Stake Your Claim to the Connected Home

Home automation is the name of the game this month, one which many more businesses have decided to stake their claim to over the past year. (Hot news is AT&T’s development of its “Digital Life Services” group, see sidebar on page 19). The “connected home” is the tipping point in residential and home automation and some industry leaders who weighed in this month infer this is just the beginning. Turn the page and hear what else they had to say on the changing residential landscape and what dealers and integrators need to know to play their hand well in this growing market.

What is changing in the residential marketplace? We’ve witnessed the advent of lighting, HVAC and other user-friendly remote controls and what apps can bring to the table. What’s on the forefront that our dealer and integrator community needs to be aware of?

Eric Smith, chief architect, Control4, Salt Lake City: These trends are causing consumers to be much more aware of automation technologies than any other time in history, which is helping our industry reach a scale never before seen. This new scale is causing many manufacturers to create “connected devices,” such as Sub-Zero refrigerators and Wolf Appliance ranges. They have created connected appliances that can be controlled from any user interface on a Control4 system and send alerts about important information, such as the refrigerator door being left open or the oven reaching the desired temperature.

Todd Santiago, president, 2gig Technologies Inc., Carlsbad, Calif.: Home security is the launching pad for a variety of home services—lighting, locks and thermostats are the tip of the iceberg. These basic services will soon become the norm rather than the exception. Homeowners will begin consolidating the control and management of various subsystems around the house to their mobile phone, tablet or control panel on the wall. These subsystems include more robust energy management (including detailed consumption information) and entertainment (for example, opportunities to integrate and distribute audio, video and personal communications). While many dealers and integrators are already well positioned, others will need to be prepared to install and support these systems. Manufacturers must offer the integration of these new solutions to a system that is intuitive for customers to use and foolproof for the dealers to install.

Greg Roberts, vice president of Marketing, iControl Networks Inc., Redwood City, Calif.: Change in the residential marketplace has only just begun. The concept of the connected home is becoming a reality for the mass market and with it comes a significant number of consumer benefits. However, the compelling solutions are not one-feature-point applications such as remote lighting or HVAC control. The consumer doesn’t want multiple user interfaces in and out of the home to manage. They want a comprehensive, all-inclusive solution that enables them to secure and manage their home from one simple, intuitive user interface—regardless of the device they choose. They want the touchscreen in the home to look, feel and operate like the mobile application and Web portal used outside of the home. The end result of a fully-integrated solution is that it enables more benefits for the user: greater peace of mind; the ability to stay connected with their home and family while away; money savings on energy bills; and greater convenience in managing the home.

Alex Dunn, chief operating officer, Vivint Inc., Provo, Utah: Although new services like lighting control, HVAC and remote controls are available, the adoption rate among security companies is extremely low. They need to embrace these services and focus on integrating them into their existing offerings. To facilitate integration and adoption, it’s important to have a panel that allows you to update its software over the air. The Vivint panel does this, which allows us to upgrade customers to new services with ease, eliminating the need for customers to complete any additional steps.

How are you expanding your services to residential customers?

Smith: We continually improve our product and add new and compelling features. The Control4 seven-inch portable touchscreen (model C4-TSWM7-E-B) provides video conferencing capabilities. Our Control4 MyHome-Android phone and tablet software allows consumers to control their systems from mobile devices. We also recently introduced the Control4 Panelized Lighting Solution that is 100 percent IP-enabled.

Santiago: Our goal is to enable homeowners to more affordably and conveniently protect and manage what’s most important to them while at home and on the road. We innovate with the purpose of driving cost out while adding more convenience and functionality to the homeowner. Products and services in our pipeline include more robust energy management, video, entertainment and security. We are working to ensure that what was once available only to the highest income bracket will soon be available to everyone.

Roberts: iControl is constantly enhancing our OpenHome broadband home management software solution to enable our deployment partners—ADT, Comcast, Rogers and Swisscom—to offer their customers more connected home services. The platform utilizes open technologies such as Z-Wave, ZigBee and Wi-Fi to leverage a huge ecosystem of hardware, device and application developers that enable our solution to provide more features and services. With this strategy, we are able to expand our broadband home management solution to support energy management, home healthcare and other benefits that have mass market consumer appeal.

Dunn: Vivint is dedicated to offering the best products and services to our customers. While we continuously work on new offerings, we are focused on making sure our customers embrace our smart thermostat, door locks and lighting controls. We’ve only been selling these additional services for eight months, so we are still focused on educating the consumer on energy-efficient and money-saving options.

Many players outside of security and even home automation—such as Comcast, Verizon and AT&T—have stepped into the ring to offer home energy and security services. Should security-industry dealers and integrators be prepared to work with such vendors in the near future? If so, how should they prepare to integrate their service offerings into security hardware?

Smith: These players are directly targeting the $30/month revenue stream currently collected by traditional security companies and should be considered a direct threat. The best way for dealers in the security industry to counter this threat is to surpass the features and functionality offered by these companies. Becoming a Control4 dealer is a great way to do this as our technology seamlessly integrates with most security systems and has features that go beyond what Verizon and Comcast offer. For example, at home users can arm their security system from the same user interface they use to control lighting, temperature, music and movies from a wide range of mobile devices, a Control4 touchscreen or even their remote control. Users can choose to get email alerts at work, text notifications on their smartphone or access the system remotely for an overall security check.

Santiago: It’s uncertain how and if dealers and integrators will work with these new players. The reality is that these new entrants want to displace them. In spite of the threat, there is a huge opportunity to take advantage of the market awareness being generated by millions of dollars of advertising. No one is better suited to provide superior and personalized service and support than the dealer and integrator community. The key is to be prepared to offer competitive solutions and services beyond basic security. Using solutions like our GoControl system enables dealers to match and exceed the newcomers’ offering at a much better price and allows them to tap into recurring monthly revenue (RMR).

Roberts: Security and home management solutions offered from service providers will be even more prevalent in 2012. The good news about broadband home management offerings from these companies is that they will collectively increase awareness of the benefits such solutions provide to consumers, which will drive consumer interest and adoption. Dealers and integrators can leverage this new market demand by providing interactive solutions of their own. DSC provides solutions via their C24 Interactive offering to dealers and integrators, enabling them to offer broadband home management and security services to their customers. This is not only a compelling solution for dealers and integrators, it’s essential if they want to compete in this vastly growing market.

Dunn: It appears that these “outside players” intend their services to be integrated with products and services offered by other companies. The security industry needs to have a broader value proposition than just security to compete with the services these additional players are beginning to offer.

How should dealers and integrators create services around home/building automation and residential technology developments that provide them with RMR?

Smith: Security dealers have always been much better than home automation dealers at creating RMR. But over the years, competition and discounting in an effort to gain market share eroded the recurring revenue stream for security companies. Adding remote monitoring and automated control of cameras, door locks and lighting can be a way to increase and stabilize that revenue stream. Security monitoring will continue to be one of the best ways to get monthly recurring revenue.

Santiago: Customers understand the basic functionality of a security system and its associated cost. Dealers must promote the benefits of automation features—such as automatically locking doors and adjusting temperature when arming a system—to help customers understand the value in these services. By offering modular, add-on packages—such as energy, video, or lighting, each with nominal incremental costs—dealers are able to increase their RMR while providing the customer with additional value.

Dunn: It’s important that any services tied to RMR create an ongoing value to the customer, so the monthly bill is justified. Traditionally, the monthly value we’ve provided has been security. With home services, we’ve added such new values as remote control and energy management.

Some believe that with consumer-friendly features and capabilities being added to alarm panels, the security component may be overlooked. How do you respond? How does security continue to stay an important element in residential and home automation developments?

Smith: The whole reason phone and cable providers are becoming interested in home systems is to gain access to the security monitoring revenue stream. They are adding additional services to make switching to them compelling. But the main reason a consumer buys these services is because they get all of the additional features in addition to security which they were already willing to pay for.

Santiago: Home automation and video enhance the security offering rather than detract from it. Security is the most critical component of our system and our number one focus. We believe it is the only standalone offering. Without it, the other features couldn’t exist on a large scale due to the cost constraints and economic model that exists in the security industry. Our goal is to integrate these other features into the core security offering. When a system is armed away, lights go out, doors are locked and thermostats are adjusted. All of these features can be done independent of security but the greatest financial and convenience benefits come when integrated with security. Video functionality is a great offering but is enhanced when a homeowner receives video clips of alarm events and can check the status of their home remotely.

Roberts: The “anchor tenant” for a broadband home management system is the life safety feature the home security service delivers. That should always be the priority focus. This is why you see our deployment partners such as Comcast (Xfinity Home Security) and ADT (Pulse) focus their marketing messaging primarily on security and secondarily on home management. Dealers and integrators should only consider UL- or ETL-listed equipment for their broadband home management deployments. While cutting costs on utility bills and saving time managing the home are compelling consumer benefits, those are secondary to keeping consumers safe and protected.

Dunn: We’ve found that consumers gravitate to the features that they are most interested in integrating into their daily lives. We have home automation customers that feel security is an afterthought and bonus. Yet we also have home automation customers that purchased the system primarily for security. The great thing about additional services is that it broadens our market, which now includes customers that never would have considered Vivint if security was the only service provided.

 

How do we foresee home automation providers continuing to integrate with security to provide residential safety?

Smith: We continue to see security as an important pillar in our business and we hope to see more security dealers branch out into home automation to create more compelling solutions for their customers.

Santiago: The home management aspect provided a huge step forward in residential safety and will continue to be catalyst for future improvement as it becomes more integrated into the daily lives of our customers. Through our partnership with Alarm.com, the home automation component of our system has led to greater intrusion prevention through implementation with automatic door locks, video and lighting control. Alarm and home automation events trigger text and email messages to multiple parties, alerting the homeowner, neighbors or friends. Having HVAC fans turn off automatically when a smoke alarm is triggered can slow the spread of smoke throughout a house. Using motion detectors with time-of-day awareness can cause doors to lock or lights to turn on, along with triggering the recording of cameras.

Roberts: Our consumer research indicates the size of the security market could double over time with the added benefits that home management services can provide. This is a significant opportunity for us, our deployment customers and our ecosystem partners. We take great pride in helping redefine the security industry for future growth.

Dunn: Protecting families is core to our mission. In May of 2010, we rolled out a free tornado alert for U.S.-based customers living in states most affected by tornados. This new service was a free software update that allowed our company to pass along alerts issued directly by the National Weather Service. When the deadly tornado hit Joplin, Mo. last year, Vivint provided alerts to nearly 500 customers in the area. These alerts gave customers extra time to take cover. In fact, one customer credits our tornado alert system with saving her life.

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