Shopping – POTs and PANs

Consider the following pricing chart from Vivint, one of the nationwide leaders in home security. This particular pricing chart happens to come from Fort Wayne, Indiana.

This may not look like it, but this is the beginning of the Internet of Things and I think the way that Vivint has packaged this is brilliant. Just a few years ago this company and every company in the security business would have been selling only the features in the first column. But now they have added on energy management and home automation which are the first steps into the Internet of Things. To make this work they will install a gateway in the home that is capable of monitoring or communicating with the devices in the home and also communicating back with the cloud.

This is just the beginning. As more home-ready services are created Vivint will certainly add some of them on as enhancements to the packages listed or will create new packages. The next big field is already hinted in the last item, the medical pendant. We are not too far away from the time when sensors will be able monitoring your health and keeping a constant record of your heart beat, blood pressure and other vital signs. And a few years after that, micro sensors will be in your blood looking at your blood chemistry, looking for cancer etc.

A company like Vivint will have to decide what things they will support because the scope of the Internet of Things will become immense. It’s been predicted that much of the Internet of things will be done with Apps. But households still need the gateway and will want an expert to make sure things like security and smoke alarms are connected properly. I see a prominent role for businesses willing to go into the home to make sure that everything works well together.

Since there will be so many options in the Internet of Things it’s likely that a carrier will choose a few standardized packages that will fit a large percentage of the population and will leave customized packages to somebody else. For example, even today there are a ton of other options available in the energy management field and Vivint has chosen a few common options. Today a household can also do things like control blinds for allowing or blocking sunlight, coordinate ceiling fans, change the hot water heater settings dynamically during day, and interface with external solar panels.

I believe a lot of homes are going to want these services. I also know that customers will choose somebody they know and trust if given a choice of vendors. The Internet of Things is going to grow over time while traditional services like voice and cable TV wane. If you are going to survive as a carrier selling to households, then selling the Internet of Things needs to be in your portfolio.

Savant Home Automation Control Media Room (Photo credit: Gramophone Maryland)

As a gadget guy I am interested in home automation. I stayed in the Hyatt in the Dallas airport last year which has automated rooms. I spent a great hour playing with the blinds, lighting and temperature from my bed. For a gadget nut this hotel gained a wow.

And a lot of people are interested in automating their homes to some degree. The problem they run into is that once they start investigating home automation they find a ton of different devices on the market, almost all from brands that they never heard of. And so they have no idea how to get started.

And this is why there is a product for carriers. As you probably know from reading this blog, I think that if you are a full-service provider that you need to take every opportunity to get into your customer’s homes. Meeting and talking with your customers benefits you in many ways. First, every time you meet them is an opportunity to upsell them. Second, they are able to put a face with your company so that you are not just another person they send monthly checks to. And this leads to loyalty from customers and less churn.

I have one client who has already seen the wisdom of installing home automation systems. He did his research and he picked a platform that is able to handle a number of devices and that looks expandable into the future. But this is the early days of home automation and he is not wedded to that system and he will consider a better one of it comes along.

And here is how he sells it. He will sell the equipment directly to a customer, but he would prefer that they lease it over time by signing a term contract. He makes more money on the lease and customers find it easier to pay over time. He then charges a fee to install the system to cover his technician’s time. Finally, he offers a monthly fee that will cover the labor cost of adding additional devices onto the system later. This fees basically lets the customer pay you to have you come and sell them more hardware in the future.

So what does he automate? There are a few obvious things. You connect this to the thermostat so that customers can easily change the temperature by time of day for comfort and to save money. And there is the old standby of putting light switches on the system so that they can be set to turn on and off when you wish.

But with a good home automation you can also tie in to security systems, irrigation systems, audio-visual systems, and a host of other devices like alarm clocks, smart door locks, blinds, coffee pots, you name it. With the advent of the Internet of Things, more and more devices in your house are going to have a WiFi or bluetooth interface.

A home automation system can save customers money. For instance, along with controlling the thermostat a customer can tie the system into smart blinds. The blinds can raise and lower at pre-set times to welcome the day, but more importantly to save energy by selectively blocking or letting in the sun depending upon the time of day and time of year.

You can also use motion detectors in the system so that a room responds when you enter by turning on the lights and playing your streaming Frank Sinatra. The number of options for a customer is almost unlimited and this is what homeowners find intriguing but also what they find daunting. There are a ton of home automation systems on the market that will easily do stuff like automate the lights. But it takes programming to do the more complicated (and fun!) stuff. It’s a little more complicated if you want your house to remind you that tomorrow is your anniversary.

And the systems can all be accessed from the customer’s smart phone. The beauty of this is that you can also pre-set alarms. For instance, a customer can have the house tell them if the temperature goes warmer or colder than the pre-set temperature range. They can have the house send them a text every time somebody comes to the front door. They can check in to see that the pets or the kids aren’t killing each other just yet.

Not all home automation is serious. There are silly devices available that can be tied into these systems. Just last week I saw an egg tray that will tell you how many eggs you have left in the fridge. Doesn’t make sense to me, but if a customer wants that, then let’s make it work!

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