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Summary

Qivicon is a smart home platform developed by Deutsche Telekom (DT) and launched in Germany in 4Q13. The company has successfully built up a partner ecosystem of more than 30 companies from a variety of industries. However, it has found that by making end customers purchase a separate new home hub before any smart home services or devices can be utilized has created a barrier to initial take-up. To remove this barrier, DT has announced that from 2016 all new broadband routers will come integrated with the Qivicon platform as standard. Additionally, DT will offer the Qivicon platform on a wholesale basis to other telecommunication operators as well as other players, such as energy companies, retailers, and insurance companies, with the aim of making Qivicon the number one platform in Europe.

DT looks to scale to drive interest in its smart home platform

Within its home market, DT sees significant opportunities for smart home services but is not able to use professional home security as the lead service into the home, as seen in some other countries, because the market in Germany for this type of service is relatively limited. Instead, it offers a range of services and applications, such as smart monitoring, smart energy, and smart lighting, via its partner ecosystem. However, it has found that although demand for such services in Germany is high, having to first purchase an additional home gateway device has been a barrier for many customers. Although a significant investment on DT's part, integration of the Qivicon platform into the standard broadband router has removed this barrier to growth. By the end of 2016, DT aims to have installed between 1.5 and 2 million Qivicon hubs through new broadband acquisitions and as part of its normal broadband router replacement cycle.

On the wholesale front, DT will offer this end-to-end smart home platform, including the partnership ecosystem, on a white-label basis throughout Europe and already has at least one incumbent operator piloting the platform. In Ovum's view the proposition will be particularly interesting to smaller incumbent/competitive players that perhaps don't have the same industry clout, nor the resources, to build their own partner ecosystem, which will be critical for success in the smart home market. The issue of the business case for the broadband service partners to deploy a smart home solution doesn't necessarily go away; they still need to generate revenues to get a ROI, but utilizing the Qivicon platform should at least make deployment quicker and cheaper.

On the face of it, both of DT's announcements are positive steps. If successful, both will drive scale, which in turn will attract more device vendors and application developers onto the platform, which in turn will make it a more attractive proposition to the end user. Having the platform already deployed in millions of homes will also significantly reduce the costs for other stakeholders, such as an insurance company, looking to get involved in some way in the smart home – again driving further interest in joining the platform and enabling new and more interesting use cases. In order to attract wholesale customers, however, DT will need to demonstrate how the platform can generate a positive ROI, and this will mean revenue growth, not just customer churn reduction. If it is able to do this, Ovum believes it is only a matter of time before DT is announcing new partnership alliances with other European broadband service providers.

Appendix

Further reading

Connected Home Case Study: Deutsche Telekom, TE004-000730 (September 2013)

Smart Home: The Broadband Service Provider Opportunity, TE0003-000801 (November 2014)

"Qivicon connects the smart car to the smart home,"TE0003-000791 (September 2014)

Author

Michael Philpott, Practice Leader, Consumer Services

michael.philpott@ovum.com

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