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Wednesday, November 11, 2015

Arrayent: The average consumer isn't ready for complete home automation solutions

Shane Dyer, Founder of Arrayent, answers the following industry questions prior to the 2015 CONNECTIONS Europe event taking place 10-11 November in Amsterdam:

What challenges does Europe face with rolling out new smart home & connected entertainment services?

We are talking to more and more product manufacturers who are struggling to deal with European data sovereignty issues, especially considering the recent European "safe harbor" ruling. These companies have very legitimate concerns about keeping their European device and customer data in Europe to meet the EU's strict smart home data privacy and security requirements. Since most IoT platform providers don't have local infrastructure, staff, and capability, manufacturers don't know where to turn. Many of them actually think that they need to build their own IoT solution from scratch. This is an incredibly difficult task and will likely take a product manufacturer much more time (often 3-5x) than working with an experienced IoT platform provider who can both handle the European data privacy requirements and expedite the delivery of connected products to European and other global markets.

What do you see as the biggest challenge facing your company in the next 12 months?

Many of the high-profile home automation system providers have gotten ahead of the market and the potential for rapid growth. The average consumer still isn't ready for a complete home automation solution. They're too complex, and the value propositions don't yet resonate with mass market users. IoT market growth today and in the near future is going to come from consumers who are adopting their first connected products, one at a time, from brands they know and trust.

The danger for the industry, and the challenge for us, is that manufacturers and retailers will push comprehensive home automation solutions on consumers before they are ready. The users will likely have negative experiences due to the complexity and rough edges of the current systems, which could create negative market perception and slow the adoption of well-designed, connected point products that are already ready for prime time.

How will companies leverage the growth in the market in the next 12 months? What is the impact of the Internet Giants (Google, Amazon) getting involved in the market?

We think that the majority of the growth will come from well-designed connected products that solve the typical consumer's everyday problems. For example, the connected garage door opener that replaces its broken, unconnected predecessor for essentially the same price, while providing more features and capabilities based on its connectivity. The really big potential over the next twelve months is for connected point products that can easily and cheaply work together with other connected point products to create virtual home automation systems. This approach is more appropriate for the current state of the market than the comprehensive and complex home automation systems that are being sold today.

It's pretty clear that manufacturers without strong connected product strategies in place risk being disrupted by existing and new competitors. In many cases startups are using the transition from unconnected to connected in specific product categories as opportunities to disrupt categories from thermostats to lighting. These startups will compete with and perhaps eventually displace unprepared industry leaders. Because some of the basic tools are rapidly improving from big companies like Amazon and Google, it's making it easier, especially for startups, to get new products to market.

Larger manufacturers and their IT departments, however, are looking for more complete and polished solutions. They have to support large numbers of users--sometimes millions of customers across continents--and can't rely on custom or one-off software that doesn't scale or maintain pace with the rapid changes and technology and market. The current offerings from the internet giants still require too much work and heavy lifting to get an IoT product off the ground at scale. Although their strong brand and deep pockets attract media and market attention, their solutions won't do much to change the market until they are much more mature.    

Shane will be speaking at the panel session “IoT and APIs: Expanding the Role of Connected Devices” on 11 November at 15:15.

For more information on this year's CONNECTIONS Europe event, visit www.connectionseurope.com

Next: Consumers need to have trust in their service providers: Insights from Essence
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