Study: Parks examines approaches to the smart home

DALLAS—Parks Associates took a look at the smart home's competitive landscape—and how providers should prepare for the market's future—in its new report, “Smart Home: A Roadmap for Strategic Planning.”

“The security industry is the leading channel for smart home products and services,” Tom Kerber, Parks' director of IoT strategy, told Security Systems News, adding that there are players, both in- and outside of the security industry, approaching the smart home market in different ways.

“We wanted to highlight those different approaches and then discuss … how the market might evolve and how the strategies may have to evolve with it,” Kerber said.

Parks looks at companies' approaches to smart home products in three ways; vertically integrated, curated and open. Parks then looks at the customer satisfaction levels of companies taking each approach through user reviews.

Vivint is an example of the vertically integrated approach, according to Kerber; it controls all aspects of the user experience including the sales, the monitoring and the interactive solutions. Kerber listed Alarm.com as a company taking a more 'curated' approach, picking the products to work with to create the best customer offering. Wink is a company, outside of the security industry, taking the open approach of writing to various companies' APIs.

“We're looking for … a flag that would denote a shift in the market. And one of those things that you'd look at, maybe, is that consumer experience,” he said. Parks looks at reviews in order to judge the user experience—and Kerber expects that companies with an open approach will eventually become higher rated than vertically integrated approaches, which is currently top-rated. “The difference between a curated and a vertically integrated approach is relatively small and potentially non-existent,” Kerber noted.

“When those much more open platforms can provide an equivalent user experience, then the market definitely will have to shift in that direction,” Kerber said. “The breadth of [open] platforms is much more substantial than either the vertically integrated approaches of Vivint, or even Alarm.com and their ecosystem of partners.”

Kerber continued, “It will be hard to maintain a [vertically integrated] approach, or even for that matter a highly curated approach, when a very open approach can provide a similar user experience and provide much more access … to whatever product you may have or want to own.”

The move from vertically integrated to open “could happen relatively quickly,” Kerber said. “Our recommendation to smart home platform providers, as well as service providers, is to plan for that eventuality.” This means security dealers may need to consider offering a broader range of products, he added.

Parks Associates is monitoring a variety of trends in this market and in this report, including self-installed systems, pay-as-you-go monitoring, and solutions like ADT Canopy—which brings professional monitoring into more products.

“We asked smart smoke detector owners 'Would you be interested in adding professional monitoring to your device?' Seventy-six percent said yes, and 60 percent said they would pay $10 a month for that service,” Kerber said. “We think that that is a very interesting approach to expand the market.”

The only negative potential trend Kerber identified is the slowing of growth in average RMR, which could come from more competition from large companies like Comcast or from the self-install market, he said. “Those have a downward impact on RMR growth. … It's flattening—It's still growing, but it is not growing at the same rate.”

The report mainly focuses on the U.S. market, Kerber said, “But the concepts apply globally.”