Whither the Smart Home?

Amid signs that the smart home industry is stumbling, it's time for vendors to get real about collaboration.
By Mary Catherine O'Connor
Jun 30, 2015

Consumer interest in smart home devices fell by 15 percent throughout the past year, according to the latest home automation report from Argus Group, a Silicon Valley market research firm. Last year at this time, consumer interest was growing at a prodigious pace—in August 2014, Argus says, it was 140 percent higher than in August 2013—but the firm's figures show that since this past February, interest has been declining rapidly.

"It is obvious that the early adopters have bought what they want," Argus CEO John Feland wrote in the report announcement, "and other consumers are expressing frustration that these products are complicated and difficult to set up and use."

Indeed, the smart home marketplace is awash in different interface protocols (Bluetooth, ZigBee, Wi-Fi, etc.) and standardization efforts (from Thread Group, the ZigBee Alliance and HomeKit), which have thus far not generated an obvious go-to product or standard that consumers are embracing. As such, those who are not tech-savvy are watching and waiting.

Then there are consumers' worries about data security and privacy. Computer Weekly recently reported that consumers in the United Kingdom are worried about government agencies mishandling their personal data, which is keeping them from leveraging energy-conservation programs linked to smart meters.

And when hackers exploited weaknesses in the home video streaming camera DropCam—back before Google (which also owns smart thermostat maker Nest) purchased the company for $555 million last year—it left a bad taste in consumers' mouths.

ThroughTek, a machine-to-machine platform provider, recently polled 1,181 consumers and found that data security is holding nearly a third of respondents back from purchasing smart home products. Daniel Collins, the company's chief data officer, says the new Nest Cam, Nest's first home-security product since it acquired DropCam, "provides validation for the importance of security in a connected home environment."

Collins thinks the success or failure of the Nest Cam could foretell the fate of Google's IoT operating system, Brillo. "Will [Google] stay true to creating an open IoT ecosystem," he asks, "or will it require consumers to be locked in its own IoT ecosystem of devices?"

The future of the Internet of Things might not lie with consumers anyway. McKinsey Global Institute just released a new report that says the lion's share of what it sees as the IoT's $11.1 trillion economic potential (by 2025) is in the business-to-business realm, not the consumer world. Based on the Argus Insights report and the mediocre splash that Nest Cam has made out of the gate, it seems like that might be true.

I don't think it's too late for manufacturers to reignite the smart home industry. Certainly, major firms are still investing significant resources into making smart home products interoperable and easier for consumers to put to work. NXP Semiconductors last week unveiled a new NFC chipset for smart home applications that it thinks will make building out a smart home network a snap. And chipmaker GreenPeak has just announced a multi-protocol chipset, the GP712, that can support ZigBee and Thread data packets in the same radio.

I hear about new technologies and software tools all the time that sound promising and could actually help consumers save significant amounts of energy and make their homes more secure. But if any segment of the IoT is truly suffering from the hype cycle, it appears to be the smart home. Vendors that have over-promised and under-delivered need to start meeting consumer expectations and ensuring that products from disparate manufacturers play well together.

Mary Catherine O'Connor is the editor of Internet of Things Journal and a former staff reporter for RFID Journal. She also writes about technology, as it relates to business and the environment, for a range of consumer magazines and newspapers.

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