5 Steps the 'Smart' Home Industry Must Take to Develop a Consumer Market

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Managing Director, OpenAir Equity Partners
5 min read
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Thanks to wide adoption of high-speed broadband, consumers are enjoying a proliferation of connectivity within their homes and on the go. The emerging industry of the connected, or smart, home offers huge potential for investors and industry participants. Recent examples of industry acceleration include Google’s purchase of Nest for over $3bn last year and Apple’s launch of the HomeKit

 While there is understandable excitement at the industry level and among the usual early adopters, mainstream consumer adoption is still very low. According to a recent Forrester report, one-third of consumers are interested in adopting smart home technology, but only one to two percent currently have connected devices to control lighting, climate, energy, appliances or have a home monitoring solution in place.

Related: 8 Ways the 'Internet of Things' Will Impact Your Everyday Life

There is an obvious disconnect between the market hype and actual consumer behavior. So what is holding consumers back? As the smart home market grows, industry players must consider the following five factors to encourage mass-market adoption.

1. Simplicity. Many home automation solutions currently available on the market are too technically complex for the average consumer. They can be difficult to understand and often require an engineering mindset to program.

Consumers need a solution that is easy to understand and easy to install. Additionally, no consumer wants 12 separate apps on their phone to manage 12 different devices. Consumers want one app and one single interface to control an array of devices that enable their smart home.

Finally, home automation devices and services have to be easy to acquire. Consumers want to see, feel and experience the product before it is installed in their home. Mass market retail will be a key enabling channel that drives smart home penetration in the US.

2. The Human Factor. In today’s “Mobile First” world, user experience and design is everything. The current IoT conversation is high on hype but short on practical user experience consideration. Home automation systems must orchestrate the various smart devices (soon to be dozens in any given connected home) in a manner that can be reduced into a simple, but powerful user interface.

The user experience design must be the champion of the system. Consumers will embrace their connected home only if it is simple and intuitive to install and operate. With thoughtful user experience design, complexity disappears and the promise of what the smart home can be becomes a reality.

Related: What's the Right Path for Startups Entering the 'Internet of Things'?

3. Interoperability. The lifeblood of the “Internet of Things” (IoT) movement is the ability of devices to seamlessly interact with one another but the IoT ecosystem today involves an array of manufacturers, distributors, service providers and technology platforms. Consumers typically must purchase all devices from either a single manufacturer or distribution channel, or live in a fragmented world of multiple devices running on separate apps.

To achieve mass market success, the smart home market must provide choice to the consumer, while at the same time providing peace of mind that devices and platforms will interoperate. Recent efforts led by wireless carriers and tech giants to standardize IoT are a good start.

4. Sustainability. It is imperative that automation systems commit to continuously improve upon the customer experience. Ongoing support, maintenance and product development are often the missing link in existing solutions. These investments are cost prohibitive for home automation vendors that are device focused.

Conversely, the large service providers are focused on high-end deployments that are often overkill for the average household. Ongoing service and platform upgrades are essential to make sure all firmware, software, device interoperability and the user interface are regularly maintained. Consumers want to be sure that devices they purchase today will work with the devices they purchase a year from now.

5. Security and privacy. Consumers have an understandable fear that without appropriate safeguards hackers can gain access into their homes and personal information through connected devices. Security and privacy is a legitimate threat that cannot be overlooked during product and platform development. Both developers and users should think holistically in terms of protecting their smart home against these cyber-attacks. This includes ensuring that data policies are transparent, that there are sufficient layers of security protection both at the device and platform level, and that user information is encrypted.

The mass market is ready to open the door to the smart home, but the right foundation must be laid for the technology to be broadly embraced. In order for true mass-market adoption to take place, smart home device manufacturers and service providers must become experts in recognizing and managing the breadth of consumer needs in order to successfully create a complete, seamless experience for the user. Every piece of the puzzle needs to be in place, or industry players risk missing a massive opportunity to drive user adoption above the current 1 or 2 percent.

Related: The Internet of Things May See Huge Growth, So Companies Want in Now

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