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Summary

Ovum's latest edition of its Smart Home Tracker reveals how numerous service providers (SPs) from different verticals are proactively exploring new business opportunities within the smart home sphere through diverse activities and business models. The research assesses the market initiatives these companies are carrying out to propel the adoption of smart home solutions.

SPs increase activity in the smart home industry

More and more SPs are willing to enter the smart home space and take advantage of the business opportunities that emerge from the growing number of connected devices at home. This is due to more players seeking new ways to capitalize on the IoT industry by creating new revenue sources, new value-added services to enhance their offerings, and new efficiencies to improve overall business performance. In 2016, we saw a significant increase in the launch of new solutions and in the number of service updates (up 50% on the number of service updates announced in 2015). This activity increase has created more consumer awareness of – and enthusiasm for – the benefits of the smart home.

More players from different backgrounds are exploring the potential of the smart home through multiple market initiatives. This means that diverse industry verticals are driving the next phase of smart home adoption, enabling the technology to reach more households through alternative sales channels other than smart home vendors and retailers. To provide concrete examples and KPIs, Ovum has developed a new proactivity index within the Smart Home Tracker which assesses the involvement of SPs such as broadband operators and insurance companies in the smart home space. The index assesses how active these companies are in the promotion of smart home devices and adjacent services. Here are some of the main findings relating to players with an active role in the smart home market:

Broadband providers

  • 88% have a medium to high level of proactivity, offering an end-to-end smart home solution developed by themselves or a third party (e.g. an IoT company or telco)

  • 40% provide smart home solutions as a part of a bundle and not as a standalone service

  • 69% charge a monthly service fee

These results show that when broadband SPs have an active role in the smart home space, the vast majority have a medium to high proactivity level, offering comprehensive solutions as part of standalone services. Moreover, more than 60% of providers are not fully subsidizing the smart home equipment like they do with CPE such as routers. Despite SPs offering the equipment free of charge (especially in the case of security solutions), most players in this segment are still reluctant to adopt this business model, probably because they are waiting for the smart home to reach higher levels of acceptance among consumers and they don’t yet see a way of getting the money back.

Insurance providers

  • 35% have a high level of proactivity

  • 47% offer product subsidies to deploy smart home solutions

  • 41% provide smart home insurance

The majority of insurance providers in the smart home industry are still behaving cautiously, showing little proactivity. The provision of product subsidies is one of the most popular market initiatives for propelling the adoption of smart home solutions among insurance providers, followed by premium discounts. At present not many companies are providing pure smart home insurance, offering instead policies linked to certain smart home devices that prevent specific risks. This timid approach illustrates that the insurance industry is still waiting for the smart home to reach the mass market before introducing more comprehensive solutions and business models. But insurers are still making profits, moving slowly into other types of business models when a revenue stream is under threat.

Appendix

Further reading

Smart Home Tracker: 2H16, TE0003-000985(January 2017)

Author

Mariana Zamoszczyk, Senior Analyst, Consumer Services

mariana.zamoszczyk@ovum.com

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