Four Smart Home Product Strategy Tips
In 2011, Popular Mechanics published an article entitled The Future That Never Was. It analyzed predictions made over the course of the magazine’s 100+ year history. One prediction, made in 1939, still isn’t fully realized, but the industry is rapidly growing: the “Electric Remote-Controlled Home” or, as we call it now, the smart home.
Companies can reap tremendous benefits from entering this market with a strong smart home product strategy. Although the industry is not there yet with a fully automated home or building, smart products are already overseeing every aspect of the places we live and work, from our music speakers to lights to shopping lists.
Maciej Kranz, vice president of Corporate Strategic Innovation Group at Cisco, has seen more industries adopting the Internet of Things (IoT) over the last few years, including retail, healthcare, agriculture, smart cities and sports and entertainment in addition to more IoT-established industries, such as manufacturing, logistics and transportation.
The smart home and building market is growing, projected to be worth $97.61 billion by 2025. According to Jabil’s latest Smart Home Technology Trends survey, the top market opportunities moving forward include smart appliances, security and access control and energy efficiency.
If you want to emerge as a strong competitor in the industry, here are four tips for a successful smart home product strategy:
1. Determine the value of your connected solutions
One of the challenges in developing smart home and building solutions is purposeful product strategy, including design. In Jabil’s survey, 89% of manufacturing decision-makers agreed that "connected" isn't enough and that these devices need to deliver real customer value. This implies that people want more than a collection of nifty gadgets; they crave building blocks for a more efficient and less stressful lifestyle.
This perception of smart products is central when developing a profitable smart home and building product strategy. It will inform your technological decisions, partnerships and more.
Entering the smart technology market requires more than a few technological tweaks to existing devices. It mandates adjusting your entire business model to utilize new revenue streams and marketing opportunities. Breaking into the smart home and building market is not impossible, but does need to be well-strategized, from the technical innovations it demands to how it will reach the consumer.
To start, examine your basic building materials. Many OEMs are still designing modern products with legacy components, putting the final product at risk. By the time a product goes to market, a component that is already five years old could be seven years old, meaning that it might soon be out of production. In your product strategy, invest in alternative parts and plan for the dynamic technology curve. But do so with caution: don’t choose a new component without listening to your supply base. This is key to your solution’s long-term relevancy.
As more devices become connected to the Internet, companies have an important question to answer: how will the various products communicate with each other? Or how can end-users communicate with all smart devices from a common platform? To advance the adoption of smart technology, and, ultimately, connected homes and buildings, OEMs need to develop a broad ecosystem where smart appliances and devices can communicate with each other and the customer.
No one argues that this is a central aspect of connected homes and buildings. A study from McKinsey Global Institute reveals that at least 40% of potential benefits cannot be realized without heterogenous firmware. According to Jabil’s survey, 99% of manufacturers support the implementation of data and communication standards because it will enable straightforward connectivity to other systems and devices.
But manufacturers do debate how to develop the most efficient ecosystem. Jabil’s research shows that manufacturing decision makers are almost evenly divided on the best approach to connected integration. Forty-five percent of respondents indicated that they would prefer a “controlled” method of integration. This would allow tighter control over integration, thus delivering all needed functionality within a business-managed ecosystem, giving the company full control of the customer experience.
On the other hand, 47% of survey participants favored an interoperable method. To achieve this, the industry would establish a general set of communication standards. This would make it easier for customers with devices from different brands to communicate with all technology on a single user interface system.
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2. Improve your channel-to-market
There is an essential element many OEMs are still struggling with: creating a cohesive system of sale and installation.
The channel-to-market for automated homes and buildings is fundamentally broken. Too many OEMs rely on traditional big box retailers to handle their products. This creates a problem; many smart home and building capabilities require specialized installation, and these retailers do not possess the proper set-up proficiency, meaning that customers need to bring in an additional specialist for installation, which adds to the hassle. Initial efforts have begun by some retailers to build areas in stores where customers can experience competitor products and receive additional information, before making a purchase decision.
As of now, there’s no bootstrapped carpenter who can stroll into your house and install a fully automated kitchen, complete with smart appliances and a common user interface.
Furthermore, many of the direct channels don’t sell multiple products; they tend to specialize in one particular area, such as security, which makes it difficult to implement a variety of IoT devices.
Connected solutions are still a fairly new capability. OEMs will need to figure out a way to provide end-to-end solutions, either internally or through partnerships.
3. Examine your domain expertise
If your company has a history with analog products, be cautious in venturing into the connected device market. How well do you really understand smart products? Domain expertise is key to product strategy.
While expanding into smart devices can be a highly profitable venture, companies need to proceed with caution. According to Jabil’s survey, only 15% of customers buy smart products to simply try something new. Most customers want devices to increase their personal comfort and productivity; they are unwilling to tolerate clunky interfaces or glitchy, experimental features. OEMs need to carefully consider whether they have the technological resources and capacity for product development.
For your debut into smart solutions, be sure to start small. Tinker with existing devices that you are familiar with and broaden your scope as your knowledge, experience and capabilities do. In fact, 39% of smart home device OEM decision-makers say they are mostly adding connectivity and smart features to their existing products.
Don’t rush to put out new products because IoT is “trendy” or acquire companies whose product offerings and services wander too far from your own. To borrow an old adage, remember that this is a marathon, not a sprint. The shift to connectivity won’t just happen overnight.
Of course, maintaining a prominent level of domain expertise requires persistent effort. As the technology continues to evolve, so does the areas of domain expertise required to be successful in the connected home and building industry. For example, companies may need more proficiency in managing data, or, as interoperability develops, they may need comprehensive knowledge of cloud. One option to gain personnel with necessary experience and knowledge is to develop partnerships.
4. Engage with strategic partners
In Jabil’s survey, almost all (99%) manufacturing decision makers identified partners as integral to their product strategy. This is hardly surprising; after all, partnerships can fill in critical gaps in a company’s capabilities, experience and knowledge. In terms of developing connected home and building solutions, partners can help manage data, implement interoperability, develop business strategies and improve your domain expertise.
Especially in an industry where requirements and outcomes continually change, partnerships can offer a competitive edge. They can assist in several crucial areas of product development, such as quickening time-to-market, increasing resources and boosting credibility. Partners can also build on each other’s domain expertise to expand their capabilities.
However, it is also important to consider values and culture when selecting a partner. The tangible end-product is important but partnering with a company with a different vision and mindset can be counterproductive.
Popular Mechanics may have been wrong in asserting that we would all pilot cars that fly with the help of a high-powered fan, but its vision of a connected home has become more technologically sophisticated and will soon be more culturally prevalent than anyone in the early to mid-20th century could have imagined. Is your product strategy in place to ensure your company can glean the greatest possible benefits from smart home and building solutions?
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Insights on technology adoption, industry opportunities and biggest challenges from over 200 IoT decision-makers at smart home and appliance OEMs.