Technology

Home, Where the Smart Is

Voice-controlled hubs, integrated systems in CES spotlight 1/09/2017 8:00 AM Eastern
Zen Echosystems's smart thermostat is the latest third-party product to be integrated with Xfinity Home.
TakeAway

The home is shaping up to be the battleground cable operators and other service providers are jostling to dominate with an emerging class of smart products and services.

LAS VEGAS — The emergence of the Internet of Things has quickly been followed by the smartness of everything. As a key theme here at CES last week, it is clearly no longer enough to simply connect everything to the Internet. Those Internet-connected things must also work in concert with a tightly integrated and secure platform that can be managed together, rather than operate within their own technology silos.

 

Playing into that that trend is the emergence of voice-controlled technologies from companies such as Amazon and Google that are seemingly being built into everything from smart home hubs, connected televisions to over-the-top devices, including Shield TV, a new streaming box from Nvidia that runs on Android TV.

 

“The next computer interface is voice” as the technology hits an inflection point and makes the leap from “theoretical to practical,” Dr. Shawn DuBravac, the Consumer Technology Association’s chief economist, said last week in a presentation that outlined key tech trends and revenue forecasts for a wide array of product categories (see sidebar).

 

While the home is shaping up to be the battleground, cable operators and other service providers are jostling to position themselves as the aggregation and management point of this emerging class of smart-home services, which have already boosted profits.

 

It’s shaping up to be a good place to seek growth, as consumer adoption of smart-home technologies and services is clearly on the rise.

 

About 26% of U.S. broadband homes now have a smart home device, up from 19% at the end of 2015, according to a Q4 2016 national survey conducted by Parks Associates. The research firm also found that 11% of U.S. broadband homes currently employ a smart thermostat, and 5% own a smart plug/adapter module.

 

And while retail will be playing a big role in the smart home, the trend is toward aggregated and integrated ecosystems that support an array of smart home products, an area of focus for service providers such as Comcast, AT&T and Verizon Communications.

 

Building partnerships with device makers and stitching them into an integrated ecosystem will help smart home products and services break into the consumer mainstream and create scale, according to Daniel Herscovici, senior vice president and general manager of Xfinity Home, Comcast’s home security and automation service, who spoke at the Parks-run Connections Summit here last week.

 

Consumers now have a “premium expectation” that smart home devices will work together, agreed François Girodolle, head of European developer relations for Nest Labs, the smart home product unit owned by Google.

 

Xfinity Home is pushing hard in that direction with a curated certification program for third-party device makers that aims to support two to three “best of breed” suppliers in several key categories and then stand behind them with customer, tech and installation support.

 

Herscovici said he expects other large smart-home ecosystems to follow Comcast’s lead, but stressed that building partnerships with third-party suppliers isn’t without its challenges.

 

Notably, Comcast must also keep pace with new iterations of products and firmware updates coming from partners. Getting partners to be “disciplined” with those technical changes has become a greater challenge as the ecosystem grows, he said.

 

Carrier, the heating, ventilation and air conditioning giant, has also been looking to help its customers optimize and automate their home climate systems and continues to be interested in lending its expertise to smart home ecosystems and aggregators such as Comcast, Apple and Google.

 

But Carrier, which relies on complex HVAC systems that utilize their own algorithms, gets concerned when others are injecting sensors to control HVAC systems without a well-heeled partnership, Matthew Pine, Carrier’s vice president of marketing, said.

 

“In the first wave of integration … the deeper layer is what concerns me,” Pine said, noting that Carrier sometimes gets customer calls because of issues stemming from smart home systems that are architected in a different way than Carrier’s.

 

Comcast, meanwhile, has been looking beyond Xfinity Home with its smart home strategy. Last week, it introduced a broader “Digital Home” initiative run by an integrated, cloud-powered platform that will help millions of customers smarten up, organize and simplify their home networks.

 

Comcast expects the new whole-home platform to go live by the end of Q1 2017, with a goal of having it supported in 15 million gateways by the end of the year. It will operate via a new app for mobile devices or a Web portal and be integrated with the X1 voice remote.

 

“To all of us, the Internet doesn’t stop at the wall,” Chris Satchell, Comcast’s executive vice president and chief product officer, said. “It has to be ubiquitous and it has to be smart and be able to connect to all of those devices.”

 

Emerging Tech Fills the CE Gap

 

LAS VEGAS — Maturing technology and product categories, such as smartphones, tablets, TVs and PCs, contribute about half of total CE industry revenue, and many of those segments are in decline.

 

The good news for the industry is that emerging categories such as virtual reality, smart-home technology and services, and TVs with next-gen 4K and High Dynamic Range (HDR) are filling the gap. The U.S. consumer technology industry is forecast to produce $292 billion in retail revenue this year, driven by emerging categories, according to the Consumer Technology Association’s latest U.S. Consumer Technology Sales and Forecasts report.

 

Here’s a glance at how some of the newer categories are expected to perform:

 

Virtual Reality: Sales of VR headsets are expected to reach 2.5 million units this year, up 79% versus 2016, while driving $660 million in revenue, representing a 42% rise.

Smart Home: This category, which includes products like smart thermostats, IP cameras, smart locks, lights and doorbells will hit sales of 29 million units in 2017, up 63%, and bring in $3.5 billion, up 57%.

Digital Assistant Devices: Thanks to the popularity of products like Amazon’s Echo and Google Home, unit sales are expected to reach 4.5 million units in 2017, up 52%, and $608 million in revenue, up 36%.

4K/UH D TVs: Shipments are expected to reach 15.6 million units, up 51%, and pump revenues of $14.6 billion, up 38%.

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