I recently decided to revisit the home automation space to see what options are out there to make it easier to control my home. Fortunately, when I was out at CES2013 in January, I made some connections to help me to gauge the marketplace. In particular, I want to thank Mark Walters from the Z-Wave Alliance for answering some of my industry questions. Here is the interview, conducted via email, with Mark.
I recently decided to revisit the home automation space to see what options are out there to make it easier to control my home. We have an alarm system (from Vivint, using a Z-Wave controller) and three IP cameras, but wanted to look into adding controllable locks and a sun shade for the front foyer window. I really did not know where to start at first. One of the confusing issues out there is the choice of home automation platform. I was was aware of ZigBee, Z-Wave, and wireless solutions like the NEST thermostat, all of which looked interesting. Fortunately, when I was out at CES2013 in January, I made some connections to help me to gauge the marketplace. In particular, I want to thank Mark Walters from the Z-Wave Alliance for answering some of my industry questions. Here is the interview, conducted via email, with Mark. My questions are in bold, with Mark’s responses indented below.
1. Home Automation Market:
a. What is the current market size for North America for home automation products?
Frost and Sullivan Research says it is $2,442 Million.
Strategy Analytics says US Smart Home Application Market will be $5 Billion by 2015.
Parks Associates Research says more than 10 million households will have some form of remote monitoring and control system by 2014 up from 3.4 million at the end of 2009.
b. Who is the buyer for these products: contractors or home owners?
Both contractors and homeowners purchase these products. At this time “professional” installation is more predominant over homeowner installation with the large national alarm companies taking the lead.
c. What is the profile of the typical home owner having these products installed?
Mid-income with family.
d. How critical is this capability to the strategic success of the hardware manufacturers? Do they value the potential for differentiation in what can be seen as a commodity product, or are they supporting home automation capabilities as a wait-and-see approach?
They are embracing an escape from what was a commodity hardware business with new product capabilities and new business models that include “backend” services such as monitoring and cloud serving. An example would be the Schlage Link, now Nexia program.
2. Alarm Companies:
a. My alarm company (Vivint) offers some degree of home automation products, based on a Z-Wave controller in the alarm panel. Why go with the alarm company over a self-install from the consumer’s standpoint?
Some people are not handy and don’t want to spend the time to do it themselves.
You get professional monitoring.
Combines easily with existing alarm (security) offering.
b. How does the hardware manufacturer capture value from the alarm company installation?
They sell the products to the alarm company.
Their brand is on the product.
These are incremental sales, without automation the existing locks would stay in place another 20 years effectively blocking another sale. Automation gets a second sale per door that otherwise would not happen.