Why the smart home is the new battleground for CSPs
Not since Columbus discovered the Americas has a new land represented such potential. The smart home market is a new world of opportunities, with communication service providers (CSPs) and global brands, including Google, Amazon and Apple battling to capture this growing market.
In the UK, which is still classed as being in the early adopter phase, more than four million Britons have invested in smart devices for their homes with the market currently valued at £30 million a year. This figure is expected to explode in coming years, with Strategy Analytics predicting that consumer spending on smart home systems and services will reach $157 billion by 2020. With such growth predicted, it’s unsurprising that CSPs are activity pursing the smart home market to increase their margins, user base, and average revenue per user (ARPU).
Within the smart home market, there are numerous opportunities across different market segments such as home automation, home entrainment, energy management and security – each with its own players. There is potential for CSPs to harness this new market to create an ecosystem, within which each of those different segments can operate to provide a seamless experience for users.
What consumers want from their smart home
Ultimately, when it comes to the smart home, consumer want two things:
- Interoperability – consumers don’t want to be the common interface for potentially hundreds of different devices. Internet of Things (IoT) devices - whether smart lighting, thermostats, or voice assistants – require interoperability in terms of connectivity, communications and integration protocols to provide an intuitive and frictionless experience.
- Connectivity – The foundation of the smart home’s intelligence is in connectivity, so products should be simple to connect.
But not all devices are being built with these preferences in mind. Too frequently, smart home players are building their product or service offering in silo to the rest of the market, discarding issues around complexity, security, flexibility and the ability to connect devices across the smart home ecosystem seamlessly.
This is where the potential lies for CSPs to take hold of the market. With the extensive user bases already depending on their services to deliver other over-the-top (OTT) services, CSPs are a natural strategic fit. And if they can leverage and build on their brand, platform, and existing capabilities, CSPs can deliver a smart home framework which will not only successfully deliver a better user experience, but also create incremental revenue streams.
What must CSPs consider when creating a smart home framework?
Customer-centric platforms: An essential first step is identifying a customer centric value proposition. For CSPs, solving the ubiquitous connectivity challenge and defencing core revenue streams, such as broadband revenue, will be key.
Take command of the market: CSPs must create blueprints for revenue retention, and devise indirect monetisation strategies, such as loyalty programmes and churn reduction. Taking advantage of customers “wait and see” attitude, CSPs can offer exceptional customer care on their one-stop platform by providing customised marketing solutions and putting a big focus on product development. However, this will only be possible if CSPs partner with suppliers quickly.
Partnerships: CSPs need to identify which areas best compliment their existing offerings and where they should look to the support of partners. This can be achieved by using open APIs for easy and quick integration with partners and suppliers. Getting these partners on board will be crucial if they’re to convert the smart home from a luxury into necessity. A vertical partner selection strategy can support CSPs in offering a full package of solutions and harness a competitive advantage that will be harder for niche players to get a foot in on.
Effective and flexible: From their brand recognition, existing customer and infrastructure base, and highly talented engineering workforce, CSPs have many unique advantages to help them take hold of the smart home market. But not only does this give them market advantage, it will also help them create an exceptional customer experience. An effective roll out of diverse services will be crucial to achieving this, with those CSPs that embrace flexibility on their smart home platform, to include home entertainment, security, automation, energy management, and more coming out on top.
Ultimately, understanding what it is that customers want from their smart home experience - rather than just reflecting on what technology itself can offer – will pave an innovative path of profitability. CSPs already have their foot in the door of many households, but by working with partners and suppliers they will be able to deliver a customer centric platform that will enable them to take control of the market.
Interested in hearing industry leaders discuss subjects like this and sharing their IoT use-cases? Attend the IoT Tech Expo World Series events with upcoming shows in Silicon Valley, London and Amsterdam to learn more.
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