The Smart Home will be the battle of the business model not the technology!


2015-05-04, 10:41 Posted by: Advisory

Who will control our home in the future? Right now companies and alliances are forming to win the battle of the smart home, but as always it is the best executed business model that will win the battle and not the best technology. As seen in the current smart phone battle a market can sustain several competing platforms but not too many, like Android and IOS works but Windows Phone has big problems attracting the support and developers. In the smart home this means that the developers / device producers needs to limit the versions of their products and the winning ecosystem(s) will be the ecosystems that gets the devices and services first.

In this article I will look at my understanding of the business model of some players in the market and compare them. All data is taken from public sources and I have added my own thoughts, conclusions and assumptions on that information. Originally I did the material for a series of client meetings last year that has a connection to the smart home.

 Today the smart home is mostly isolated smart connected devices controlled by isolated applications on smartphones. In most cases there is no exchange of data to improve the user experience and the control of the home. This is however changing quickly.

 In the battle there is two obvious combatants, Google and Apple. They want of course to expand their current ecosystems around the smart phone by adding the smart home as an accessory but they do it in two completely different ways where it is defiantly not possible to say which way is the best and will win in the long run.

 

Note: these business models are not complete but put together for demonstration of my conclusions. To get the business model canvas explained please go here.

In my view one of the biggest difference is the customer segment where Google by putting Nest in the center are aiming for the home owner but Apple by putting IOS device in center are aiming at any consumer owning an IOS device. For me this means while I have two daughters they can have their own private smart rooms in the house but also being part of the larger smart home, for Google/Nest that is not so easy.

The next big difference is the approach to the device / developer community, where Google is offering data from the Nest sensors so that the developers can make better products/services but Apple on the other hand are asking the developers/device producers to hand over control/data Apple so that anybody can use it to innovate on.

Finally they are formulating a new communication standard to support their effort, Apple by them self where devices needs to support it via the Mfi program (very structured) and Google via the forming of the Thread group which is releasing it's 1.0 standard soon (based on Nest communication). In this there is also a big difference in that Google/Nest supports cross platform IOS/Android/WWW but Apple, as usual, only support native IOS.

So both of them have understood that this is a multi-sided business model play with minimum three customers: Consumers/Home owners, device producers and developers. As always it is important to early gain traction in one early adopter segment to get the new devices and services early and that is not easy!

Apple/Google are not the only players in this market, you have the energy/security firms, Samsung/Smartthings, startups and so on. There is one different play that I think is very interesting and that is Wink/Quirky. Have you heard about them?

Wink is a spin-off of Quirky which is a Kickstarter but as a company. They have created a large community of innovators which suggest ideas and if Quirky produce the idea the innovator and the community receives a share of the sales. Quirky are focusing in product package, producing and shelve spaces to help get innovations out. Looking at Wink which was started after Quirky understood that 30% of the ideas coming in was about the smart home.

 

Wink is similar to Apple in that they address the broader consumer space and not just home owners, but their offering is different from both Google and Apple due to that they offer an app to control the smart home and a hub to integrate legacy systems. With the app they will support the different mobile ecosystems similar to Google.

For the device producers they offer the ability to let the Wink app control their device and they do the integration between devices in the home to give the user one coherent interface. This could over time have problem with scaling but at the moment it gives them speed which is very important.

But the real advantage of the model is the innovator community where they very quickly can make an idea happen and put it on shelves across the world (today only usa). This really enables speed to market and somebody once stated that before VP's at a large company (like Electrolux, GE etc) can find time for a meeting to take the decision to do a product,  Wink/Quirky already have it on the shelves :-).

The next couple of years will tell who will dominate the smart home, if it is one of these three or if it is somebody else completely. What are your thoughts about the smart home? Do you agree with my thoughts?


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