Thomas Rockman, Deutsche Telekom
by Stuart Wilson, Sunday 19 February 2017
There is a growing debate on open versus proprietary systems in the smart home channel. Thomas Rockman, VP Connected Home at Deutsche Telekom, brings us up to speed on the key issues.
The open versus proprietary battle
“There is a raging debate about which way the smart home industry should go….the days of proprietary preference in smart home systems may be numbered as businesses also push for open systems, but is open the best way forward for all players?
While many channel resellers may just about be getting their heads around the concept of the smart home and IoT in general, the trend has reignited an old debate - the open versus proprietary battle.
At first sight that might seem fairly irrelevant to the channel, but the ramifications are far-reaching, and could well stifle the smart home market if not resolved.
As many will have noted, the smart home market is set to be sizeable in the imminent future. While predictions vary widely, PwC predicts that the global smart homes market is expected to reach over US$58 billion by 2020.
Of course, that’s an enormous figure, but breaking that down into sectors still provides exciting enough numbers - for example, the global smart home healthcare market is expected to grow with a CAGR of 38% during 2016 to 2022 according to Research and Markets, while Parks Associates research shows 19% of US broadband households currently own a smart home device of some kind, and half of all security system households report ownership of a smart home device.
Needless to say, these device figures underpin a seriously complex market that has already undergone explosive growth over several years. The downside of this untrammelled progress has been an overpowering rush to market with devices of all kinds, from smart lightbulbs to thermostats, radiator valves and security cameras.
Unfortunately, many enterprises in the early days of the smart home market chose their solution purely on the basis of speed to market, rather than taking perhaps a more long-term view and assessing the merits of open vs proprietary. The result is the fragmented market of today, with millions of devices on the market that rarely interoperate, often use different standards, and in some cases are completely siloed off, unable to link with their peers at all.
Value of open source
While sectors such as home security are growing and a fantastic rate for resellers, this lack of interoperability will start to hinder uptake, as consumers are unable to easily upgrade their systems due to this proprietary platform ‘lock-in’. This is why many enterprises are considering the value of open source, as exemplified by Deutsche Telekom’s open connected home platform QIVICON, launched in late 2013.
Now available internationally as a white label solution, the platform supports the Eclipse SmartHome/openHAB initiative, and more than 40 partners use the platform, including eQ-3, Miele, Netatmo, Osram, Philips, KPN, Sonos and Vattenfall. With an open ecosystem, partners can play to their core strengths, benefit from multiple synergies, discover new routes to market, deepen consumers’ loyalty to their brand, and create new growth for their business.
It is at the partnership level that the open platform option becomes the obvious choice for the channel however, as players can easily work together and help develop new hardware that fits into any ecosystem rather than the exclusive proprietary smart home, which benefits only a selection of already-integrated players.
With better partnerships come improved opportunities for successful bundling of products and services. There are many examples of tentative ’product as a service’ strategies emerging in the smart home market, most commonly from utilities bundling smart thermostats with desirable accessories to decrease churn and improve margins. However, there are significant opportunities in other vertical markets, as well as the potential to partner in providing wider bundles, potentially offering warranty and assistance contracts, for example.
Role for retailers
The benefits of a thriving ecosystem around an open platform are myriad, including enhanced security for all parties, better chance of an engaged and vibrant developer community, and the ability for lesser-known brands to benefit from better-known brands market recognition - an unusually powerful win-win, where the larger brand loses nothing, but can gain by association with the smaller, more dynamic players.
Retailers have a key role to play in this market, especially in offering help and advice for consumers considering connecting their homes, as the market matures beyond early adopters and hobbyists and towards the mass market. These retailers have an opportunity to strengthen their brand position, as well as differentiate their offering from online retailers, by providing installation and on-site support services. Installation visits then become an opportunity to up-sell and cross-sell further products and services.
The industry-wide recognition and adoption of open, standards-based platforms will considerably facilitate this, by minimising confusion and promoting the widest interoperability, and will also improve in-store conversions too. For retailers to benefit from the projected growth opportunity, it will no longer be acceptable to only train a sub-set of store staff on the capabilities and potential that the connected home offers - with wider, easier interoperability will come lower training overheads.
Overall, it is clear that the smart home offers enormous potential, and that the best value proposition is in an open, standards based platform which brings the industry together to generate better value for all, rather than siloing their individual efforts. Together the industry will become greater than the sum of its parts, and will stand to reap the sizeable rewards when it does so..."