Business Model Innovations in the Smart Home

by Parks Associates | May. 13, 2019

The smart home industry has tried to shift to a service-focused business model in order to drive recurring revenues and better align with its new cost structure. Value creation in the industry is evolving from benefits derived solely from hardware to include those derived from software. However, consumers have been somewhat resistant to acquire smart home service subscriptions. The percentage of consumers paying a monthly or annual fee for a home control system has remained steady since 2014.

As the cost structure of connected products expand beyond the date of manufacture to the entire lifecycle of the product, product manufacturers and service providers must evaluate new strategies to drive market appeal. Expansion of the subscriber market may be realized by offering lower-tier, targeted service offerings as an entry point, such as ad-hoc monitoring, video recording/analytics, water device monitoring, or energy management services. New options to unbundle hardware from service subscriptions or to finance hardware for zero-interest will appeal to a segment of buyers who prefer a smartphone-like model. Offering a bundle of leased hardware with a service subscription may work for devices where technology is changing rapidly (making frequent upgrades appealing), installation/de-installation is easy (truck rolls not required), and consumers are renters or mobile homeowners who move frequently.

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Moderated by Patrice Samuels the CONNECTIONS™ session, “Business Model Innovations in the Smart Home,” addresses shifting business models from one-off sales to upselling additional services, such as monitoring, cloud video recording, or a bundle of enhanced features. It also addresses other service models such as bundling smart home solutions with home insurance, cybersecurity, or energy management solutions.

This session takes place on Thursday, May 23, from 1:30 p.m. to 2:15 p.m. Speakers include:

  • Andy Chambers, Vice President of Connected Home, Assurant
  • Kent Dickson, CEO & Founder, Yonomi
  • Stephen Eyre, Area Vice President, Cloud & Smart Home and Business Solutions, Calix
  • Brett Worthington, SVP of Business Development, Frontdoor, Inc.


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