European Research Update

Global Adoption of IoT and Smart Home: Key Questions for the European Markets

by Stuart Sikes | Jun. 1, 2015

As we watch the growth of the many technology product and ecosystems companies that comprise IoT and smart home technologies, we hear several recurring questions:

“What are the biggest barriers to smart home adoption?”
“What are the leading drivers to smart home adoption?”
“What companies will dominate the smart home landscape?”

The first question is answered consistently by most every IoT player that we meet. The low awareness of the presence and benefits of IoT products is the biggest barrier around the globe. In the EU, telco offerings from Orange, Telefonica, Belgacom, Swisscom, and Turkcell, to name a few, are still in very early stages. The marketing muscle of telcos will build awareness in the EU just as AT&T Digital Life, Time Warner Cable, and Comcast Xfinity have in the U.S. The increasing retail presence of do-it-yourself (DIY) smart home products in mass retailers, specialty electronics stores, and wireless telephone shops also contributes to higher awareness across the population.

The second question is more difficult – what are the leading drivers to smart home adoption? The European landscape is very diverse, with great legislative, cultural, climactic, and economic diversity, and it is more difficult to identify the primary driver for adoption.

Energy management is a leading driver, particular in the nations in which energy prices are relatively high such as Ireland, Spain, Italy, Germany, and Denmark. The European Commission’s 2020 climate and energy package legislates energy efficiency, renewable energy, and reduction of greenhouse gas emissions, providing tangible incentives for smart home technologies. In northern Europe, households find the convenience of remotely controlling heating furnaces to be a reasonable driver for home technologies such as Hive from British Gas.

Retailers of smart home products are reporting success by making the initial purchase, or entry point, an easy one. By offering a simple and highly understandable value proposition -- like automating light bulbs or controlling the thermostat -- for a good value, consumers will make the first step into IoT at home. Simple solutions at budget prices become the Trojan horse for home controls. Adding the second, third, and fourth features, whether smart locks, smart pet doors, or automated window blinds, becomes far easier once the consumer experiences the fun and ease of the first device.

With increasingly competitive agendas, European retail energy providers such as RWE and British Gas are offering smart home solutions through partnerships. These offerings differentiate their commodity energy services, increasing the value of the services and the value of smart home products.

Which company will dominate the smart home space? While companies such as Google, Apple, Xiaomi, and Samsung have great potential to offer comprehensive, end-to-end solutions, it is unlikely that any one company will dominate.

Success of the smart home will be the result of an extensive set of economical, specialized, best-of-breed offerings to address many niche interests, needs, and hobbies. The company that can integrate disparate devices through a single API or operating system is the company to follow, but that company will have to “play well” with others.

Stuart Sikes is attending Smart Home World Summit, June 23-24, in London, and moderating the panels "Establishing a Smart Home Roadmap" and "Managing the User Interface: Gateways, Hubs & Devices." If you are interested in meeting with him, please contact info@parksassociates.com.




Stuart Sikes

Stuart Sikes

President

Stuart Sikes is the president of Parks Associates, a market research firm specializing in consumer adoption of technology products and services. Stuart and team assist clients around the world by predicting trends in consumer technologies and identifying evolving business models. The Parks Associates team serves the world’s leading semiconductor, software, consumer electronics, telecom equipment, and entertainment companies, providing them with industry analysis, consumer research, and go-to-market recommendations. Stuart’s recent industry presentations include the outlook for residential energy management, new business models for the connected home, and the evolution of new video services.

Stuart has served technology companies for over twenty years, designing technical service, software, and hardware solutions for companies ranging from global semiconductor manufacturers to one of the nation’s largest airlines. In his positions with companies including AT&T, NCR, OpenConnect Systems, and Intelligraphics, Stuart’s roles have included sales, product marketing, marketing communications, and executive management.

Stuart holds an MBA from SMU and a BA in economics from Vanderbilt University.

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