Best Practices Guide for Smart Home Market Success

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1 Introduction By 2018,

The smart home market is poised for rapid growth as broadband connectivity expands, mobile device use % or increases and overall consumer demand for automated 12 solutions in the home continues to gain strong momentum.

Just about every major appliance vendor is now promoting the potential of connected devices to revolutionize the way we run our households. Whether it’s light bulbs that can be controlled using a smartphone or refrigerators that can tell 224 you when your leftovers are spoiled, pioneers of the smart million home are just scratching the surface of what analysts predict will be a major consumer market.

Research firmIHS Technology (NYSE: IHS) projects the smart of all households home market will grow by 56 percent, compounded annually, worldwide will in the next three years, with 190 million products shipping by 2018. By then, 224 million homes, or nearly 12% of all have at least one households worldwide, will have at least one type of smart type of smart home system installed, according to Strategy Analytics. home system But before adoption becomes mainstream, the industry still installed. has some issues to work out. Although there are plenty of new and exciting products on the market ready to power the smart home revolution, until recently there has not been a single platform with the power to unify them into one interoperable system.

2 Early Barriers to Adoption

Innovative thinkers have been envisioning the fully automated home since at least 1962 – when the animated series ‘The Jetsons’ first aired – but progress has been slow. While wireless machine-to- machine connectivity and sensor technology have been employed liberally for industrial applications such as fleet management and precision agriculture, widespread usage in the consumer home automation sector hasn’t materialized.

Early product developers are part of the reason for the delay. Grappling with the best way to capture revenue and secure their customer base, the early smart home market favored proprietary systems to power their home-management solutions. This created a market characterized largely by closed, expensive business models that forced consumers to pay high monthly fees and/or purchase equipment that offered access to only a limited number of devices.

More recently, vendors have experimented with the following wireless technology standards for smart-home automation and networking:

ZigBee is a popular access technology for smart home applications and is a low-power wireless area networking protocol with more than 600 certified products based on the IEEE 802.15 standard.

Z-Wave boasts more than 1,000 supported products and the Z-Wave Alliance counts more than 250 independent manufacturers as members – many of them in the hospitality, home management and senior-monitoring sector.

3 Meanwhile a handful of newer standards supported by individual vendors or coalitions of technology manufacturers – some standards-based, others open-source – have appeared, prompting The right some analysts to predict a coming “standards war” in the smart technology is home sector. Recent entrants include the Thread project, which utilizes the same frequency as Zigbee with some security and critical, but so scalability benefits. are business Yet no single unifying platform has proven itself capable of supporting the mass adoption of smart home solutions. That’s strategies that problematic, because analysts are predicting a spike in so-called incorporate an “do it yourself” smart homes, characterized by a more piecemeal, or “bring your own device” approach that gives consumers a broader understanding range of choices and the ability to automate their homes from the ground up. of what drives consumer The Way Forward behavior.

Developers looking to take advantage of early momentum and gain a foothold in the consumer smart home sector need to carefully consider the obstacles that have prevented robust growth and pursue strategies to alleviate them. The right technology is critical, but so are business strategies that incorporate an understanding of what drives consumer behavior. Product developers need to consider the arc of future smart home growth and ensure today’s decisions will stand the test of time.

4 Homeowners are seeking easily adoptable and integrated systems that are simple to use and work with other products in their home. To resonate with consumers, devices will need to feature plug-and-play usability and easy management without unnecessary complexities. The combination of variables required to spark widespread consumer adoption includes:

Interoperability: Consumers will demand vendor-agnostic technologies that allow them to select and incorporate products from a variety of different manufacturers. This is constrained in many current smart home approaches, characterized by a handful of competing standards, many of which don’t operate with each other, and some that don’t even support interoperability between all of their standardized products.

Customizability: Developers need a design platform that offers flexibility and freedom in order to make products that will integrate into a plug-and-play environment. This means the ability to create customized data profiles that allow the developer to differentiate their product without sacrificing interoperability.

Security: Early interest in smart home connectivity has revolved around a number of security-sensitive applications -- such as window and door locks, and home monitoring systems. Easing homeowner concerns requires built-in security technology and protocols that use sophisticated, reliable encryption.

5 Scale: According to Gartner, the average smart home of the future could contain as many as 500 smart devices.1 This will require an access solution with the scope to seamlessly grow as the market does, the ubiquity to connect to a variety of disparate devices – ranging from activity monitors to light fixtures – as well as the seamless interaction with the smartphones and tablets consumers already own.

Simplicity: One of the early barriers to smart home product penetration has been the complexity that often comes with embracing first-generation technologies. Future consumers will want the confidence of knowing they can buy a smart appliance off the shelf, take it home and count on it to work.

Cost: Taking costs into consideration means thinking about not only the cost of components and price of the products themselves, but also the cost of operating them, including battery replacement.

Enter Bluetooth® Smart

While some of the other smart home access technologies hit on one or even several of the above variables for smart home development success, few offer a clear pathway to the mass market.

Frustrated by the limitations of current home-automation systems, many product manufacturers are now looking at a low-energy version of Bluetooth technology as the market disrupter capable of taking the smart home to its next plateau.

1. http://www.gartner.com/newsroom/id/2839717 6 CASE STUDY

In 2006, Bluetooth Special Interest Group (SIG) acquired Nokia’s “Wibree” low-energy, short-range wireless-networking technology and integrated it into the standard with the adoption of the Bluetooth Core Specification Version 4.0. This Creating the Building low-power version of Bluetooth is called Bluetooth Smart. In Blocks for the Smart addition to being extremely power efficient, Bluetooth Smart Home is an application-friendly technology natively supported by every major operating system. It offers a flexible development Szymon Slupik founded Seed architecture that allows developers to create applications that Labs, Inc. in 2011 to develop can connect with the smartphones, tablets, or similar devices technology to support connected consumers already own. appliances. His passion for smart home technology had led him to In 2012, Gartner predicted that Bluetooth Smart — sometimes cobble together a homegrown called Bluetooth Low Energy, or simply BLE — was on a network of more than 250 “collision course” with ZigBee, while ABI Research predicts devices. But knowing the average that Bluetooth will surpass ZigBee’s market share by the end consumer did not have the time, of 2015. patience or technical acumen to do the same, he set about Bluetooth Smart is not only less expensive per radio than many of its rivals but also has a longer battery life and spans creating software to facilitate multiple industries, making its value proposition much stronger smart home adoption. than other protocols – billions of consumers already have access to Bluetooth in the devices they own. This provides Today, Seed Labs develops enormous market scale. Since the average consumer is already software that delivers connectivity walking around with a Bluetooth controller in the form of a to any device through its “Seed smartphone, half of the technology needed to power a fully Module.” The module is built using automated smart home is already in the homeowner’s hand. Bluetooth® Smart technology, According to IHS Research more than 96% of Bluetooth-enabled which was first integrated into smartphones will support Bluetooth Smart by 2018. Each of smartphones in 2011 with the those has the capability to immediately connect to a range of smart devices, many of which have yet to be developed. release of the iPhone 4S.

7 Bluetooth enjoys up to 96% brand recognition worldwide, Slupik calls Bluetooth Smart “the features FIPS compliant 128-bit AES encryption, and is already game changer” in IoT connectivity, a staple in a number of wearable devices. but he says it wasn’t until 2013 when Android introduced native Unlike its rivals, Bluetooth Smart provides design Bluetooth Smart support that customizability by enabling developers to create unique GATT- he was convinced to place his based profiles to achieve specific use cases while offering bets on it. Now, every major device interoperability and unmatched scale. smartphone and tablet vendor

Most promisingly, Bluetooth Smart is the only low power incorporates Bluetooth Smart and wireless smart home technology that can connect with Slupik has made it a foundation of the majority of smartphones or tablets already in the Seed’s B2B strategy. market, offering plug-and-play simplicity and instant device management with the right application. “I was always looking for something that would catch on The market share for Bluetooth Smart in the smart home segment for mass market adoption and is expected to grow six-fold within two years and exceed 13% that means something that would market penetration by 2018 according to IHS Technology. Apple, be inexpensive and easy-to-use, one of the newest and most high profile entrants to the smart and that would allow phones to home market, began supporting Bluetooth Smart in 2012 and now relies on the technology to power its iBeacon devices. interact directly with things,” he said. “For us it was obvious that

Every day more market analysts are recognizing the inherent value Bluetooth Smart offered that.” of Bluetooth Smart as an enabler of the smart home. Many now He says that Bluetooth Smart agree that Bluetooth Smart is the most promising short-range is an optimal solution for home wireless home-access technology to date, and improvements are connectivity because unlike Wi-Fi in development to make it even more powerful. Bluetooth SIG is it needs no configuration, requires actively working on adding mesh-networking capability and as of minimal setup, can ascertain a December 2014, the SIG has introduced profiles which support IP connectivity for Bluetooth devices. These developments will make Bluetooth Smart an even more compelling proposition for smart home implementations.

8 user’s proximity, and can operate Conclusion for years on a single battery. It also has a cost-per-unit much As more consumers become educated on the benefits lower than any other connectivity of the smart home, homeowners will be looking for easy- solution available on the market. to-navigate, off-the-shelf products that can be introduced What’s more, Slupik says the incrementally and networked into a unified solution. Ideally, flexibility and customizability these products will need to offer one-click integration with Bluetooth offers has allowed his existing device platforms and established home networks. engineers to make incremental Of all the protocols on the market, a number of experts now say Bluetooth Smart provides the strongest foundation for enhancements to the company’s constructing the smart home of the future. And while that modules – such as extended future may not look exactly like the one television producers range, multicasting ability and envisioned in the 1960s, it is right around the corner, and it optional privacy settings. Seed’s promises to be bright. engineers are now applying techniques to make Bluetooth Smart even more applicable to the smart home environment by balancing the need to support multiple concurrent connections without limiting responsiveness.

9 About

Bluetooth wireless technology is the global wireless standard enabling simple, secure connectivity for an expanding range of devices and serves as the backbone of the connected world. Bluetooth Smart technology, through an updatable platform and low power consumption, creates new application opportunities for the mobile phone, consumer electronics, PC, automotive, health & fitness and smart home industries. With more than two billion devices shipping annually, Bluetooth is the wireless technology of choice for developers, product manufacturers, and consumers worldwide. Backed by industry leading companies, the Bluetooth SIG empowers more than 24,000 member companies to collaborate, innovate and guide Bluetooth wireless technology. For more information, please visit http://www.bluetooth.com/Pages/ Smart-Home-Market.aspx

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