The Practical Impediments to Smart Home

Outdoor cameraThere are a lot of small telcos and ISPs these days flirting with a Smart Home product, and I know a few of them who seem to be having some success. But – at least for now – it is unlikely that the product line will get significant customer penetration rates. A Smart Home product, while interesting, it not yet a replacement for triple play revenues. Here are a few of the issues involved with being successful with Smart Home:

Public Perception. Probably the biggest hurdle is still customer perception of the product. So far the idea has made inroads with some early adopters, but surveys show that the majority of people either don’t know what Smart Home is or else don’t find it of interest. Anybody selling the product has an uphill battle of educating their customers of the benefits first before they can sell it.

Most small carriers are starting with a product that includes security and energy management (a smart thermostat). These two products are the most recognizable to customers and so are the easiest to sell.

But Smart Home products beyond those are a different case. Just look at the options that are available in the Comcast Smart Home product. This includes options like smart door locks, a smart irrigation / sprinkler system, smart lights, smart garage door, indoor and outdoor cameras, and even a smart doorbell that will show you who is at the front door. The general public is largely not knowledgeable about these products and it’s an uphill battle to upsell people past the base product.

Surveys show that there is general dissatisfaction with the state of the IoT industry as a whole. Early adopters that like IoT expect that if they buy some new gizmo they see advertised that it will work with the platform they are using. But there is still no standard industry interface with devices and there are half a dozen or more different ways that devise communicate with users today. The industry is a long way away from plug and play, which is the expected standard today.

And then there is price. Without considering the equipment costs and the connection charges, Comcast charges $49.95 per month for the package. There is a lot of work to do to convince customers that there is enough benefit to them where they need to take on a new monthly bill of that magnitude.

Quickly Obsolete. Probably the next biggest concern for anybody entering this business is if the components used to deliver the product will remain available. There are a huge number of big and small companies that are offering Smart Home hubs and add-ons. Past experience reminds us that there is always an eventual shake-out in a new industry and that most of the companies selling IoT won’t be here a few years from now.

You can’t even trust going with a large vendor for components. Earlier this year Google’s Nest walked away from their smart hub product and turned off the web servers that supported the product.

Controlling Truck Rolls. The next big worry of companies I know who are considering the product is that it’s going to involve a lot of truck rolls. There’s not just the trucks rolls needed to initially install the product, but adding a new device to a customer’s system is probably going to need a truck roll.

And like any new technology there are going to be bugs and user errors and it’s likely that the product is going to require a lot of maintenance calls.

Summary

I think most homeowners are intrigued by the idea of having a Jetson’s home where an automated home makes life easier. But we are still a decade or two away from having a fully integrated and easy-to-use Smart Home product that can deliver some of that promise.

This doesn’t mean that you can’t be successful with a limited Smart Home product now. But you must be aware of the risks and have a plan for somehow controlling excessive truck rolls for the product to be profitable. What nobody wants is a product line that takes a lot of work but that doesn’t move the bottom line.