The Future of Smart Technology

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1 The Future of Smart Technology What Consumer s Want Presented by:

2 Two Paths to Market Products Systems 2 2

3 Smart Home Market Overcoming Barriers to Smart Home Adoption Presented by:

4 % of Respondents Barriers to Smart Home System Adoption - Awareness Smart Home Familiarity (Q2/14) 20% 10% 0% 10% 20% Very familiar (Rating 6-7) Not familiar (Rating 1-3) 10% 11% 8% 9% 30% 40% 50% 60% 70% 62% 62% 72% 69% 80% Smart home services Smart home products Where to buy smart home services Where to buy smart home products Source: American Broadband Households and Their Technologies Q N=10,000 broadband households, ±0.98% 2014 Parks Associates 4

5 Barriers to Adoption No Concise Value Proposition Most Appealing Smart Home Use Cases (Q2/14) Receive alerts for smoke or fire Receive alerts for carbon monoxide or a gas leak Receive alerts when doors or windows are opened Receive alerts when there is a medical emergency Receive alerts when there is a water leak Receive alerts when motion detectors are triggered Lock and unlock doors Turn on/off the lights Monitor outdoor security cameras Monitor indoor security cameras Use sensors to know occupancy and automatically turn off lights and Receive alerts when energy usage is high Monitor, program, and adjust your home's thermostat Have appliances automatically minimize electricity usage Identify if there is a problem with any major appliances Identify ways of improving your home's energy efficiency Monitor your home's total electricity usage in real time Let you know if energy use is within budget Turn on/off or check the status of appliances Open and close your garage door Understand your home's energy performance Receive a daily summary of your home's energy usage Turn on/off or check the status of appliances in your laundry area Open a pet door 21% 45% 43% 41% 41% 39% 39% 36% 35% 34% 34% 34% 32% 31% 31% 30% 30% 29% 29% 29% 28% 26% 26% 51% 0% 10% 20% 30% 40% 50% 60% % "Very Appealing" (6-7 on 7pt. Scale) Source: American Broadband Households and Their Technologies Q N=10,000 broadband households, ±0.98% 2014 Parks Associates 5 5

6 Barriers to Adoption Upfront, Recurring Fees Q7098. In a few words, tell us why you decided not to get a home security system in the past? Source: Homeowners with Broadband at Home Q N=4,000 U.S. Broadband Homeowners 2013 Parks Associates 6

7 % Reporting "Very Important" (Rating 6/7 with 7="Extremely Important") Barriers to Adoption - Interoperability 70% Importance of Interoperability (Q2/14) 60% 58% 60% 50% 51% 40% 30% 20% 10% 0% 1st device purchased (n=736, ±3.61%) 2nd device purchased (n=573, ±4.09%) 3rd device purchased (n=520, ±4.3%) Source: American Broadband Households and Their Technologies Q N=10,000 broadband households, ±0.98% 2014 Parks Associates 7

8 % of Respondents Barriers to Adoption Privacy and Security Smart Home Privacy Concerns (Q2/14) 70% Concerned (Rating 5) Very concerned (Rating 6-7) 60% 50% 24% 20% 40% 30% 20% 39% 38% 10% 0% Concern over unauthorized access Concern over historical data Source: American Broadband Households and Their Technologies Q N=10,000 broadband households, ±0.98% 2014 Parks Associates 8

9 Smart Home Service Providers Competition in the Smart Home Presented by:

10 Smart Home Competitors Professional Monitoring Fee Based Self Monitoring Self Monitoring Monitoring and Fees 10

11 Smart Home Competitors Face to Face Retail Vignette Call Center On line Sales Approach 11

12 Smart Home Competitors Staff Technicians Dealer Channel DIY / 3 rd Party Contractors DIY Installation Approach 12

13 Smart Home Competitors Security Professional Monitoring Fee Based Self Monitoring Self Monitoring Monitoring Face to Face Retail Vignette Call Center On Line Sales Approach Professional DIY Installation 13

14 Smart Home Competitors Low Cost Professional Monitoring Fee Based Self Monitoring Monitoring Self Monitoring Face to Face Retail Vignette Call Center On Line Sales Approach Professional DIY Installation 14

15 % of BB HHs Self Installation is Growing Home Security Installation by Length of Ownership (Q3/14) 100% 90% 80% 70% 60% 50% 40% 47% 16% 65% 75% 79% I don't know The security system provider A contractor that I hired 30% 20% 10% 0% 10% 26% Less than one year (n=608, ±3.97%) 11% 5% 16% 1-2 years (n=454, ±4.6%) 7% 4% 12% 3-4 years (n=280, ±5.86%) 6% 5% 6% 5+ years (n=579, ±4.07%) Friend or family Myself Source: American Broadband Households and Their Technologies Q N=10,000 Broadband HHs ± 0.98% 2014 Parks Associates 15

16 Smart Products Competition in the Smart Home Presented by:

17 Smart Product Requirements Essential Features of Smart Products (Q2/14) Have no monthly service fees Have long battery life Be upgradable when new software releases are available Offer technical support for product Be removable, so you can take it with you when you move Be able to install it by myself Keep communication with the product secure Keep the data generated from the product private Work with other smart products Not cost more than a non-smart product Not use excessive bandwidth Have a specific type of network technology None of the above 16% 20% 26% 30% 43% 42% 42% 42% 40% 40% 37% 49% 54% 0% 10% 20% 30% 40% 50% 60% % Selecting Source: American Broadband Households and Their Technologies Q N=10,000 broadband households, ±0.98% 2014 Parks Associates 17

18 Smart Product Adoption Adoption of Smart Home Control Products (Q2/14) I m not sure, 4% No, 83% Yes, 13% Source: American Broadband Households and Their Technologies Q N=10,000 broadband households, ±0.98% 2014 Parks Associates 18

19 Smart Product Adoption Adoption of Smart Home Devices (Q2/14) Lights Programmable thermostat Smoke detectors Security camera Door locks Garage door openers Carbon monoxide detectors Outlet/plug Door bells Power strip Home or Kitchen appliances Combination sensor Blinds or drapes Sprinkler system Water leak detectors 4% 4% 3% 3% 5% 5% 5% 5% 4% 4% 6% 6% 6% 6% 6% 0% 2% 4% 6% 8% % Owning Product Source: American Broadband Households and Their Technologies Q N=10,000 broadband households, ±0.98% 2014 Parks Associates 19

20 Architecture for Smart Products Connected Product Virtual Device Device Monitoring and Control Gateway Device Analytics, Modeling and Control Data Services 20

21 Value Added Service Bundles Smart Thermostat: Preference (Q2/14) $299 A programmable thermostat that can: -Be monitored for status or controlled from a smartphone, tablet or computer -Display the current weather forecast -Use weather forecast to save money by running your air conditioner or furnace when it is most efficient -Increase your home s energy efficiency by learning your daily routines and temperature preferences -Automatically make minor adjustments to save money by operating your system when electricity prices are low 42% 58% $99 A programmable thermostat that can: -Be monitored for status or controlled from a smartphone, tablet or computer 21

22 Value Added Service Bundles Smart Smoke Detector: Preference (Q2/14) $129 A smoke detector that can: -Be monitored for status or controlled from a smartphone, tablet or computer -Send you alerts when the battery needs to be replaced 47% $29 A smoke detector that can: -Be monitored for status or controlled from a smartphone tablet or computer -Send you alerts when the alarm is triggered telling you about the event and location 53% -Automatically shut off the furnace or air conditioner in the event of a fire 22

23 Value Added Service Bundles Advanced Smart Smoke Detector: Likelihood of Replacing Functioning Unit (Q2/14) Only when it stops working properly, 39% While it s still working properly, 61% 23

24 Door locks Security camera Combination sensor Water leak detectors Carbon monoxide detectors Smoke detectors Door bells Lights Garage door openers Outlet/plug Programmable thermostat Blinds or drapes Power strip Stand Alone Smart Products, Part of Smart Systems Product Integration with Smart Home Systems 32% 34% 39% 41% 41% 44% 45% 47% 48% 49% 54% 55% 55%...stand alone devices, not part of any system 9% 8% 58% 58% 9% 11% 9% 10% 7% 52% 48% 50% 46% 48% 12% 10% 12% 10% 8% 13% 42% 42% 39% 36% 37% 32%...part of a home control system that controls multiple devices...part of a home security system 24

25 Evolution of the Smart Home Scenarios of the Future Presented by:

26 Consumer Who Controls - Choice Vendor Key Dimensions of Change Choice This dimension relates to who controls the ecosystem, including the hub, the operating system, the applications, peripherals, communication, channel, and services associated with the ecosystem. Monetization This dimension relates to who pays for the hardware, software and services associated with the ecosystem[s] that are used by the consumer. Consumer Who Pays - Monetization Vendor 26

27 Smart Products Industry Partners Data from Smart Products Unlocks Value for Partners Health Security Energy Media Insurance Electronics Retail Care The Internet of Things 27

28 Scenarios Vendors Who Controls System - Choice 1 2 Smart Home Service Providers Control the Ecosystem 3 Build-it-Yourself Systems Smart Home Service Providers Control with Incentives 4 Build-it-Yourself Systems with Incentives Consumer Who Pays - Monetization Vendors 28

29 Scenarios Vendors Who Controls System - Choice 1 2 Smart Home Service Providers Control the Ecosystem 3 Build-it-Yourself Systems Smart Home Service Providers Control with Incentives 4 Build-it-Yourself Systems with Incentives Consumer Who Pays - Monetization Vendors 29

30 Thank You. Tom Kerber Director of Home Systems and Energy Parks Associates N. Dallas Parkway, Suite 575 Dallas, Texas Office: Fax:

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