and more on those types of skills. So, from products being dominant to this mix of products and the softer skills you mentioned how challenging is that in terms of sort of culture and DNA, for Resideo. Is that something you're really trying to focus on to get the culture and the DNA as much around the software as the hardware. Is that a challenge or actually finding that's going quite smoothly at the moment?

[00:25:52.620] - Mario Moura

Yeah, it's an interesting challenge for us. We have a number of people in the company obviously that came from Honeywell right, spent a lot of time in Honeywell and had this strong hardware mindset. We have a number of engineers that work to make our hardware the most robust as possible. But we need to move from this culture of having those pieces of hardware that will be fit and forgotten right. That's probably what's the structure of a Honeywell fit and forget. You basically don't see that you have a thermostat there and the thermostat will work for 20, 30, 40 years without breaking, to a much more dynamic market or dynamic situation than having contact with the pros and customers.

[00:27:00.270] - Mario Moura

So there is a huge cultural gap and we're working towards blending our workforce, our new workforce with all the software engineers that bring you know A.I. and machine learning capability to our business app and cloud capabilities as well to our business and blending to those you know robust hardware builders. So, I think we have a very good position in the market but not easy to blend those two cultures but that is where we are spending a lot of our efforts right now.

[00:27:41.250] - Jon Slowe

Yeah, I can imagine it's not just bringing the right people are skills in but as you say it's the culture and getting people working together and understanding each other and all a soft but critical issues that are necessary.

[00:27:54.570] - Mario Moura

That's correct. And going beyond that is about selling services right. Selling analytics, data, fixes rather than just a hardware. So, the commercial teams also need to change and adapt to that new situation. Absolutely.

[00:28:20.010] - Jon Slowe

So, Mario, trying to bring these different topics that we've discussed together as we move to wrapping up. We've talked about this still being, the connected home market still being a niche market. You talked about I think seven million connected customers you have at the moment for this to really grow and become a mass market. Looking forward what are the key challenges you see for not necessarily Resideo specifically but to the sector in general. So, what are the things that the sector needs to get right or really focus on in the next years?

[00:29:07.280] - Mario Moura

Yeah when we talk specifically about the energy sector, I think I mentioned that that's a very regulated sector.

[00:29:11.980] - Mario Moura

Regulations involves much lower than the customer needs and channels to serve those customers. So, I think we as a sector need to understand those challenges.

[00:29:27.040] - Mario Moura

We need to engage at the right level with professionals. I mean equip them, connect them so that they can be more effective in addressing the customer needs. I also think that this market will evolve much faster once we tackle the whole home rather than offering point to point solutions. The point to point solutions will be always there. But once we can connect all that and offer a comprehensive whole-home solution, I think we have a much better capability to grow this market faster. Could be peer to peer communication, cloud to cloud there are ways to connect those products interoperability.

[00:30:21.820] - Mario Moura

It's the keyword in this respect as well.

[00:30:27.010] - Mario Moura

I also think that we should look into the energy trends going forward and making sure that we not only do the job right now in terms of connecting the screws but also think about where the industry is moving towards in terms of the heating mix becoming more, much more complex, electrification, with the heat pumps, with the renewable gas, we have decentralisation of you know heating generation across the board.

[00:31:04.870] - Mario Moura

I think that we also need to link somehow what we're trying to do now with the home with the general trends to have that as a mass market.

[00:31:18.190] - Jon Slowe

So, the two things that really stand out to me there Mario are the focus on the whole home, and will that create more customer pull? Is that a stronger customer proposition? If Resideo or any one of your competitors can offer me a whole home piece of my solution, so that looks after my home from a water security and energy aspect. So that's one thing that stands out to me and the other thing I think is the focus you have on those professional channels and moving both of those forward at the same time so equipping the professionals, making it in their interests, getting their enthusiasm to install these types of products and offer these types of services whilst at the same time creating some really compelling customer propositions.

[00:32:16.910] Jon Slowe

Would that be a fair summary of what you said?

[00:32:21.200] - Mario Moura  

That's a fair summary. That's exactly what we're trying to convey.

[00:32:26.940] - Mario Moura  

We also talked about the move from hardware to service. Right.

[00:32:33.840] - Mario Moura   

And linking that to what you said maybe evolving from hardware to heat as a service, to comfort as a service, to ultimately offer peace of mind as a service that's a valuable position very easy to understand.

[00:32:50.490] - Mario Moura    

And there will be various different levels of willingness to pay from consumers but that's a very easy value proposition to understand versus where we are at the moment. So, I think you summarised very well what we're going with the whole home solution.

[00:33:13.440] – Jon Slowe

So, looking forward Mario.

[00:33:14.890] – Jon Slowe

Then to finish off, excuse me, from your current seven or so million connected customers in ten years’ time. Ballpark. Do you think you'll be in low tens, high tens, hundreds of millions of connected customers?

[00:33:35.170] - Mario Moura     

That's a very tough question Jon. Well in ten years’ time I'd definitely like to be in the hundreds of millions of customers. Absolutely. And then we would be at a point hopefully not only ours, but you know the whole market, the whole industry to say that we are finally at the mass market point that's what I would say is our ambition.

[00:34:05.320] – Jon Slowe

Well, I think it would be hugely exciting if the next decade is a decade when the concept of the connected home or smart home really takes off. So, Mario I really appreciate your time and your sharing your thoughts and experiences.

[00:34:23.140] – Jon Slowe

With us and with my listeners. I hope you've enjoyed the podcasts there. Thank you very much.

[00:34:30.580] - Mario Moura     

Thank you so much, Jon. Thanks for inviting me once again and have a nice day.

[00:34:35.110] – Jon Slowe

Thanks. And thank you as always to all of our listeners. We hope you enjoyed the slightly different format, the in conversation format today with Mario and hope with inspired you to maybe go back home look at your hardware in your home and think what could be connected or where you might be in your home in ten years’ time. What sorts of services you might be buying?

[00:34:59.380] – Jon Slowe

So that's it for this week. We'll be back next week. Thanks for listening and I'll be speaking to you all soon, goodbye.

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