Smart Home Market. Tom Kerber Director, Research Parks Associates

Smart Home Market Tom Kerber Director, Research Parks Associates

Drivers and Barriers to Smart Home Adoption

% of Respondents Barriers - Awareness Smart Home Familiarity (Q2/14) 20% 10% 0% 10% 20% 30% 40% 50% 60% 70% 80% Very familiar (Rating 6-7) Not familiar (Rating 1-3) 10% 11% 8% 9% 62% 62% Smart home services Smart home products Where to buy smart home services 72% 69% Where to buy smart home products Source: American Broadband Households and Their Technologies Q2 2014 N=10,000 broadband households, ±0.98% 2014 Parks Associates

Barriers - No Concise Value Proposition Most Appealing Smart Home Use Cases (Q2/14) Receive alerts for smoke or fire Receive alerts for carbon monoxide or a gas leak Receive alerts when doors or windows are opened Receive alerts when there is a medical emergency Receive alerts when there is a water leak Receive alerts when motion detectors are triggered Lock and unlock doors Turn on/off the lights Monitor outdoor security cameras Monitor indoor security cameras Use sensors to know occupancy and automatically turn off lights and appliances Receive alerts when energy usage is high Monitor, program, and adjust your home's thermostat Have appliances automatically minimize electricity usage Identify if there is a problem with any major appliances Identify ways of improving your home's energy efficiency Monitor your home's total electricity usage in real time Let you know if energy use is within budget Turn on/off or check the status of appliances Open and close your garage door Understand your home's energy performance Receive a daily summary of your home's energy usage Turn on/off or check the status of appliances in your laundry area Open a pet door 21% 45% 43% 41% 41% 39% 39% 36% 35% 34% 34% 34% 32% 31% 31% 30% 30% 29% 29% 29% 28% 26% 26% 51% Source: American Broadband Households and Their Technologies Q2 2014 N=10,000 broadband households, ±0.98% 2014 Parks Associates

Barriers - Upfront, Recurring Fees Source: Homeowners with Broadband at Home Q2 2013 N=4,000 U.S. Broadband Homeowners 2013 Parks Associates

% Reporting Very Important (Rating 6/7 with 7= Extremely Important ) Barriers - Interoperability Importance of Interoperability (Q2/14) 58% 51% 60% 1 st device purchased (n=736, ±3.61%) 2 nd device purchased (n=573, ±4.09%) 3 rd device purchased (n=520, ±4.3%) Source: American Broadband Households and Their Technologies Q2 2014 N=10,000 broadband households, ±0.98% 2014 Parks Associates

Barriers Privacy and Security Smart Home Privacy Concerns (Q2/14) Concerned (Rating 5) Very concerned (Rating 6-7) 24% 20% 39% 38% Concern over unauthorized access Concern over historical data Source: American Broadband Households and Their Technologies Q2 2014 N=10,000 broadband households, ±0.98% 2014 Parks Associates

Drivers - Huge Brands Entering the Market

Drivers - Business Innovation Complementary Product Sales App Sales, Upgrades Advertising, Lead Generation Data Exchange Energy Savings, Demand Response Transaction Fees Subsidizing Upfront Costs

Drivers - Data Creating Growing Value Intelligent Control Prediction Adapt and Learn Modeling Notifications Reporting Display Data Collection

Market Barriers Low awareness No concise value proposition Initial cost, recurring fees Interoperability Privacy and security Market Drivers Big brands entering market New business models Value-added services

Smart Product Adoption

Two Paths to Market Products Systems

Smart Home Product Adoption Adoption of Smart Home Control Products (Q2/14) I m not sure, 4% No, 83% Yes, 13% Source: American Broadband Households and Their Technologies Q2 2014 N=10,000 broadband households, ±0.98% 2014 Parks Associates

Smart Home Product Adoption Adoption of at Least 1 of the Listed Smart Home Devices (Q2/14) Lights Programmable thermostat Smoke detectors Security camera Door locks Garage door openers Carbon monoxide detectors Outlet/plug Door bells Power strip Home or Kitchen appliances Combination sensor Blinds or drapes Sprinkler system Water leak detectors 4% 4% 3% 3% 5% 5% 5% 5% 4% 4% 6% 6% 6% 6% 6% Source: American Broadband Households and Their Technologies Q2 2014 N=10,000 broadband households, ±0.98% 2014 Parks Associates

Door locks Security camera Combination sensor Water leak detectors Carbon monoxide detectors Smoke detectors Door bells Lights Garage door openers Outlet/plug Programmable thermostat Blinds or drapes Power strip Smart Home Product Adoption Smart Home Devices as System or Stand-alone Device (Q2/14) stand alone devices, not part of any system 9% 8% 9% 11% 9% 10% 7% 12% 10% 12% 32% 34% 39% 41% 41% 44% 45% 47% 48% 49% 54% 55% 55% 10% 8% 13% part of a home control system that controls multiple devices 58% 58% 52% 48% 50% 46% 48% 42% 42% 39% 36% 37% 32% part of a home security system Source: American Broadband Households and Their Technologies Q2 2014 N=10,000 broadband households, ±0.98% 2014 Parks Associates

Value Added Services

Value Added Services Command 3X Price $299 A programmable thermostat that can: -Be monitored for status or controlled from a smartphone, tablet or computer -Display the current weather forecast -Use weather forecast to save money by running your air conditioner or furnace when it is most efficient -Increase your home s energy efficiency by learning your daily routines and temperature preferences -Automatically make minor adjustments to save money by operating your system when electricity prices are low Source: American Broadband Households and Their Technologies Q2 2014 N=10,000 broadband households, ±0.98% 2014 Parks Associates Smart Thermostat: Preference (Q2/14) 42% 58% $99 A programmable thermostat that can: -Be monitored for status or controlled from a smartphone, tablet or computer

Value Added Services Command 4X Price Smart Smoke Detector: Preference (Q2/14) $129 A smoke detector that can: -Be monitored for status or controlled from a smartphone, tablet or computer $29 A smoke detector that can: -Be monitored for status or controlled from a smartphone tablet or computer -Send you alerts when the battery needs to be replaced 47% -Send you alerts when the alarm is triggered telling you about the event and location -Automatically shut off the furnace or air conditioner in the event of a fire 53% Source: American Broadband Households and Their Technologies Q2 2014 N=10,000 broadband households, ±0.98% 2014 Parks Associates

Value Added Services Drive Replacement Advanced Smart Smoke Detector: Likelihood of Replacing Functioning Unit (Q2/14) Only when it stops working properly, 39% While it s still working properly, 61% Source: American Broadband Households and Their Technologies Q2 2014 N=10,000 broadband households, ±0.98% 2014 Parks Associates

Bundling Services Together Most Appealing Smart Home Use Cases (Q2/14) Receive alerts for smoke or fire Receive alerts for carbon monoxide or a gas leak Receive alerts when doors or windows are opened Receive alerts when there is a medical emergency Receive alerts when there is a water leak Receive alerts when motion detectors are triggered Lock and unlock doors Turn on/off the lights Monitor outdoor security cameras Monitor indoor security cameras Use sensors to know occupancy and automatically turn off lights and appliances Receive alerts when energy usage is high Monitor, program, and adjust your home's thermostat Have appliances automatically minimize electricity usage Identify if there is a problem with any major appliances Identify ways of improving your home's energy efficiency Monitor your home's total electricity usage in real time Let you know if energy use is within budget Turn on/off or check the status of appliances Open and close your garage door Understand your home's energy performance Receive a daily summary of your home's energy usage Turn on/off or check the status of appliances in your laundry area Open a pet door 21% 45% 43% 41% 41% 39% 39% 36% 35% 34% 34% 34% 32% 31% 31% 30% 30% 29% 29% 29% 28% 26% 26% 51% Source: American Broadband Households and Their Technologies Q2 2014 N=10,000 broadband households, ±0.98% 2014 Parks Associates

Energy Related Use Cases Appeal of Smart Energy Features (Q2/14) Not appealing (Rating 1-3) Very appealing (Rating 6-7)...use sensors to automatically turn off lights and appliances when home is unoccupied receive alerts when energy usage is high identify problems with major appliances identify ways of improving your home s energy efficiency monitor your home s total electricity usage in real time...let you know if energy use is within budget...understand your home s energy performance receive a daily summary energy consumption 35% 36% 36% 37% 38% 38% 40% 41% 34% 34% 31% 30% 30% 29% 28% 26% Source: American Broadband Households and Their Technologies Q2 2014 N=10,000 broadband households, ±0.98% 2014 Parks Associates

% of BB HHs Very Likely to Subscribe Value of a Bundle of Energy Services Willingness to Subscribe to Smart Energy Service (Q2/14) 69% 59% 43% $9.99 per month $4.99 per month $2.99 per month Source: American Broadband Households and Their Technologies Q2 2014 N=10,000 broadband households, ±0.98% 2014 Parks Associates

Thank You Tom Kerber Director of Research, Parks Associates tom.kerber@parksassociates.com

Consumer IoT Smartphones as the Passport to the IoT Bill Morelli Director, IoT, M2M & Connectivity IHS

Agenda Internet of Things Overview Definition Evolution Market Size Consumer IoT Market Smart Home Connected Car Wearables Technology Insights Smartphone

The Internet of Things What is the Internet of Things? IoT is a conceptual framework It s about enabling connectivity and embedded intelligence in devices Some of these devices are connected today, but MANY are not Not strictly machine-to-machine (M2M) also machine-to-people, people-to-machine, machine-to-objects, people-to-objects Creates the ability to collect data from a broad range of devices Data can be accessed via the cloud and analyzed using big data techniques IoT can be used to provide unique value propositions and create complex information systems which are greater than the sum of the individual components.

IoT Application Segments Automotive Infotainment Under-the-hood Communications Consumer CPE Enterprise CPE Last-mile Access Backbone Mobile Handsets and Infrastructure Computers Desktop Server Portable Computing (Netbook, Notebook & Tablet) Medical Consumer Medical Imaging Other Medical Industrial Building Automation Commercial Transportation EFT-POS & Smartcards Industrial Automation Lighting Power & Energy Security Test & Measurement Other Industrial & Commercial Consumer Home Appliance Home Automation Home Consumer Electronics PC Peripherals & Office Equipment Portable CE Smart Toys Sports and Fitness Other Consumer Military & Aerospace Commercial Aerospace Military Equipment

IoT Technologies Wired WPAN W-Mesh WLAN WWAN Ethernet, Coax, Fiber, etc. considered as a single category ANT+ Bluetooth Classic and Smart Ready Bluetooth Smart ZigBee PRO ZigBee RF4CE ZigBee Multi-Protocol EnOcean ISA100.11a WirelessHART Z-Wave Other 802.15.4 802.11a/b/g 802.11n 802.11ac 802.11ad Other 802.11 DECT ULE Other 2.4GHz Other Sub-GHz 2G Cellular 3G Cellular 4G Cellular

Installed Base (M) Device Shipments (M) IoT Extended Forecast, 2011-2025 IoT Extended Forecast - Internet Connectable Devices - Installed Base & Device Shipments 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 2012 2013 2014 2016 2019 2022 2025 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 Automotive Communications Computers Consumer Industrial Medical Military & Aerospace Device Shipments Source: IHS 0 2014 IHS Installed base includes both active connections and connectable devices which are not networked Industrial category includes a wide range on nonconsumer applications (transportation, power and energy, security, etc.)

Connectable Devices (K) Consumer IoT Forecast, 2013-2019 Consumer Internet Connectable Devices - Installed Base 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 Tablets, laptops and connected accessories are expected to see continued growth 6,000,000 4,000,000 2,000,000 0 2013 2014 2015 2016 2017 2018 2019 Smart Home is expected to see significant uptake in the next 5 years Automotive Consumer CPE Consumer Medical Home Automation Home CE PC Peripherals Portable & Desktop PC Portable CE Smart Toys Sports & Fitness Source: IHS 2014 IHS

Internet of Things Evolution Internet of Everything (IoE): Represents the open access to data from one or more monitoring and control systems by third-party applications to provide unique, additional value to stakeholders. Connect Devices Collect Data Access Data Complex Analytics Unique Value Connectivity Intelligence Sensors Storage Cloud Standards Open APIs Big Data Realize the true potential of a connected society Where we are today Next stage Ideal goal security is key challenge! many years away

Consumer IoT Market Three main IoT touchpoints for consumers to interact with IoT are home, car and wearables (everywhere) Smart Home Connected Car Wearables

Consumer IoT Environments Paradigm shift in the past decade individuals used to access the internet at home and work. Today, thanks to near ubiquitous wireless coverage, consumers can access the internet anywhere and so can their devices.

Smart Home Subs (K) Smart Homes: Overview Smart Home Subscribers by Application What is a Smart Home? IHS: Low-bandwidth home network used for command or control applications Main application types: Energy Management Home Monitoring Hazard Detection 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 2011 2012 2013 2014 2015 2016 2017 2018 Energy Management Hazard Detection Healthcare or Independent Living Home Monitoring Lighting Controls Other Source: IHS 2014 IHS

Smart Home Subs (K) Smart Homes: Forecast Annual smart home automation device shipments projected to grow from 25M in 2013 to 190M in 2018 Home monitoring (safety and security) devices lead the way, driven by North American consumer requirements In US, service providers are forecast to see the highest growth in share; as multi-service operators like AT&T, Comcast, Time Warner and others start to penetrate mass-market households Smart Home Device Shipments by Region 250,000 200,000 150,000 100,000 50,000 0 2012 2013 2014 2015 2016 2017 2018 Americas Asia Pacific EMEA Source: IHS 2014 IHS

Key Points: Smart Home Diverse supplier landscape improving availability of affordable systems Varying consumer requirements, but security and privacy are vital Interoperability and user interface fragmentation Connected variants of smart home devices projected to slowly become the new norm Long life-cycle device OEMs look to connected devices to drive upgrades, offer value-add features and remain current throughout lifespan

Connected Car Trends Embedded Modem Key Trends First telematics service Leading telematics approach Growth from ecall mandates Other Information OnStar is leading system Through 2018 Europe, Russia and Brazil Mobile or Smartphone Strong growth from Smartphone Ford most successful system Emerging services as apps Mostly a niche market earlier Japan first: navigation services Use Smartphone data plan Hybrid or Both Emerging as long-term favorite Embedded for car-centric info Smartphone for cloud content Leader after 2018 Due to higher security Smartphone apps and data plan

Unit Sales (#K) 18,000 16,000 14,000 12,000 10,000 8,000 6,000 Mobile Disruption in Automotive Phone Projection Growth in Global OEM Platforms MirrorLink Android Auto Apple CarPlay Take-Away Google and Apple succeed as OEM partnerships grow CarPlay and Android Auto have shortened the window of opportunity for MirrorLink and increased barriers 4,000 2,000 0 Source: IHS Automotive 2014 2015 2016 2017 2018 2014 IHS

Key Points: Connected Car Innovation in the connected car is occurring rapidly outside of the traditional automotive supply chain Tech company partnerships and alliances are critical for automakers to stay relevant Connected car data becomes a critical component of daily operations and product development as 152 million vehicles begin transmitting 11.1PB of data by 2020 Automakers are taking advantage of the connectivity and UX real estate offered by wearables to provide services and remote access

Wearable Technology Overview Market growing rapidly 2013: $10B from 105M units 2019: $34B from 230M units (forecast) Service revenue to exceed $6B in 2019 N. America and Europe account for 70% of global revenue Successful wearable app strategies should tie in to existing app ecosystems World: Application store revenues ($m) 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Apple App Store Google Play Other 2012 2013 2014 2015 2016 2017 Healthcare and Medical Blood Pressure Monitors Glucose Monitoring ECG Monitors PERS Fitness and Wellness Activity Monitors Fitness and Heart Rate Monitors Pedometers Smart Clothing Infotainment Bluetooth Headsets Head-up Displays Imaging Products Smart Glasses Smart Watches

Wearable Tech Apps Wearable and Peripheral Apps by Category (%) Health & Fitness Lifestyle Music Utilities Entertainment Games Sports 7% 6% 4% 2% 44% Health & Fitness services dominate apps for wearable and peripheral devices Photo & Video Social Networking 8% Navigation Business Weather 11% Education 12%

Key Points: Wearable Tech Device, service, app and OS compatibility is crucial So far, wearable apps and devices are an extension of smartphone ecosystems Health and Fitness apps dominate but there is room for other categories Apps for wearables are unlikely to match smartphone and tablet app revenue success but business models are evolving Advertising will play a role, with the correct data strategy

Consumer IoT and Smartphones Role of the smartphone in Consumer IoT Identity Security Data integration Opportunities for developers using smartphone as entry point

Smartphones By 2017, 91% of handsets sold will be smartphones Cellular, Wi-Fi, Bluetooth Classic, Wi-Fi, tether Bluetooth Smart, ANT+, NFC Smartphones are the most connected device in the world based on the breadth of technologies Can communicate PAN, LAN, WAN

Smartphones: IoT Passport In 2016, smartphones will represent 85% of mobile subscriptions in the US Smartphones already widely used in home Use in cars increasing, more integration coming Most wearables rely on smartphone tethering

Key Takeaways Smartphones are the entry point to Consumer IoT! Much of the value of IoT will come from the integration of data from disparate sources Consumer IoT strategies should focus on interoperability, try to leverage multiple platforms Consumer requirements will vary based on vertical area, platform, and use case, but security and privacy are vital!! Don t just solve today s problems look at solving future problems leveraging emerging classes of connected devices

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