Smart Home Crawling Closer

Don Dulchinos, president, Smart Home & Away LLC

Don Dulchinos, president,
Smart Home & Away LLC

CES Remains a Good Showcase for Assessing the State of Progress

By Don Dulchinos

CES 2018 was epic – with pouring rain and blackouts, almost apocalyptic, but still going strong three years after I predicted the whole thing would collapse under its own weight.

While that’s still a safe bet given all good things must end eventually, CES is just well enough designed and categorized that a guy with three days and a reasonable number of meetings scheduled to the realities of clogged streets, lines and exhibit halls can make them all and still have time for exploring the weirdness. One thing nobody could miss, no matter what their purpose for starting the new year under such conditions, was the fact that amid the cacophonous buzz generated by the VR/AR/AV (Autonomous Vehicles) crazes the smart home as a breeding ground for the Internet of Things is still central to CES.

This article offers a quick readout of the state of play in that space based on demos and announcements at CES. The lead story is that the battle of the 800-pound gorilla IoT ecosystems really came to the fore. Making clear the BYOD market acceleration generated by Amazon and Google isn’t the end of the story, Comcast and Samsung went all in with a very broad range of announcements, components and partnerships that signaled they are finally and fully serious about IoT as key to their futures.

Taking into account the combined forces of gadget chaos and ecosystem coherency, one can say the Smart Home is still not quite happening overnight, but it’s definitely crawling closer.

I couldn’t agree more with the focus of the large players betting on the market pull of coherency. You don’t hear it said much, but I think the residential product category of IoT, home automation, whatever you want to call it, will be a $200/month Revenue Generating Unit within five years. True, Comcast is still essentially giving away Xfinity Home as part of the bundle, just like telephony. But no one predicted consumer wireless being where it is now – replacing the old monthly $50 phone bill with $300/month wireless plus lifestyle smart phone category.

In that context, it’s worth asking what current products, services and devices will get absorbed by IoT the way the smart phone has eaten people’s music and video collections. I’d bet on Comcast growing its fledgling retail energy business, and adding water and personal mobility to services it will begin to absorb in the next five years. But that’s a topic for future articles. Much of the CES 2018 discussion is still about growing the home security/home automation service and adding devices.

Where Are All the Devices?

This growth path is on my mind in contrast to what was missing at CES. The shine seems to be off standalone first-generation devices from Hue, Wemo, Sonos and others. Now they’re exposure comes primarily from listings like Works with Nest, Works with Xfinity Home and other hub catalogs. So it’s not that the device guys won’t proliferate, but the oxygen, and probably the lion’s share of the profit, is going elsewhere.

That said, I have a companion top-ten list of oddball new device categories found here, and also have posted a more serious list of devices tapping into downward price trends in brain-computer interfaces on display at CES 2018.  Also watch this space for an update on Cars, the ultimate connected “device”, and the New Mobility, probably the biggest single news territory at CES this year.

Background Brands

Before moving onto the finalists in the ecosystems war, it’s worth quoting one pundit who remarked in advance of CES how the accelerating pace of change is making it difficult to pick winners, or even identify the right trend categories. “It may well be the background brands – the business to business giants such as Cisco, IBM, Bosch, Qualcomm…that look best positioned.” Hmm.  Here’s the CES headline from several of them:

Bosch – “The intelligently connected city.” Smart Cities turned out to be a smaller presence at this year’s CES than I expected.  Maybe industrial M2M shows are where that action is?

Cisco – “Key enterprise technology trends in 2018 worth watching – robots, augmented reality, smart city and transportation as integrators.” It’s all there except, what exactly are they selling?
IBM – “Integrate intelligence into devices and connect them to everything.” Big play around AI and Watson.

Panasonic – “We can take pride in our ability to help consumers with their needs of today and tomorrow.” The winner for least specificity, but I am reminded of their Denver CityNow project, where they have a product (solar panels, autonomous vehicles, EV charging stations, Wi-Fi networks) for every Smart City dream.

Qualcomm – “The company that changed everything about the smartphone is about to change everything about everything else.” My candidate for winner in the hyperbole category.

Ecosystem Finalists Face Off – Comcast vs. Samsung

I attended the Parks Associates CONNECTIONS Summit, where Parks put up a research slide showing these market shares for “Platforms in Use to Control Smart Home Devices” (I think this is percent of homes that have any such devices, which is still under 50%.)

Amazon Echo……………………..23%
Google Home……………………..22%
Samsung SmartThings………… 15%
Apple HomeKit………………….. 13%
Crestron, other custom………….7%

All interesting in one way or another, including how some come into play as customers mix multiple platforms. Custom guys like Crestron at 7% kind of blew the mass market, but I’m sure they are happy with the profit margins at the high end. I thought IFTTT (if this, then that) was an open-source collection of standard “recipes,” not a product that could have a market share. And I had never heard of Stringify. Fortunately, Scott Boyarsky, Comcast VP Digital Home Products, later came on stage and clarified they had acquired the company – that fact perhaps to amend for Xfinity Home itself not making that top-ten list.

Comcast has been busy in more ways than one building on their announcement last year that they had achieved 1 million home automation/security subs. Those strategies encompass a platform, a gateway, connectivity and the beginnings of a value proposition beyond the basic home security.

Stringify is said to be a cloud-powered automation service for more than 500 IoT products and digital services, and is being gradually integrated into existing Xfinity smart home products. By the way, what happened to the iControl acquisition, which I thought was their platform play? (One theory was that iControl was good at security, but slow at adding other smart home verticals.) I am hard pressed to find much online about Stringify to justify their top-ten name recognition, but maybe there is still room for innovators.

The other move that instantly increased Xfinity’s footprint was Comcast’s new improved XFi Internet gateway, said to allow Comcast to provide additional home automation services for IoT controls at no extra cost; in other words, 15 million existing customers suddenly have your platform! (Reminds me of Google/Nest acquisitions like DropCam – one day they just start working together!) A crack in the door for others (e.g. Samsung) is that “between 80 and 90 percent of Xfinity subscribers lease their gateways directly from Comcast;” i.e., not everyone; and I wouldn’t recommend “equipment rental fees” much longer in the 21st century.

Comcast’s Boyarsky offered a compelling strategy for improving the user experience, with a call for reducing the consumer’s cognitive load. While he is happy to support the growing list of hundreds of products that Work with Xfinity, the company makes a point of planning for at least 50 of those to be more fully integrated, making an important distinction between interoperability (connects but with limited feature set) and integration. Interoperability with standards like Open Connectivity Forum, Thread and Zigbee are helpful.

Comcast was perhaps the only company on the planet not to claim it works with Alexa. Instead, it has its own voice control technology that is already built into its remote controls. Voice and other integration allow a number of helpful use cases (reducing cognitive load):

  • When you arrive home, you can say, “Xfinity, I’m home.” Then the XFi or Xfinity Home app on a smartphone can trigger such actions as turning on lights, opening the garage door, adjusting the thermostat and turning on music throughout the home from a streaming music service.
  • “If you’re a gamer, you might hear your doorbell ring,” Schaefer said. “You can grab the remote and say, ‘Open my front door,’ so you don’t have to move away from the TV.
  • Xfinity Mobile has a feature dubbed Phone Finder, which lets customers search for and locate their mobile phone in their home using the X1 voice remote. There’s no setup required – customers just say “Xfinity Mobile, find my phone” into their X1 voice remote, and the phone rings.

Much of the Xfinity messaging during the show was focused on the Consumer part of CES.  But I note a recent investment by the Comcast Ventures arm in an insurance start up – a natural link to home security services. As noted at the outset, I think absorption of multiple vertical businesses is the real payoff of a comprehensive Comcast platform.

The only other ecosystem competitor that I think is matching Comcast’s scope right now is Samsung. As CES is their home turf, they mounted a broad-based effort. In that, I am reminded of how Panasonic operates in their Denver CityNOW project.  While the messaging is about smart cities goals, Panasonic sees a market in that context for many of their product lines – solar panels for sustainability, self-driving shuttles for improved mobility and Wi-Fi solutions for connectivity. Samsung brings a similar conglomerate’s array of businesses to the IoT game.

Voice control? Check. The friendly sounding Bixby (“Have Bixby Everywhere!”) is their entry.

Platform? Check. Samsung acquired SmartThings a few years ago, and has now committed to making it the central platform across all their devices. They are a top-ten platform as noted – in over 1 million homes to date. The existing Samsung Connect smart home product will roll up into SmartThings, as will Android and iOS applications.

Interoperability? Check. Support for the requisite hundreds of devices, but unlike Comcast they actually manufacture some of them. They also tout their commitment to the original SmartThings’ developer support culture – 50,000 developers in 88 countries.

Beyond smart phones, SmartThings and Samsung plan to add a version of the app to other Samsung devices that have a screen, including Gear smart watches, Samsung televisions and white goods. Some of their marketing material talks about the refrigerator as the Samsung Family Hub. Everybody still thinks they control the last mile or last screen. I happen to think vertical integration with device manufacturing is a competitive advantage, but beware of being a company that starts with a business model, like the fridge as family hub, rather than what a customer actually wants.

When it comes to competitive disadvantage, Samsung attacked connectivity with a new Connect Home Pro Wi-Fi router and smart home hub – sounds familiar.  Comcast has overwhelming market share, and people probably feel introducing a non-affiliated product might be problematic, but again, nobody loves equipment fees.

One thing Samsung is doing that Comcast is not is moving into the automotive space. Samsung acquired Harman last year, a major legacy supplier in the automotive space. That’s a market position that is extremely important in the insular automotive industry. The company demonstrated a SmartThings-based “Digital Cockpit.” This is a highly tactical diversification, and I’m not talking just for in-vehicle infotainment.

A part of Samsung’s lead up to CES was announcing a partnership with ADT for alarm service.  This plugs another hole in the Samsung competitive alignment as a company that is not a telecomm service provider. Interestingly, ADT’s initial public offering launched just after CES, and has underwhelmed investors. Some blamed doubts about the home security business in general, but I think it’s pretty clear ADT should not have backed away from the larger home automation space as it did two years ago. Its story became simpler, but also less compelling in terms of upside.

IoT WAN vs. 5G

In view of Samsung’s efforts to bolster its connectivity story, it’s worth looking at Comcast’s competing story beyond their broadband presence. They are doing something very interesting in wireless – not in marketing me-too cellular service, though that is useful, but in pioneering the development of a low power WAN technology standard called LoRa.

Comcast last year began building out in 12 cities a network of low cost radios and access points, which by the way communicate with the aforementioned gateways. They are inviting multiple business categories – health care, public utilities, automotive, corporate asset tracking and smart cities – to connect their devices to this LoRa network. Layered on top of that network is an interesting monetization effort called MachineQ, a data and analytics offering in support of IoT products and services.

At CES, I got to see an integration of LoRa and the new XB6 gateway (hat tip to PureIntegration.) There was a small LoRa Alliance demo area on the CES exhibit floor, featuring Semtech, Sagemcom and a few others. CableLabs has also pitched into the effort with an open source network solution.

The fundamental premise is that pervasive LoRa gateways will provide network coverage at a cheaper rate than 4G and allow IoT service providers to use cheaper, lower-power sensors. This begs the question of whether the next generation 5G standard will allow major wireless carriers to swoop in and undercut LoRa. Verizon claims “5G will seamlessly connect a massive number of embedded sensors in virtually everything through the ability to scale down in data rates, power and mobility to provide extremely lean/low-cost solutions.”

Verizon, like Comcast, is still a little uneasy about being at a device show like CES. (But not, as noted earlier, Qualcomm – “The company that changed everything about the smart phone is about to change everything about everything else.” I can’t get over that hype – sell those chips!!) But I think Verizon and Qualcomm will be more successful, in the current moment, pitching messages like “5G will not only make our smartphones better, but it will also usher in new immersive experiences, such as VR and AR, with faster, more uniform data rates, lower latency, and cost-per-bit.” VR and AR had the buzz going this year – although, in case you’re wondering, as far as TV is concerned, I contend that VR is this year’s 3-D.

Stacks Over the Top

Despite my feeling that Comcast and Samsung are the teams to beat, one should never count out the stack companies, who always try to go over the top of any place consumer attention is focused. Of course, they rarely treat CES as a major venue for announcements.

This year, Google had a fairly flashy presence at CES, pushing the Google Assistant and Google Home – I think they were stung how much mindshare Alexa has gotten. I suppose that just as Alexa has an adjacent market of to sell the many IoT devices that it makes easier to use, Google will sell ads and analytics based on all the IoT behavior that flows through its platform.

“Google Hardware” was there – Pixel phones, Pixel ear buds, Clips camera – but it still seems like a sideline.  You can’t argue however with the success of Chrome. I just don’t know if Google Home and Amazon Echo will have staying power in the home. I could throw shade on the catfights between Alexa and Siri, or phones reacting to inadvertent commands to call Mom, but I think the bigger problem is that voice assistants are not fundamentally part of the network of customer devices – over the top in a very loose way. Interoperability is not integration.

Apple HomeKit was the lone stack holdout at CES. There was a paltry set of half a dozen manufacturers touting HomeKit-Ready devices, and two of those were Shenzhen knock-off factories. But some people think they are great, so I guess we’ll have to see if the aloofness and hipster appeal of Apple prevails at some point.

Google’s Nest venture was not a floor presence, but is more involved in sector integration, specifically utilities. Jeff Hamel, Head of Energy Partnerships Nest Labs spoke at CONNECTIONS, and was all about partnerships with Austin Energy, Reliant /NRG, and SoCal Edison. I think Nest may lose the “smart home” market per se, but win a new vertical $200/month RGU contest with a retail energy program. A few years ago, Nest thermostats were the Alexa of the electric utilities. The sleepy utility execs would all say “oh, we have Nest!” but a) they were just resellers of the thermostat and b) half of them were letting Nest monetize the data. And now, by the way, you can buy a Nest thermostat and get a Google Home mini for free, so they are still pushing penetration.

The Importance of Design

The Nest thermostat is definitely a business model Trojan horse, but it’s a beautiful design that still stands out to me in a way only the original iPod or the original Kindle products did. Design, in the sense of full user experience from the visual UI to the background learning in service of customer needs (and cognitive load!), is still the unsolved key to success of the whole IoT space. And there’s still so much room for better design – things you want to touch – among unloved things a la thermostats.

Here’s some companies from CES that seem more elegantly designed to me than many others, and applying design to some unexpected unloved objects.

  • Tabs – small form factor locators
  • Netatmo Intuitiv – smart electric heater module
  • Netatmo – smart radiator valve
  • Cerevo – so many to choose from – Elucidator, Qvie, Lumigent, Taclim, Tachikoma

Having the most buttons, or the most complex scenes/recipes, is not a substitute for design. I heard Fitbit talk this year about “integration,” but I have to ask, if it senses that you are hyperventilating in the red zone on your Peloton exercise bike trying to keep up with Chris Froome, does it turn up the air conditioning?

Interoperability is not integration.

And design gets broken when business models outweigh actual consumer needs and desires. The Smart Home is crawling closer, but it’s still wading through the battling business models and ecosystems.  Paying attention to cognitive load is a good way to accelerate its arrival.

About the Author
As president of Smart Home and Away LLC, Don Dulchinos provides consulting services for developers and providers of Internet of Things applications and services. Dulchinos, a former CableLabs executive, recently served as executive director of the EIDR (Entertainment Identifier Registry), a service created by Hollywood studios, cable companies and digital video providers, including Netflix and Google, to manage assignment and storage of IDs used to track movies and TV programming across all distribution outlets.