EVENT SUMMARY May 19-21 . San Francisco PLATINUM SPONSOR HOSTED BY 72 US.com | [email protected] | @CONNECTIONS_US | #CONNUS15 | 972.490.1113 HOSTED BY SPONSORS PLATINUM RECEPTION 021 1495 C.G.5 SILVER BRONZE AFFINEGY plumchoice BREAKFAST systems ™ systems ™ systems ™ BREAK SUPPORTERS ASSOCIATION PLATINUM In partnership with CONNECTIONS™: The Premier Connected Home Conference Event Summary 2015 Attendee Demographics The term “Internet of Things” (IoT) has emerged over the past two years as a key concept for the connected home and entertainment industries. Parks Associates defines the IoT as the range of networked products and services that are capable of sending and receiving data. This all- encompassing term broadly covers areas we have been examining at Parks Associates for nearly three decades. The connected home has gone through many transformations, and we recently passed a new milestone. At the beginning of 2015, 78% of U.S. broadband households have a smartphone, compared to 69% that have a desktop, moving the connected home into a “post- desktop” phase now that more U.S. households own a smartphone than a desktop. The connected entertainment and smart home industries need to ensure that the consumer side of the IoT works seamlessly, securely, and with a flexible design capable of integrating future innovations. We strive to provide new insights and understanding at CONNECTIONS, including: a deeper understanding of the impact of new business models and partnerships in the connected home; insights into innovative technologies being introduced and tested; specific consumer adoption rates and intentions and highlight segments to target for specific products and services; and a networking venue that brings together all players of the ecosystem, from smart home and connected entertainment to digital media and tech support. CONNECTIONSUS.com | [email protected] | 972.490.1113 Opening Comments: Emerging Trends and the Connected Consumer Speaker: Stuart Sikes, President, Parks Associates Notes: A key priority for Parks Associates research is to help identify emerging business models and engagement strategies that help develop profitable consumer products and services. Notable technology trends include the following: Consumer electronics devices started out as specialized devices; many have since evolved. Game consoles, for example, have evolved into entertainment and control devices. Mobile devices have surpassed computing and other devices and are now the second most penetrated connected device throughout the connected home, behind televisions. Connected cars – Consumers are beginning to show interest in the value propositions offered at the intersection of the connected home and connected cars. Many also have safety and privacy concerns, so the industry must be proactive in confronting these concerns. Connected healthcare devices are now transitioning from communication devices to devices that are predictive and facilitate preventative measures. CONNECTIONSUS.com | [email protected] | 972.490.1113 Defining the Connected Home: Entertainment, Security, Health, Smart Home The concept of the smart home, as well as the penetration of smart devices, is expanding rapidly. This panel focused on the major elements of the connected home, including consumer electronics devices (Panasonic), connected health and security systems (Nortek), digital content (Pandora), connected cars (Ford), and home controls systems (Honeywell, Cox). Each of these vendors is a major player in growing ecosystems within the wider connected home experience. By gathering these ecosystem leaders together, the panel discussed: Integration between Ecosystems Is integration of the different home ecosystems a critical element of vendors’ strategies? Which entities have the market and brand power to begin to integrate different ecosystems? What are the first steps each ecosystem will take toward integration? Coordination and Standardization Can coordination occur via natural evolution of consortia such as Thread? Will GAFA (Google, Apple, Facebook, Amazon, and peers) cause coordination through common APIs? Is coordination a threat to unique customer relationships? Opposing Forces What are the strongest forces that are working against coordination? Will incumbent vendors be able to transform their business, or will disruptors take the industries by storm? CONNECTIONSUS.com | [email protected] | 972.490.1113 Speakers: Kristine Faulkner, VP/GM Home Security & Smart Home, Cox Duane Paulson, SVP Product and Market Development, Nortek Security & Control Rob Puric, Director - Product Management Connected Home, Honeywell Todd Rytting, Chief Technology Officer, Panasonic Corporation of North America Geoff Snyder, Vice President, Business Development, Pandora Mike Tinskey, Global Director of Electrification and Vehicle Infrastructure, Ford Motor Company Moderator: Stuart Sikes, President, Parks Associates Notes: The Internet of Things presents challenges and opportunities for the connected consumer industries. Products need to be developed with simple interfaces and intuitive designs that enable easy and personalized user experiences. CONNECTIONSUS.com | [email protected] | 972.490.1113 Companies need to communicate the benefits and value of connected products in the home, including security and energy management, and promote the overall personalization of content and navigation for consumers. The ability to integrate connected home products is critical. Consumers expect devices to work together and aren’t concerned with how interoperability is achieved. Parks Associates research shows the value of interoperability grows with each device. Among U.S. broadband households with three smart home devices, 60% consider interoperability to be very important. Consumers will introduce connected products into their homes through a variety of different means. Some consumers purchase directly from their broadband service providers, where they expect a long-term relationship built on trust and loyalty. Other consumers are buying products at retail and integrating them into existing systems. Companies are still testing features that provide a different experience, such as voice controls. Functionality and design remain core considerations for manufacturers. Partnerships between companies are critical for interoperability and the integration of various technology platforms to create a cohesive user experience. Opening Keynote: Taking a Mobile-First Approach to the Smart Home What lessons from the mobile-first economy can we apply to the smart home? Taking a mobile-first approach has created consumer delight and significant commercial value in other parts of the digital economy. This keynote from Farooq Muzaffar of Verizon explored what works and doesn’t work when it comes to mobile-first and how those lessons can be applied to the smart home. Speaker: Farooq Muzaffar, Vice President, Corporate Strategy & Development, Verizon CONNECTIONSUS.com | [email protected] | 972.490.1113 Innovative Partnerships: The Connected Home Smart home product and service providers are evolving. Smart home controllers and smart home platforms are adding more networks, more intelligence, more data analytics, and more value-added services. Today, smart home service providers control almost every aspect of their offering. Consumers make one choice, the service provider, and the service provider chooses everything else. The service provider determines what products work with the platform, what algorithms control those products, what the user interface looks like, and even how the system is installed. The consumer has almost no control. If consumers want a group of products that work together, the only choice is to select a service provider or home control platform. Products that work together are not available without a smart home controller or a smart home platform. Smart home system vendors generally charge a recurring monthly fee for services. Smart product vendors charge an upfront fee in the form of a price premium for smart products. The business models used by different participants are a reflection of existing business models. However, connectivity opens up many new possibilities that use smart products to enhance the value chains of different industries, unlocking new value and enabling participation in new revenue streams that are not directly funded by the consumer. The smart home market can be described using two axes: control of the smart home system and monetization of the smart home. The vertical axis describes the entity which controls the smart home system, how it is installed, and what products, algorithms, apps, and user interface or interfaces are used. At the lower end of the vertical axis, the end user makes all of the decisions. Consumers get what they want—how they want it. The consumer chooses what products to purchase, when they are purchased, how they are purchased, what apps or subsystem controllers control those products, and what smart home platform, if any, they want. Consumers may acquire connected products over time, as they replace legacy products with new, smart products. Some consumers may proactively replace some products if they find the value proposition compelling. CONNECTIONSUS.com | [email protected] | 972.490.1113 At the upper end of the vertical axis, the service provider makes all of the decisions. Most smart home systems on the market today are closed to both new products and third-party