At IoT World Forum 2014 in London (UK), M2M World News had the opportunity to interview Jon Carter, UK Head of Business Development – Connected Home at Deutsche Telekom.
M2M World News: Deutsche Telekom has designed a platform to help the players of the smart home ecosystem bring value to the end-users through new services. Can you tell us more about this platform and how it could be leveraged to develop new smart homes solutions and services?
Jon Carter: The connected home has got a huge potential. According to our insight, in the next 5 years, people could have up to 24 connected devices at home. Compared to where it is today, there is a massive growth expected. The challenge we see is that there are many silo products and they are not interconnected with each other. And the real value of the connected home is when you start to interconnect the different devices around the home. For example if a lamp or other devices could be turned on when the smoke detector triggers an alarm. The difficulty is that there is no common standard around these devices. There is a lot of talk about it but nothing is happening. And the way the industry players are looking at this issue is “yes, there should be a common standard and it should be ours!”. We need true common standards that are recognized by the key players. On our side, we have deployed OSGI, a standard which has been existing for 14-15 years now and which is used by all the major telcos across the world as a framework for all their IoT developments. Indeed, it offers a lot of flexibility in terms of bundles of services, and you don’t have to reboot the devices built on top of this architecture if you have to drop a new firmware, like it is the case today for many connected consumer devices. For the IoT, you may have critical devices which need constant connection. So we have deployed this open architecture which enables a seamless, agile approach to constantly refreshing the software with new bundles. Implementing this open architecture has been the first step. Then, what we saw as absolutely fundamental was to have open APIs. We have looked at the market and we have certainly been the prime promoter of Eclipse. The Eclipse foundation has thousands of developers working on open source software solutions for the OSGI platform and we think that by leveraging Eclipse SmartHome you can make it much easier for manufacturers or third party platforms, to realize value without huge investments in building an infrastructure.
M2M World News: The DT connected home platform is available now. On what scale is it meant to be deployed in terms of volume and geography?
Jon: For the moment, it is available in Europe which is our main focus today. In the US we are looking at opportunities on a case by case basis. In terms of resources, we are focused on driving growth in Europe.
M2M World News: Can you give a few examples of services which are available, running on the platform?
Jon: At the moment, the applications of most interest relate to peace of mind, security, self-monitoring and safety, Deutsche Telekom has added value to that by partnering with Allianz, so for example in the case of a flood event, not only you have the water turned off, but Allianz can offer a service where they would bring a person to repair or clean the mess that has been caused. In terms of energy management, we have partnered with four of five of the major utilities in Germany with the idea of enabling the end-users to optimize their energy use. Then, the other areas are related to convenience and control, essentially home automation, which is enabled through our platform.
M2M World News: Are those services you mention already deployed and available?
Jon: It depends. For some manufacturers, it is a new platform and they see the value of moving to a common architecture, a common platform. For example, we have partnered with Philips, which already has its own gateway and they are integrating their gateway functionality onto our solution. They see the value of having multiples devices on one open and flexible platform. The key is to have a really clear, simple, compelling use-case proposition and beyond that you need to make sure you have low-cost hardware because this is going to impact the volume. Attached to that you need to look at innovative models, for example find out how you can get your value proposition to the market without necessarily having the customer pay hard cash in the near term. Yes, there would be some upfront charge, maybe there would be some subscription but actually, the question is how you can fold this proposition into existing revenue streams, whether it is insurance, energy management, warranty…The value is how you can optimize an existing product in a way to optimize the profitability on existing revenues, and then conform the hardware to do so with an enhanced customer experience.
M2M World News: What do you think are the main barriers to adoption today: the business models, the price point…?
Jon: The models, the price point, too many unfocused propositions…We need to make sure we are really answering the customer needs and a real pain point. Generally speaking, across the market, the industry is too focused on its own excitement. And if you look at the pricing across the market, it is generally still too high!
Now, if you look at the UK insurance market, a third of insurance claims are based on burst water pipes because of a frozen pipe or water leak. And if you replicate this issue across Europe, you can imagine there is an opportunity for potentially massive cost savings just through implementing IoT.
M2M World News: Don’t you think that customers expect a smart home solution that would help them make savings for example from their energy consumption?
Jon: I think you need to help the customer adopt the solution. Take pay-as-you drive insurance, customers agree to use the system if at the end they get a discount.
There is no single use case, there are so many different needs across the market. Developing some UBI-type of propositions will appeal to some market segments, but others are ready to spend money on consumer tech like wearables and with these type of products you can create some compelling use cases. For example, if I’ve got a Jawbone and a Sonos sound bar and I come downstairs in the morning and the light turns on and the radio comes on in the kitchen because my personal Jawbone has been detected. Well, now you could, with small purchases, get cool scenarios which would make your life at home more personalized, more comforting. In the end, there are multiple drivers and use cases on the market.
M2M World News: How do you manage, through the platform, the fragmentation of wireless technologies generally used in smart home solutions? Is your platform able to adapt to new standards that could emerge in the future?
Jon: Absolutely! As there is currently, indeed, a significant fragmentation of wireless technologies in the smart home market we integrate the most relevant technologies in our gateway and support an extension via USB sticks or external gateways. We already support ZigBee and HomeMatic which is a subset of a popular smart home technology used in Germany. From our point of view it is important that customers have the choice to connect a large range of smart home devices – independent of the technology used. Our platform is not only able to adapt to new standards as they come along – we even have the capability to add these new technologies and standards seamlessly without the need for a painful firmware update. We believe that this is necessary to appeal to a broader range of manufacturers and to support the use-cases driving massive adoption. And with all those possibilities, it really makes sense to have a common open architecture.
M2M World News: Obviously there is a lot of education to make on the market. How Deutsche Telekom sees its role in terms of market education?
Jon: It depends on the markets. Of course, in Germany Deutsche Telekom is the incumbent telco and we are currently selling the solution in 550 stores, so we are doing an active job to communicate, to explain the proposition. But then, our partners are doing their own job in promoting their propositions.
What we are doing in the UK is working with partners. We are acting as a solution seller and we explain to our partners what is critical to drive success, making sure that their proposition really resonates, that it truly answers a need and constantly challenging them on their channel strategy, on how they could streamline and improve their go-to-market plans. Bringing partners onto our platform is only a small part of our activities. We are then very much engaged in making sure what they take to market drives volumes.
The White Paper we are about to release is looking at the different models that we think need to be adopted on the market. We are challenging some of the big industry players, inviting them to think differently, whether it is in financial services, insurance, warranty…there is a huge opportunity to optimize their business, to improve the customer experience…
M2M World News: How long do you think it will take for connected home solutions to be in every homes?
Jon: I don’t know. I think Gartner is quite right with regard to where we are in the hype cycle. It is still the early days but we are moving up this hype cycle quite quickly and the level of interest in IoT has been really intense in the last 6 months. The challenge that we face is we are going to have companies that continue with their silo approach, whereas we need to be much more flexible around how we go to market and not tell the customers what they buy but give them the opportunity to decide what they want.
M2M World News: Thank you Jon. Do you have anything to add as a conclusion?
Jon: In conclusion, I would like to say to the players of the IoT/M2M ecosystem that we need to work together. We would like to see the major telcos, especially in Europe, work together on deploying OSGI, with a Java-based approach, and adopting Eclipse. This is the only way to have the European flag on the IoT podium some day!