The Smart Home Hub is not dead, but evolving
Smart home technologies are beginning to enjoy their day in the sun, with adoption levels rising across the board. One recent research report from Parks Associates claims that 17% of US broadband households own an Internet-connected entertainment device and a smart home device, with an additional 13% of consumers owning both a connected health device and a smart home device. In ancient history these figures would ignore the inevitable hub required to connect these devices, but that is increasingly no longer the case.
Interestingly, just across the pond, new stats from YouGov have found that one in ten in the UK now own a smart speaker, up from just one in twenty in Q3 2017, and over a third (34%) say they interact with other smart devices using their speaker, while nearly a quarter (26%) said they bought their smart speaker specifically because it can integrate with other devices. Accessing smart home services in a whole new way, with voice, is evolving and 14% of Britons already own a device powered by Artificial Intelligence (AI). 10% currently own AI devices, but a significant one in three are planning to buy an AI device, according to the latest figures from PWC.
The market for AI-powered smart home hubs like smart speakers is also on the rise. Integration is accelerating and this concept of integration is absolutely central to the smart home market on every level, from the biggest enterprise to the home consumer.
Open standards that allow enterprises to collaborate and work towards a more dynamic and powerful ecosystem are in turn allowing installers and professional engineers to more easily manage customer expectations and cross-sell more effectively. This supporting integrational ecosystem - perhaps most importantly - means that the end consumer can readily recognise products that fit together, removing the guesswork or need for them to conduct any intensive technical research.
“This supporting integrational ecosystem - perhaps most importantly - means that the end consumer can readily recognise products that fit together…”
It is this urge for integration that will ultimately be responsible for the end of the dedicated smart home hub, especially when viewed in conjunction with other key market trends that all appear to be pointing the same way.
Customer expectation is a key battleground, where single use, power hungry and bulky devices are no longer popular, a fact that Deutsche Telekom recognised some time ago. Even in 2017, Deutsche Telekom began rolling out software upgrades to consumer routers across Germany, so that the popular Speedport Smart router now controls Deutsche Telekom’s end-customer offer Magenta SmartHome devices. The routers are no longer ‘dumb’ connector points for phone calls, Internet and TV services; they can now function as the first stop on a smart home journey, an essential low-barrier entry point.
A consumer can access basic functionality for free, and so by just adding a compatible low-cost device such as a door/window contact or motion-sensitive camera, for example, they can create a simple but effective home security solution for very little outlay indeed. This single, simple but effective point of entry is a vital ingredient in the smart home success story, and one that resonates for both consumers and service providers.
As mentioned above, the market for smart home speakers has rocketed. At CES 2018, Samsung announced that the next generation of smart TVs will ship with integrated voice AI, thanks to Samsung’s digital assistant, Bixby, which will control SmartThings-compatible devices, such as Ring doorbells and Philips Hue lighting. The gravity of this step is significant when you consider that Samsung sold 47.9 million TVs in 2016. Meanwhile the latest hub from Centrica-owned Hive (the Hive Hub 360) follows the same trend, incorporating 360-degree audio detection, thus contributing an extra security sensor to the consumer’s home, natively, right out of the box. We have also been following the trend closely, and recently announced plans to speed up the transition to voice-enabled AI during 2018 with the launch of an own-brand assistant and AI-enabled consumer speaker product to control smart home devices and DT's services (such as EntertainTV).
The opportunities for professional installers here are significant, because while the AI speaker may be a near portable, minimum installation device, the next steps on the integration ladder - that essential upgrade path - are often more demanding. Outdoor lighting, smart doorbells and door locks and heating control are natural upgrades once voice control becomes expected, and many consumers automatically seek professional help with devices of this sort. However, once again, the value of standards-based integration should not be underestimated - the ability of installers and service providers to add value is dependent on seamless compatibility with the broadest range of partner products. That’s why it’s important to have an open smart home platform that can work with many of the household names mentioned, including different smart speakers, Sonos and Philips Hue – this inclusive approach will only become more important as devices converge and customer requirements and expectations increase.
While the single smart home hub may well face imminent obsolescence, that is due to the most exciting of reasons - better integration - which is a sign that the smart home industry is maturing - and maturing fast. We have long advocated better collaboration, more partnerships and clear, widely accepted standards, and the evolution of the smart hub is just one indicator that a brighter future for all concerned with the smart home is emerging. We are stronger together.
Thomas Rockmann is VP of the Connected Home division at Deutsche Telekom