I'm bullish on the Smart Home, and as someone with a professional interest in the Internet of Things who was consumer-IoT-shy this time last year, I’ve been thinking about what changed my mind.
This isn’t a whitepaper, or a even a properly considered analysis: just some notes about where my head’s at and what I’m looking at. I’d appreciate feedback — both supporting points (especially pointers to UK startups who are taking advantage of these trends) and counter-examples. If I’m off-base I’d like to know!
Over the last couple years, the Smart Home has been getting a bad rap. Connected consumer products suffer for a bunch of reasons, including but not inclusively:
All of that said, this year I'm getting excited about consumer Internet of Things again. There are a few trends that make it easier for the Smart Home to get out its slump, such as the ever-increasing acceptability of e-commerce and direct sales, which reclaims the retailer margin.
But two signals in particular.
The first signal is smart lighting from Ikea which both fulfils the promise of a low-cost modular system, and also has sane interaction design (that is: it includes physical controls and works when the internet is absent).
More importantly it works with a gamut of Smart Home controls: Apple HomeKit, Google Assistant, and Amazon Alexa. This tells me that the GAFA stacks (aside: where is Facebook in the Smart Home?) have given up on their unrealistic desire to treat the home as a monolithic own-able platform. The layers are emerging: it will soon be possible for a startup to innovate on a new type of bulb without having to also break into the service layer (and yes, I've met companies with internet-connected bulbs showing a 10x life at comparable cost. Being able to plug-and-play HomeKit, Assistant, and Alexa would be a godsend for them).
At the service layer, it should also become possible to innovate on software and orchestration between devices: I look forward to services that are able to plug in to a smart home from a mix of manufacturers, providing highly specific and differentiated functionality. I think voice has a part to play here: it’s the excuse we’ve been looking for to put our phones down at home.
Interop is good news: more ways in for startups, more places to innovate, and better value for consumers.
The second signal is also a healthy emerging fracture point in the connected hardware stack: Qualcomm's reference designs, including this speaker platform. Reference designs allow for some interesting manufacturer efficiencies. A small company can go and ask for a customised version of this product, benefiting from a supply chain shared with other small companies, and with engineering costs amortised across the same.
The reference design linked above is for a smart speaker. A speaker is no longer just a speaker: it's a speaker with directional microphones, a wi-fi connection to a cloud somewhere, and enough on-board GPU to run a voice assistant, whether that's from Apple or Google. I'm interested to see what the equivalent reference designs are for a smart screen, smart doorlock, smart book, and so on.
If these appear, it will show that the consumer categories for smart products are stabilising. Categories are useful because they allow the rest of the industry to align: retail buyers can set up aisles; marketing educates the consumer; it becomes worthwhile for distributors to do their thing. With a baseline of many products in the same category, it becomes possible to experiment.
Critically reference designs provide an entry point to startups that lets them mimic Apple's business model:
hardware differentiated by software. To date this has been inaccessible to startups because hardware development is a huge barrier to overcome before service innovation can begin (not to mention the challenge of distribution). The table stakes are, happily, coming down.
Overall the Internet of Things is going to see an interesting few years. The digital world has seen rapid change: Blockchain, A.I. (in a thousand forms), and next generation interfaces too: voice and augmented reality. The recently stabilised IoT tech stack is pretty solid: digital dividends should be coming into the real world much faster than before.
And then, maybe, finally, we’ll start seeing those category-busting transformative products that we’ve been waiting for.