Connected homes driving growth opportunities in 2015

Interview with Jon Carter – Deutsche Telekom

Interview with Jon Carter, UK Head of Business Development – Connected Home.

1. Where are we as a business sector with delivering on the promise of complete home automation and control today?

Today, the market is still at a very early stage in the development – both in the US and Europe – although in the States, it’s probably slightly more advanced. And we haven’t even scratched the surface, in terms of delivering on the promise of complete home automation and control. But it’s a journey – both for the industry and the consumer. It’s not all going to happen just like that. Rome wasn’t built in a day, as they say.

So it is still early days, but to get to that end goal, it’s critical to have a clearly articulated and grounded vision of what the connected home means and could represent to the business – in terms of new revenues, optimised costs, new business models that can be exploited; and the consumer, what needs it will meet.

For the most part, we believe that today there is still too much focus on technology, and as an industry, we are falling short of making sure that we meet consumers’ needs. We believe key to success is articulating single, simple and compelling propositions – that answer to the needs of consumers. One of the key things that Deutsche Telekom is doing is ensuring that we work with our customers – the utilities, retailers, other telcos, insurers, etc – to create consumer propositions that will resonate in the market. Too often, there is still a disconnect between what we as an industry are marketing, and what consumers are currently ready to accept.

2. What steps does the smart home/technology integration industry have to take to advance the Connected Home concept beyond closed systems and device compatibility conflicts?

The industry needs to wake up to the fact that we can create even greater value from the connected home, if we work together. Building mutually exclusive ecosystems, gated communities, as we describe them – or closed architectures – will not help anyone, least of all the customer. All it will do is result in even greater consumer confusion, weak use cases, and not drive the real growth, which is what we all want to see.

At Deutsche Telekom, we have created QIVICON in Germany, which is a brand that comes with a strong customer promise that it is open and works with multiple different third party products and services. In fact, we are adding new devices to the list we support every week. We believe that this is the approach that we need to see realised to move this market forward – and it is the approach that we are promoting to all of our customers.

3. What steps are being taken to ensure interoperability of smart home devices?

As an industry, we’re also working together towards standards that have broader appeal. In the past, we have focused deployments around KNX, but now we see the industry moving towards adoption of WiFi, Bluetooth Low Energy, Zigbee and Z-Wave. This will create new opportunities for custom installers as they can start to integrate into a broader range of devices, not just consumer electronics, but wearables and beyond.

On a platform level, we also believe it is important to support an open standards-based approach. We have built an architecture that conforms to the Open Service Gateway initiative (OSGi), which has been deployed by a number of major players around the world, such as AT&T in the States. As part of our OSGi deployment, we are also supporting the EclipseSmartHome open source software community, which is enabling us to tap into a growing developer community – something that we see as a critical success factor in the connected home market.

4. What can custom installers do to expand their knowledge and skill base to speak directly to interested end-users about connected home technologies?

It’s a common consumer desire to want to be different and have something unique in our own home, so there is always going to be a need to take what is mass market and make it bespoke. There is going to be an ever-greater need for custom integrators to support consumers in further enhancing solutions, being taken to market by retailers and telcos, to add additional value. This is one of the reason why we are integrating our platform into EclipseSmartHome, as a means to enable third parties to create bespoke applications and services. Custom installers can support customers to go to that next level. We have all heard of IFTTT (If That Then This) type scenarios – the opportunity is to support customers and take them to the next level.

5. What is Deutsche Telekom doing to speed up acceptance and recognition of the Connected Home?

First off, communication is critical. We at Deutsche Telekom are currently running a multi-million Euro advertising campaign in Germany to communicate the benefits of the connected home. We are then actively engaged in talking to the industry. Deutsche Telekom believes that we can all benefit if we democratise the connected home, and move it away from high-end to the mass market. Communicating the benefits to mass market is vital, but ensuring we are talking the industry is equally important, as far as we’re concerned. Our QIVICON platform is open and integrates with multiple manufacturers, and we want as many people as possible to benefit from the capabilities that we have built.

If we continue to operate in silos, we’ll create value in our own little domain, but if we start to interconnect across all the different types of devices and backend platforms, we can create a far broader and richer ecosystem that captures much greater value for all players.

6. What will be the major successes for Connected Homes in 2015?

First off, I think we’re going to see many more innovative connected home gadgets – CES 2015 in Las Vegas demonstrated that. Innovative new thermostats, more advanced cameras, etc. But I also think we’re going to see devices such as kitchen appliances become connected, which we believe supports some interesting business models.

We also think we’re going to see the arrival of a number of more innovative propositions, which look to integrate a broad range of devices to support other services. For instance, we’re expecting exciting developments to take place around behaviour-based insurance. Today, consumers pay significantly for home contents insurance, and the industry also has to pay out significantly in terms of claims. However, if we examine what is driving the majority of those claims – particularly in the UK – much of it relates to burst pipes, water leaks, etc. If an insurer can more accurately manage their risk, they can pass this on to customers in lower and more aggressively priced insurance policies. However, insurers can also maintain the loyalty of their customers and build more interaction with and greater allegiance from them.

We also expect to see the creation of innovative hardware bundles that leverage connected consumer hardware and offer a richer range of services. As an example, in the US, T-Mobile has launched Jump, where customers pay a $10 charge every month for having the latest, greatest handset or tablet, which includes within that the ability, after X number of months, to have that gadget upgraded. The charge also covers replacing lost or damaged gadgets. We believe that players, such as retailers, will look to move towards this – where customers are paying for a service, for an experience, rather than a one-off purchase for a device.

We also believe that wearables will become increasingly important, as will how they interconnect with the connected home, allowing consumers to further personalise their home. Lights and music could turn on when a person walks into a room, based on personal preference. But that’s just the first of multiple use cases that could be created.

Underlying all of this of course is the need for open platforms that bring with them a broad ecosystem of manufacturers and service provider partners, and leverage developer communities. But, more importantly, open platforms that support and leverage the strength and power of installers and integrators who have their feet on the street, and can work with consumers to create the connected home experience that they desire.

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