Dumb thermometer shows why there’s a chill in the smart home market

There are significant challenges facing the smart home market, and perhaps the most visible is being caused and perpetuated by market fragmentation, says Thomas Rockmann, VP of Connected Home, Deutsche Telekom AG.

An additional layer of confusion is added to the mix by the overly broad scope of phrases like ‘IoT’ or even ‘smart home’, which cover off such a range of products, technologies and use cases that even the most informed can feel overwhelmed.

For example, one of the major drivers of the smart home technology market in these early days has been the smart home thermostat. Berg forecasts that by 2019, the number of smart thermostats will grow at a CAGR of 64.2% across both markets. So plenty of growth here, it would seem, but the underlying reasons are extremely complex. Energy and heating management are not only of interest to concerned consumers, but are also subject to significant regulation, which of course differs by territory.

In many EU countries, regulators are seeking to provide an open environment to stimulate greater competition and innovation. For instance, in the UK, the DECC (Department of Energy and Climate Change) has created the DCC (Data Communications Company), which as part of its mandate will allow authorised third parties to provide services direct to consumers (assuming the latter have opted in to allow the sharing of their energy consumption data), which will offer new routes for consumers to receive energy services and advice on how to reduce their energy usage.

Smart home connectivity
Smart home connectivity

This energy data also represents a compelling opportunity for utilities, as it will enable them to build more attractive connected home propositions using detailed customer insights. A smart meter that provides real-time energy visualisation gives the utility the means to build a positive relationship with a customer, assuming it fully uses this data to leverage the provision of new services and products.

For example, in Germany and Austria, Deutsche Telekom’s connected home platform has enabled utilities including Vattenfall, RheinEnergie, EnBW, Entega and eww Gruppe to offer customers heating and energy management services. This has resulted in establishing and leveraging connection to a range of devices, including thermostats and smart plugs.

Consumer confidence is undoubtedly affected by the lack of clarity over interoperability. Will your smart thermostat work with your connected weather station? Maybe, maybe not – do they share the same platform, protocols or have common integrations (the best example being If That Then This)? This confusion over interoperability can be seen at nearly every level of the IoT market and, even where standards are required, the variety is bamboozling.

The sheer diversity of wireless protocols available for manufacturers to pick ranges from established industry standards such as ZigBee, Bluetooth, Bluetooth Low Energy (BLE or Bluetooth Smart) and WiFi Direct, WiFi-ah (HaLow) to proprietary standards, such as such as Z-Wave and HomeMatic. Or how about Thread (Google’s open version of ZigBee), or open protocol 6LoWPAN, or the full range of GSM technologies from GPRS (2G) through 3G up to UMTS (4G).Qivicon

Then of course there’s good old NFC, RFID, ANT, ANT+ protocols usually used in short-range systems – the former for contactless payments, the latter two for heart rate monitors and associated fitness sensors such as cycle power meters. Even this list is only of current protocols actually in use in a home near you right now – manufacturers will have to be considering the next iterations of many of these standards, such as 5G to boot.

Faced with this plethora, it’s no surprise that the industry has spent considerable time trying to establish recognisable ecosystems of official standards and platforms. At the broadest level these break down into open and closed, or proprietary platforms. However, we feel that there are significant advantages to the former, open ecosystem approach.

The author of this blog is Thomas Rockmann, VP of connected home, Deutsche Telekom AG.

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