Connected-Home Execs Discuss Business ‘Beyond the Living Room’

Left to right: CEA’s Koenig; Control4’s West; Magnolia’s Delp; Intel’s Mehraban

Left to right: Sony’s Siegel; SubZero’s Sikir; Reliant Energy’s Few

CE, CI, appliance and energy industry reps, on the future of connectivity

What makes the connected home a reality today – and what developments lay ahead?

That question, and more, set the tone for the broad range of opinion offered at CEA’s ‘Beyond the Living Room’ panel, an event held during CES and hosted by Control4.

Moderated by CEA’s director of industry analysis, Steve Koenig, the panel included: Control4 CEO and founder Will West; Magnolia Home Theater and Magnolia Audio Video COO Steve Delp; Intel’s Shahram Mehraban, of the Energy Segment Marketing & Architecture Embedded & Communication Group; Sony vice president of home A/V Brian Siegel; SubZero vice president of design and engineering Paul Sikir; and Reliant Energy president Jason Few.

Sony’s Siegel led off the discussion, pointing to the 20 million Blu-ray-enabled devices in the market today that consumers are using to access streamed content as an indicator of industry direction. “Home automation is alive and well,” he said, “but we’re just scratching the surface.”

“It’s been talked up in the past by lots of little companies,” said Control4’s West, “but now, big companies are doing real volume.” Alluding to fellow panel participants not in the CE business, he added, “Two years ago, who would have thought than an energy company would be talking about putting intelligent devices in the home – or that SubZero would be involved in a connected-home discussion?”

Sikir of SubZero noted the “savviness of consumers today – a significant shift. It’s no longer a slow acceptance of the idea that appliances can make life easier, but that they also can be connected to a grid.”

Providing the retail perspective on whether consumers are truly ready to connect their households to a home network, Magnolia/Best Buy’s Delp noted buyers’ “voracious appetite to connect devices. But the onus is on us to make the use case compelling. The days of selling boxes are gone. The real job is to make technology seamlessly work together. We have to get better at explaining the benefits of being connected to them. That’s when adoption will happen.” As an example of an argument well made by Apple, he related that “75 percent of the people on my flight out here had an iPad. They’ve added this third device because the case was made to them, and it was compelling.”

West said the support by “every major CE manufacturer” of Control4’s platform, as well as the backing of 1,600 North American dealers in 73 countries, “speaks for itself” about wholesale acceptance of simple, direct paths to the connected home.

While Intel’s Mehraban observed that the overarching challenge in the industry remains “to make the connected home easy to install and use,” Reliant Energy’s Few said consumers are already seeing smart meters as a “powerful” concept. “They need to be connected to use them, and helping that is a proliferation of specialized apps that are easily downloadable and tremendously usable. And people are looking on their own for these things, so you will eventually see massive adoption.” Sikir’s caveat was that while app simplicity is crucial, so is providing consumer incentives “affecting the energy pricing structure.” Consumers “need information to change how they think about energy,” said Few, “and nothing changes behavior like real-time price information.”

Both Control4’s West and Magnolia’s Delp were agreed that, as West phrased it, “our job as an industry is to make the best-of-class manufacturers able to work together.” Delp said that manufacturers, and major retail operations such as his, are talking to each other in earnest, to “see how we can make everything easier for the consumer. The discussions will give rise to a middleware platform – an OS in the home for making brands work together seamlessly.”

The question of how to monetize the connected home, now and in future, was also broached. West noted that digital TVs ¬¬ – already in the market for seven years – and Blu-ray players “aren’t much of a business model” in and of themselves due to their razor-thin margins. “As an industry, no one’s making much money. But a lot of that kind of product is moving, and the high-level processors in them are a platform on which you can put all sorts of features and functionality. And consumers will benefit from that TV or Blu-ray player with features that come out two years from now. Software updates are possible, and there’s an opportunity to monetize down the road for new streaming services that will come out.”

The accelerating pace of home networking to encompass appliances and all products beyond CE – and the desire to have a voice in shaping these how these complex relationships evolve – are what is stimulating the appliance and energy industries’ participation in the larger discussion, said panelists from these sectors.

For one thing, the appliance industry, said Sikir, is lobbying to get Energy Star credits “to help us justify putting the extra investment” in smart product designs.

“Market opportunities surrounding energy management were not available to the CE industry in the past,” said Few. But since they are now beginning to be, he added, “we’re participating in CES this time so that the things we want in the energy space will be considered.”

As to what will ultimately drive consumer demand for the connected home beyond just control of A/V entertainment to the energy monitoring and management benefits that can be derived – money, convenience, or utility – Reliant Energy’s Few stated that it is “all of the above. Buying electrical power today is like a restaurant with no pricing on the menu, but the bill shows up two weeks later to say you consumed 2,000 calories. The ‘attractor factor’ will be all about getting people information on how they are using power, so that they can make informed decisions.”

Right now, though, the amount of consumer savings to be realized in energy monitoring “isn’t big enough to drive the purchase of home automation devices,” in Delp’s view. “We all use more energy year after year, and cost avoidance may be an interesting principle, but I’m cautious about the savings angle.” If there develops what he termed a “trifecta” of benefits to the connected home – its role in enabling home entertainment, energy management, and safety/security – that synergy will do more to drive market adoption than any single benefit. “After all, if the iPhone didn’t have all those apps, would it be as compelling?” he posed.

Editor in chief of Dealerscope
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