The home of the future will have beauty and brains
In The Fifth Element (1997), the protagonist’s apartment came replete with a bed that disappeared into the wall only to come back when needed with fresh linen and lights that came on when it was time to wake up. While many of us may not be ready to embrace such a tiny space, it’s clear the technologies showcased in the movie, which were a mix of smart home controls and chore-automation systems, are now within the realm of the possible. In fact, it’s hard to miss the dazzling array of high-tech devices and appliances that now promise to transform our humble abodes into techno hubs. What we don’t often see however, are the ground-breaking technologies that are also being deployed “under the hood.” In this regard, utility companies have become more than simple providers. They are now partners with customers to create a connected future where homes will be more efficient and economical to run thanks to various smart devices, safer thanks to sensors and cameras, and a lot easier to take care of thanks to chore automation.
The Internet of Things: A world of possibilities
Much has been written about the Internet of Things (IoT) in the last few years but what is it exactly? Essentially, it’s a network of devices, sensors, cameras, and systems that are connected over the Internet, allowing them to communicate with each other, collect data, and interact with businesses and consumers through applications and interfaces.
One “popular, if silly, example is the smart fridge: what if your fridge could tell you it was out of milk, texting you if its internal cameras saw there was none left, or that the carton was past its use-by date?” asks The Guardian’s Nicole Kobie.
Predictions about the future impact of IoT vary widely. A study conducted for the McKinsey Global Institute puts the total potential economic impact at somewhere between $3.5 and 11 trillion per year by 2025 while PwC predicts “the connected home market could be worth almost US$150 billion globally” by 2020.
One thing everyone agrees on is that the IoT has been made possible in great part by the rise of smartphones and their ecosystems. Today, 44% of the world’s population uses smartphones and this number is expected to grow to almost 60% by 2022, according to Strategy Analytics.
Since most consumers carry their smartphones at all times, service providers can tap into the technology to offer customers increased control, security, and peace of mind. That’s because smart communication devices are at the heart of many IoT products and services.
For example, both Ring’s Video Doorbell and HomeServe’s LeakBot, send alerts to the customer’s smartphone when their attention is required. In fact, “74% of consumers say they use their smart home device more frequently because it connects to their mobile device,” according to PwC’s Smart home, seamless life survey.
Business Insider estimates the number of devices connected to the internet will increase from 10 to 34 billion between 2015 and 2020. “IoT devices will account for 24 billion, while traditional computing devices (e.g. smartphones, tablets, smartwatches, etc.) will comprise 10 billion.”
Currently, the use of connected things is being driven by China, North America, and Western Europe, which account for 67% of installed IoT, according to Gartner. But Strategy Analytics expects the highest smartphone penetration rates will be in Central and Latin America, followed by Asia Pacific, in the next few years, opening up these markets to IoT.
One thing is clear; the home is no “longer just a place for sleeping, eating and relaxing,” explains PwC. It’s “being remodelled into a connected and personalised ecosystem of services.” As a result, many companies, including utility providers, are jumping at the chance to improve consumers’ lives through smart technology but first, they’ll have to overcome several obstacles that are impeding the adoption of IoT products and services.
Many consumers still ambivalent about smart home technology
There seems to be a disconnect between industry expectations and media hype surrounding IoT, and consumer understanding of the benefits, which is slowing down adoption. Providers have been “touting products such as coffee pots that turn on when the alarm clock rings, lighting and blinds that adjust to the time of day, and fridges that send an alert when the milk runs out,” explains The Economist. “But so far consumers have been largely resistant to making their homes “smart”.”
A study of the Canadian market conducted by Nielsen, might go a long way to explain the slow rate of IoT adoption both in Canada and in other developed markets. The top-four reasons listed by respondents for not buying connected home technologies were: “Satisfied with what I have” (68%), “Would not use enough” (52%), “Too expensive” (45%), and concerns with privacy and hacking (30%).
Cost too high?
In 2015, “consumers globally spent around $60 billion on hardware and services for the smart home,” which remains “only a fraction of the total outlay on domestic gadgets, “according to a survey by PwC. One of the main obstacles is the price tag. At a prohibitive $5,000, the smart refrigerator mentioned earlier for example, demands quite the commitment from consumers.
However, devices that cost a lot less and “are easy to install and offer obvious benefits are gaining in popularity, such as motion sensors that send alerts when windows and doors are opened and cameras to monitor activity,” points out The Economist.
That said affordability remains a top motivator for a majority (53%) of consumers, according to PwC, with 42% saying the list price represents their biggest hesitation and 52% saying they’d be more likely to consider buying a smart device if it came with a payment plan.
It’s all about the benefits
In order to convince non-users of the benefits of IoT technologies, companies will first need to identify consumers’ main concerns. According to PwC, saving on utility bills (90%) and increasing home safety (87%) are at the top of the list but it seems priorities vary by age.
Finn Partners surveyed Americans about the concept of smart homes and what they viewed as most important. While home security was the main concern for wealthier consumers, younger people and women placed chore automation at the top of their list.
Consumer Insights’ Tasneem Ali argues it’s all about educating consumers already interested in IoT. Those “who plan to buy at least one connected home technology within the next two years would benefit from learning about the convenience and efficiencies that these devices can bring to their lives,” she says, “whereas consumers who already use at least one connected device might benefit from knowing how multiple connected devices can work together.”
The constant spectres of cybersecurity and data privacy
A common obstacle in the adoption of any connected technology is the constant fear of data breaches and its consequences. “For example, the data collected by a smart thermostat can reveal when someone is home based on their heating and cooling settings,” explains cyber security specialist SecureRF. “If this information is not adequately protected, thieves can use it to determine when to break into houses.”
More needs to be done to protect consumers willing to embark on the IoT wagon but also to inform them about the way their information is collected and used. A study looking at 300 IoT devices such as smart meters, health monitors, and connected thermostats, found that almost 60% of companies failed to explain how they would be collecting, using, and disclosing their customers’ personal information. An even higher proportion (68%) failed to explain how customers’ information would be stored.
As they try to educate consumers about the benefits of integrating smart systems into their homes, utility companies must take these reservations into account and bank on the trust they’ve built over the years with their customers to overcome them.
Utility providers are a key player in the home of the future
Energy efficiency benefits everyone
At the very core of smart homes are some key components: energy (e.g. electricity, gas, solar), water, an internet connection, and devices to distribute these essentials throughout the house. As a result, utility providers are particularly well-positioned to play a pivotal role in this increasingly connected world.
This is especially true since more than a third of consumers expect their utility providers “to implement technology that [will] automate energy savings and 20% expect them “to build smarter communities,” according to a report by SmartEnergy IP.
To meet expectations, providers can use the promise of benefits to spur consumers towards greater energy efficiency and better control over home systems and that’s exactly what they’re doing in many markets around the world.
Appetite for smart technologies growing
Smart technologies are being deployed in homes to store energy, monitor its use, detect and report anomalies, and offer consumers many of the conveniences they’ve already become accustomed to in other areas of their lives.
A survey conducted by HomeServe in 18 countries around the world revealed that homeowners have preferences when it comes to which home operations they would be interested in controlling via an app.
Putting aside entertainment options, the top two choices were home security, particularly in India and Latin American countries, followed by lighting controls, also quite popular in the same markets. Heating and cooling was appealing to 41% of homeowners on average globally with the highest regional interest recorded in China (59%), India (52%), and Romania (52%).
A smart thermostat like tado for example, can learn from your routine and “take a look” at the weather forecast to make sure the temperature in your home is just the way you like it. Feeling a chill on your way home? No problem, you can also control tado using your smartphone. The system could save consumers up to 31% in heating costs, according to HomeServe, making the device smart on many levels.
Creating a more sustainable and reliable utility grid
Integrating smart technologies into the homes of customers also helps utility providers fulfil a crucial role in making the world more sustainable. Smart thermostats are just one of the many devices deployed in the home by utility providers. Others include smart lightbulbs, power outlets, water meters, and even energy storage capabilities for those using alternate sources of energy.
All these devices play a key role to “help curtail electric load during high-demand periods, provide crucial grid stability, and help to prevent extreme market prices,” explains Tom Kerber from Parks Associates.
The challenge, according to Kerber, will be for utility providers “to determine their role in the smart home environment” as “more smart devices with energy management features enter the home. Decisions to partner with device manufacturers or service providers are becoming more and more important.”
A device like HomeServe’s Leakbot for example, alerts homeowners of a leak in a water pipe before it becomes an issue. This not only protects the water supply but it also diminishes the risk of damage to the consumer’s home and could be used as a prevention tool by insurance companies.
Much needed support
Another key obstacle facing utility providers in their bid to transform homes into smart hubs is the complexity inherent in installing and monitoring some of the connected systems. As anyone who’s tried to make their home “smart” can attest, the process is rarely without difficulties. “The dream of having the ultimate connected home can sometimes turn into a nightmare,” explains Techradar. “A complicated set-up process, iffy apps and a disconnected infrastructure can mean you spending hours just trying to get a light switch connected to your router.”
This is where utility and home services companies can make great partners as one can provide the utility and smart devices and the other can provide installation expertise and take charge of monitoring and maintenance with their own smart technologies. For example, home assistant specialist HomeServe launched its first smart assistant in France this year.
Tom is a chatbot that uses natural language to interact with customers when they encounter a plumbing problem, which represents 90% of the issues that require service. As a smart device, Tom is loaded with 450 possible incident scenarios. Once it has identified the problem, Tom can advise the customer on the most appropriate action and recommend the closest professional.
Utility providers can pave the road to the home of the future
According to Digitalist Magazine, the International Data Corporation “predicts that eventually this industry will see a high impact from its IoT investments because both utility companies and consumers have a stake in making energy production and use more efficient.”
That said while the benefits of IoT devices and systems might seem obvious, slower than expected adoption rates highlight the need for companies to do a better job of educating consumers about IoT and its potential benefits while reassuring their fears about hacking and data privacy.
In the meantime, if you can’t quite picture what the home of the future will look like, have a look at this house in the UK to get a taste
The Millennial generation, as more reluctant DIY-ers, present an opportunity as an audience for home services.
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With a complex, heavily regulated environment and aggressive green agenda, the outlook for Utilities in Australia presents challenges but also great opportunities for those wishing to extend their relevance in customers’ homes.