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1 1 Smart CES 2015 Smart CES 2015

2 Smart CES 2015 Smart home vendors scramble for a piece of the market By Peter Cooney, principal analyst, smart homes After enjoying significant momentum in 2014, the smart home market continues to see growing interest and adoption by a wide range of companies across all levels of the ecosystem. CES 2015 demonstrated the large and growing number of companies participating in the space today, with a vastly increased floor space dedicated to smart homes, sponsored by major player Bosch. All told, more than 60 exhibitors were present spanning all levels of the market, from platform vendors to component vendors. Despite the dedicated floor space, a key theme at the event revolved on the fragmented state of the smart home market given its various connectivity standards, routes to market, installation levels and integrations with other smart products. So, what is really happening in smart homes in North America, the key market at present? The most successful smart home players in North America today are the service providers, such as ADT, Vivint, AT&T and Comcast, all of which continue to expand their presence and build wider smart home solutions. For the most part, physical security has been the driving application in North America, with the majority of service customers interacting with their smart alarm systems, although not necessarily using energy management services. For their part, platform vendors such as alarm.com, icontrol and Arrayent are providing essential cloud-based tools to enable system and service suppliers to roll out smart home solutions. In many cases, these software vendors are providing the smarts behind the large service providers smart home solutions and were responsible for driving much of the early adoption of the technology. The number of device/system vendors is increasing rapidly as new companies enter the market, with novel ideas and existing vendors in adjacent markets expanding into the smart home. Companies providing smart home products and gateways are often from adjacent markets such as video surveillance (like Swann), set-top boxes (Sage by Hughes), networking (D-Link), lighting (GE), garage automation (Chamberlain) and consumer electronics (Panasonic). Furthermore, dedicated smart home companies such as Savant, a high-end professionally installed smart home solution; and DigitalSTROM, which provides a wired solution for the smart home, removing the connectivity challenges are also impacting the market. Finally, NEST was the product that most companies wanted to integrate with, and which will have a real say in the future of the smart home. Smart CES

3 Component vendors including Marvell, NXP and STMicroelectronics are having an ever-greater impact on the market, offering hardware and software solutions in the form of development kits, which are enabling device vendors from all tiers of the market to add smart home devices with less effort, at a lower cost and faster time to market. Finally, Apple, Google, Samsung and Microsoft are targeting smart homes at the OS and device level, albeit with very different strategies. In 2015 many key players within the market are specialized on single links in the supply chain, such as components, devices, software or services. In addition, the market is quite fragmented with clearly defined silos, such as security, energy management, lighting and home automation. This has created a very fragmented market and hampered the transition from a collection of connected devices to the creation of the smart home. Nonetheless, IHS expects consolidation to be a major trend in the next two to three years, with fewer companies dominating a larger segment of the market and offering full solutions to consumers. Meanwhile, the truly smart/intelligent home is still in its infancy and is not fully available to most consumers. Many challenges lie ahead before the truly smart home becomes a mass-market reality. One barrier to growth is the numerous and growing number of connectivity technology choices that continue to cause confusion in the average consumer. This needs to be addressed quickly if the market is to grow significantly over the next five years. One solution is to move to cloud-based smart home services to coalesce the information from multiple systems that use different technologies. But this will not satisfy all consumers, especially because of possible security concerns. Another solution is to introduce a universal smart home gateway that is wireless-technology-agnostic and can be used as a home cloud solution, giving the consumer more control over their data. CES 2015 confirmed the desire of the industry to develop the current connected home market despite its many silos into the smart home market, adding intelligence across disparate systems and creating truly smart solutions. And while the smart home has a long way to go before it becomes completely mainstream, companies need to be prepared to look five to 10 years into the future. Players should realize that not being in the game from an early stage could mean missing out entirely on perhaps the largest growth opportunity of the 21st century. A show of contradictions for security companies By Niall Jenkins, research manager, smart homes In many ways CES 2015 was a show of ambiguities and contradictions for the physical security industry. While the general market consensus is that smart security systems are driving the adoption of smart home technology in North America, one wouldn t know from walking around the smart home section of CES Tech West at the Sands Expo. It is true that remote monitoring service companies, such as ADT and Vivint, have been successful in selling smart home services. But ADT was the only entity in its category with a large booth and visible presence. Instead, the smart home floor at the show was occupied by dedicated smart home companies offering professionally installed products and do-it-yourself solutions, as well as startups looking to sell anything, from smart plugs to full smart home solutions and gateways. One possible explanation can be found in the first word of the whole event: Consumer. The majority of products, services and solutions at CES focus on consumers, and CES is the channel that these companies use to tell customers about updates and new releases. However, the larger security service companies already have a customer base that they can directly address. In the United States alone, there are over 23 million residential monitoring service customers. Furthermore, selling security systems has always been more of a personal process, in which the company needs to gain the trust of customers often by visiting their homes and explaining in detail how a solution works. Perhaps large consumer shows such as CES do not provide the best forum for this type of interaction. It will be interesting to watch whether other security service providers follow ADT s example and exhibit at future CES shows, as these firms concentrate on offering smart home solutions in order to grow their recurring monthly revenues per customer a key strategy for building revenues from their existing customer base. 3 Smart CES 2015

4 Trends for the home appliances market By Dinesh Kithany, senior analyst, home appliances One of the principal themes at CES 2015 was the Internet of Things (IoT) and the Internet of Everything (IoE). IHS Home Appliances Research presents the following trends seen at the show relevant to the home appliances industry. Innovation-centric: As product differentiation becomes a key factor to gain share, there was greater emphasis seen at the show toward presenting innovations and new product developments. Popularity of dual concepts: Twin washers, Whirlpool s Duet dryer, dual ovens Faster appliances: Fast induction cooktops, cooking ranges, coffee makers, washing machines and dishwashers Product customization: Introduction of products catering to the needs of wider consumer segments, such as for cooking and cleaning the way consumers want faster, cheaper, easier, more convenient and enabling multitasking with the ability to operate and monitor machines as necessary. Choices include professional ranges (e.g., Chef s Collection) to bring out the real chef in users, while also combining the fun factor and element in such household chores. Smart and connected capabilities: With IoT gaining popularity, many companies showcased their range of smart-connected appliances that could also sync with other company devices. Technology extended beyond traditional white-goods major appliances to breakfast and kitchen appliances, personal care gear, and health and hygiene devices, widening to IoE. Such smart and connected capabilities will boost the home appliances market as well as other allied electronic markets, including displays, touch controls, sensors, motors and semiconductors. Energy efficiency: How to increase current energy efficiency standards and combat so-called vampire power was also a focus, following the introduction of many innovative energy-efficient appliances. Stringent government regulations, as well as incentive schemes, are helping boost the industry, in turn driving other key home appliance market segments, such as the inverterized range of appliances that helps to reduce energy consumption. Changing of the guard: As other consumer devices market show saturation, many large consumer electronic companies will shift or increase focus toward the promising smart appliances market. Brand building: Many companies focused on the key marketing task of deepening customer engagement and on building brand reputation. Chinese makers started to focus on quality and not on low prices alone. Collective competitiveness: The launch of a wide range of smart devices such as thermostats, security systems, washers, refrigerators and TVs across various technology platforms is adding further confusion for consumers on whether to buy and what to buy. To address these concerns, many companies, in addition to promoting their respective smart devices separately, need to come together and collectively promote their smart home technology platforms in an integrated fashion. More important, manufacturers should collectively work toward educating consumers and assisting them in the decision-making process. Smart CES

5 Patches: A frictionless solution for monitoring vital signs By Roeen Roashan, analyst, medical technology A typical conversation on wearable technology tends to emphasize activity monitors or smartwatches. The Sands Expo at CES 2015 was not an exception given the flood of new devices within these categories. But while activity monitors and most smartwatches have features that are beneficial to maintaining a healthier lifestyle, the overall impact of such devices is not significant from the point of view of patient outcomes. A number of patches were also released at CES 2015 from companies such as Blue Spark Technologies and Fitlinxx. Patches for the monitoring of vital signs represent an emerging category of wearable technologies offering a frictionless, effective and efficient solution for outcome-based monitoring of vital signs, used in both clinical and consumer contexts. As an example, the Temp Trap from Blue Spark Technologies offers a wirelessly connected adhesive patch that facilitates the 24-hour monitoring of temperature. These types of technologies are suitable for remote patient-monitoring platforms, which is an up-andcoming segment of smart homes. IHS expects more than 7 million patients worldwide to be monitored remotely by 2018, growing from just 725,000 patients in This growth is supported by increasingly efficient smart home technologies, such as mobile health hubs, as well as by innovative peripheral devices like patches. Display devices to play a key role in connected world By IHS Technology Connectivity and the IoT were major focus areas at CES 2015, and displays in devices will play a key role inside and outside connected homes. Ultra-high-definition (UHD) 4K smart televisions were everywhere at the show. Here suppliers focused on making complex smart TVs simpler while working with leading content providers like Netflix and Amazon to provide a wide range of 4K viewing options. Strong growth is expected in 4K TV adoption rates this year, especially for sets larger than 50 inches. 4K market enablers include lower UHD panel prices, availability in more sizes, slowly increasing content availability and upscaling. New this year was 8K, but the technology remains a mere showcase at this point. LG showed organic light-emitting diode (OLED) TVs, but OLED overall has better opportunities in mobile and wearables compared to TVs. Quantum dot (QD) coming to high-end liquid-crystal display (LCD) televisions in 2015 is closing the performance gap between OLED and LCD, offering lower power consumption and a higher color gamut. The curved form factor in TV, monitor and smartphone displays was present at the show, touting a more immersive experience, a wider field of view and higher contrast ratios. Without a strong value proposition, however, the new technology faces challenges in consumer adoption. Connected cars were among the bright stars of the CES show. Touch screen, gesture control, haptic feedback and improved voice control are all coming to the automotive market to boost driver safety or enhance assisted driving. In particular, futuristic designs for the autonomous car will deliver multiple, large touchscreen displays to car interiors. 5 Smart CES 2015

6 Realizing the potential of the smart home By Roz Euan-Smith, senior analyst, smart homes & smart cities This year s CES featured for the first time a dedicated exhibition space for smart home products, reflecting the high potential of this growing market. But smart home technology is nothing new; in fact, some companies have been working on smart or connected technology for the home for almost 20 years. So why is the market taking off just now? According to industry members at CES 2015, one key factor is the need to create a simple and reliable user experience. The market is still fragmented, with issues around connectivity protocols and interoperability of products presenting major barriers to market growth. Consumer entry point is a key factor: initially people entered the market by purchasing entire integrated systems for their home at significant cost. However, this has changed as the market developed. Today people are more likely to enter the smart home market through the purchase of a single product or solution, which they may then choose to supplement with additional products and systems, depending on their experience. This gradual entry point is where the interoperability challenge comes into play. During a panel discussion on the evolution of the smart home, experts from Lowe s, Lutron, yetu and Bosch agreed that consumers want to be able to simply buy a smart home product and get it working once out of the box at present very difficult to achieve. One solution is to install into the home a hub that contains the necessary connections for multiple communication protocols. But Google-owned smart thermostat manufacturer NEST is trying to tackle this problem another way, by forming alliances with other device manufacturers through its initiative, Works with NEST. Originally launched in June 2014, the alliance announced at CES more than a dozen new members to the initiative, including Philips Hue, August and UniKey. Regardless of how it is achieved, interoperability remains a key part of the smart home market. And until the issue is resolved, it is difficult to see for the time being how the market s potential will be realized. Interested in more information about IHS research in the smart home? Do you have feedback or comments about this IHS Smart Home Newsletter? If so, then please contact: Tim Hewitt Analyst, Smart Home 3-5 Huxley Close Wellingborough NN8 6AB Phone: tim.hewitt@ihs.com 7873-ML-0215 Smart CES

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