Parks Associates looks at smart home market, company tactics

Sixty percent of respondents to a Parks Associates survey say they don’t need to remotely control their devices
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Wednesday, February 14, 2018

DALLAS—Parks Associates, a research firm based here, released a report that outlines how the smart home market and its products are changing and what companies are doing about overcoming barriers, entitled “Evolution of Smart Home Products and Services.”

“The smart home really just hasn’t taken off as many of the industry players—or even some of the analysts—initially thought it would,” Patrice Samuels, senior analyst at Parks Associates and author of the report, told Security Systems News. The report, in part, looks at some of the technical and business model challenges in market.

“One of the primary things that we’re seeing is that consumers … don’t understand what the value is [in] the smart home,” Samuels said. Some companies are trying to combat this by offering free in-home consultations or having dynamic displays in big box stores. “Those companies that can afford that kind of investment are having in-store experience centers where consumers can more than see and touch … they can actually get to try using the products and seeing if they like it.”

Another difficulty is consumers apprehensions about interoperability, resulting in more “Works with …” programs which are advertised on compatible devices, Samuels said. “Consumers can look for that certification on different products and it makes them confident to purchase products knowing that it will work well with what they have.”

Parks recently asked consumers about the reasons for not purchasing a smart home device. “The first thing that came up was ‘I do not need to remotely control my devices.’ Sixty percent of consumers said that and we interpret that … as ‘It’s just not offering enough value for me to spend that extra money,’” said Samuels. “‘I’m not ready to replace my existing devices’ was also a popular [response],” she said, adding that devices like refrigerators have longer lifecycles. 

Twenty-one percent of the surveyed consumers cited concerns about privacy or security, Samuels continued. Thirteen percent said that smart home products do not offer enough value, she said, and other respondents pointed to technical problems or difficulty in setting up devices.

Cost is also an issue that keeps consumers from buying smart products, Samuels said. “Many consumers do say the price of the new connected products are … significantly higher than the traditional, non-smart versions of these products,” she said.

While consumers sometimes are missing the value of smart home devices, manufacturers are also looking to increase the value in their products. One approach to increasing value is incorporating new technologies—such as artificial intelligence—in cameras to provide more intelligent alerts, Samuels said.

“Outside of just making the purchase process better, there’s also the expansion to new service channels—this is something we saw a lot in 2017,” Samuels said. Home furnishing retailers, such as Ikea and Bed Bath & Beyond, started to offer smart home devices and home builders are getting involved as well, she said.

Additionally, the insurance industry is showing interest in the data from smart home devices, which would help providers better understand risks.

“The other element of the product evolution itself was the interfaces. … We saw a lot of innovation coming in as it relates to voice control and gesture control and button control,” Samuels said.

Gesture control isn’t common in the home, according to Samuels, but there are reasons for an alternative to voice controls. “If other members [of the house] are sleeping, or just for different reasons, voice is not always the most appropriate interface. It might be very convenient, but not appropriate. So, it's a matter of creating other strategies that are convenient but more appropriate.”

The report also examined how companies are approaching new revenue generation, Samuels said, such as hardware-as-a-service and service models for energy management.

Companies design models around energy management by “providing ways of monitoring your energy consumption for you, from your smart devices, and then they would actually make the adjustments on the back end that would switch you from using energy from the grid or energy from your solar power or your battery back-up system.” This energy management model seeks to ultimately save the consumer money, she said.