The smart home is recognized as having one the biggest growth potentials in the TMT sector, and with good reason. Ovum predicts that smart home device revenues will grow by 106% and smart home service revenues by 164% over the next five years, reaching a total of $106bn by 2022 – that’s bigger than both the OTT video and digital music markets as of the same date.
Smart home service revenues (i.e., for services with recurring monthly fees) will equate to 32% of the overall market. The level of competition, however, will be fierce. Therefore, although smart home will continue to be a relevant market for telco service providers, successfully monetizing it will remain a challenge.
Figure 1: Global consumer TMT revenues and telco relevance by 2022
In order to capitalize on the smart home telecommunication service, providers must do the following:
Develop a solid, long-term strategy that has strong links with the traditional core business. Driving overall customer stickiness and service efficiency will be as important to the service provider business case as generating new ARPU.
Recognize that it may always be about retail. There could be a number of advantages and opportunities for the telco to tap into in the smart home, even if the direct smart home devices and services are provided by other third parties.
When looking for retail opportunities, however, be innovative around products, pricing, and sales channels. In many cases smart home is about applications and services that the average consumer doesn’t even know they need yet – marketing simply through the normal telco channels is therefore unlikely to bear fruit.
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