The silo killer: open versus proprietary in the smart home

The silo killer: open versus proprietary in the smart home

An exclusive article by Thomas Rockmann, Vice President Connected Home, Deutsche Telekom.

The open vs proprietary debate is a long running one, and has particular resonance for the smart home sector. The days of proprietary preference in smart home systems may be numbered as businesses also push for open systems, but is open the best way forward for all players?

One thing is absolutely certain – the stakes have never been higher. The latest analyst figures predict that the global smart appliances market will be worth $130 billion by 2020, and continue to grow at a CAGR of 23.48 per cent during the period 2016-2020. It’s not just blue-sky analyst speak either, as global tech manufacturer Samsung disclosed last year, 90 per cent of all products that it manufactures will be Internet connected by the end of 2017 – the smart home market is here to stay.

The traditional open vs proprietary debate often begins and ends at the first hurdle, that of cost to market, but this is only one of the factors involved in the complex smart home market. Integration, customer perception, and the surrounding ecosystem are all essential elements of a winning proposition, rarely characterised by a pure-play proprietary solution.

Of course, even the two generalised camps of proprietary and open are further fragmented, making a balanced business decision on platform choice even more difficult. For example, you’re building a device that requires voice-recognition control as a core USP. On the proprietary side options include a bespoke in-house build, or using Apple’s Siri and the Apple Home app, or possibly integrating your existing platform with Amazon’s Alexa, via Amazon’s Smart Home Skill API. Apple would require you to license Apple’s HomeKit via MFi licensed technology, while Amazon requires you to become an Alexa developer. Clearly, even the initial costs and results of these widely varying approaches will be significantly different.

On the open platform side, we have options including Deutsche Telekom’s QIVICON. This smart home platform recently learned to communicate with Amazon’s Alexa via a ‘Skill’ and can now enable customers to control their lights, blinds, alarm systems and much more with their voice via Alexa-enabled devices like the Amazon Echo. The QIVICON-powered Magenta SmartHome offer is already available and a good example of a development that will benefit the wider community in the future, as by choosing the QIVICON platform the groundwork for Amazon Alexa has already been done – interoperability has been baked in.

For consumers and IoT manufacturers alike interoperability is a key issue. It will prove critical in the medium term, but many of the current platforms and proprietary formats have been designed with speed to market as the primary and perhaps only important factor, rather than ascribing benefit to potential long-term partnerships. While the proprietary self-build option is often perceived to be a high-speed choice, the higher setup costs and loss of flexibility over a truly open platform are both longer-term questions to be considered.

The key success factors to driving growth for all involved in the IoT sector, whether on the vendor, manufacturer or other player sides are similar. These factors are to successfully utilise developer communities and to build on existing products to suit a multitude of end uses, both key historical reasons to choose an open platform over a proprietary one. From partners working together to develop complementary devices, or product families that multiply the potential of the others, offering the opportunity to integrate to offer new services for users, the keys to the kingdom will be held by interoperability – via open systems or platforms – and partnerships.

An open ecosystem allows players to work together to deliver the next generation of smart home services that consumers are demanding, whether they be voice activated, device specific or something entirely new. In contrast, a proprietary platform generally restricts the combination of different devices for end users. In the open model, smaller brands can benefit from the reputation and access to larger customer bases of a brand that consumers already trust.

For instance, Deutsche Telecom’s own connected home platform already has over 40 partner companies of different sizes across a range of industries using the platform and the white label offer to bring their own products and services to market quicker, as part of a larger connected ecosystem. The platform supports the OSGi (Open Services Gateway initiative), Eclipse Foundation/openHAB, and open source software, including an open API and SDK, is a core component of the architecture.

In summary, although the opportunities of the smart home market are numerous, so are the pitfalls, and we at Deutsche Telekom believe that siloed-thinking is the root cause of many of these. These siloes result in a failure to deploy standards-based solutions, a lack of openness at device level, and limited cross-platform approaches, which are problematic for the health of the industry. However, the biggest issue that arises from them is a failure to create propositions that are truly consumer-led, that resonate in the market and bring distinct benefits. Choosing truly open platforms and partnering as widely as possible to develop new and fulfilling business connections, products and services is the best way forward.

The views and opinions expressed in this blog post are solely those of the author and do not necessarily reflect the opinions of IoT Business News.

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