The Battle for the Connected Home

November 06, 2018 - 6 minute read

Last year, Gartner forecast that by 2020, the world will be spending almost $3 trillion on connected devices. The battle to win the most significant share of this money, is already well under way. 

The two biggest contenders are Amazon and Google, and the fight is being fought not just behind the closed doors of boardrooms and product development labs, but in front of consumers too. If you search for Google Home on Amazon, it cheekily retrieves the Echo for you (they refuse to stock Google’s equivalent), and in similarly petty fashion, Google won’t let the Echo Show play YouTube videos.

Childish tactics aside, both companies know just how much is at stake. The vision for the connected home leans heavily on the premise that devices will interact. Whatever that first purchase may be—speakers, voice-activated assistant, or automatic door lock—the brand a consumer decides to buy is a good indicator of who they will let kit out their entire home. If Amazon take care of your smart front door, that locks and unlocks to allow your groceries to be delivered, when the time comes to get a smart fridge to automate the grocery-ordering process, Amazon would be the natural fit.

It’s about creating a comprehensive ecosystem of technology within the home. No one wants standalone products; they want devices to sync, and communicate, and get smarter on the back of it. 

The choices people make now over their first foray into Smart Homes, are footholds for these companies. Win enough battles in the coming year, and the whole home will be your oyster.

 

Clash of the titans

Amazon and Google are undoubtedly the biggest players at the moment, though Apple and Facebook have also both got designs on becoming Smart Home providers.

All four companies have launched their own smart speakers, which for most UK households, will be the gateway product into Smart Homes.

Amazon is currently clearly in the lead. Alexa entered the space early, has enjoyed seriously heavy duty advertising, and already integrates with reputable speaker providers, Bose and Sonos. The various price points of the Echo speaks to the company’s desire to get an Alexa into all UK households—upselling being much easier than cold selling.

The Amazon eco-structure has already begun to be created: there are now connected clocks, plugs, and microwaves; and your Prime subscription can be used to shop vocally via Alexa, or call your favourite Prime boxset onto the telly.

Google, for their part, are nipping at their heels via investment. Alphabet bought Nest in 2014 and they have since released eight smart home products. Their offering, at this stage, appears less centralised that Amazon’s (smart versions of the thermostat, the alarm system, door locks, and cameras).

This strategy—making a diverse range of hardware, rather than focusing on their core software offerings—means they have spent less time and energy on directly competing with Amazon’s Alexa. According to research from CIRP at the end of last quarter, Amazon has the lion’s share of the smart speaker market with 70%. Google takes 2nd place with 24%. It’s still impressive, considering the king of hardware Apple, only has 6%, and it’s very early days for the market as a whole, but it’s a figure that doesn’t predict Smart Home dominance for Google any time soon.

Wired has interpreted Google’s focus on more diverse hardware (via Nest) as a safety net in case Amazon dominate with a platform that doesn’t allow for third-party integration. Google, Wired say, are weighing up whether they can produce products that could sit within an Alexa-run home, and if that’s not the case, they’ll be looking to go all-in with the Nest offering.

Despite this being a very young market, it’s a strategy that should excite small businesses. Google are preparing for a world where Amazon are dominant within the Smart Home, but where they can play a central role. Which means that there’s no reason smaller brands can’t gun for a similar position, building upon an existing ecosystem for easier distribution to consumers.

 

How to get a look-in if you’re not a tech giant (yet)

This market map shows 60 companies across sectors already working on a specific part of the home to improve how intuitive it is:

  

 Credit: CB Insights

 

To take one of these 60, June is making smart ovens. Since the oven uses cameras to identify the food, and decipher the optimum way to cook it, all you have to do is pop some food in and turn it on. 

Were Amazon’s Smart Home domination to continue to a point that people expected to be run off Alexa, there’s no reason June couldn’t be integrated.

The same goes for Tado—a producer of smart thermostats which sense when you’re out or when you’re at home, and turns the heating off and on accordingly.

To ensure you’re not blocking consumers off from buying your products, it will be important to ask two things.

Firstly, you need to know which Smart Home platform your consumers are relying on, and be sure that your products integrate seamlessly. Remember, the attraction of an intuitive home is that individual devices work in harmony, to make consumer’s lives easier.

Secondly, you need to know the quirks and niggles of daily life that people would love to eliminate. Whether you’re looking to start a business within this flourishing market, or you’ve already got a smart product out there, the key to success in such a fast-paced and evolving space, is innovation.

Five years ago, Techcrunch identified seven key characteristics companies will need to display to thrive in this new world, and they still hold true. One, particularly so:

Perhaps most importantly, startups will need to be true “data natives”. Many connected devices offer exciting opportunities to build “data network effects”: each device captures data that, aggregated and analyzed at the cloud level, enables the extraction of insights that in turn make each individual device smarter, through machine learning and predictive analytics. This is one of the main reasons why the Internet of Things goes much beyond a simple hardware play, and will be a key aspect of the defensibility of the winners in the space: you pay for the hardware, but the software (and data) is what keeps you using the product.

 

Harvest all the data from your products that you can get your hands on. The way people are using your product will hold hints and tips as to what they enjoy about it, which features haven’t taken off, and where people are using it inventively because the product doesn’t yet do the exact things they want it to.

That said, there’s much more data you could be retrieving too. What about finding out which other Smart Home devices your customers use, or which they would like it to integrate with? And what about people who aren’t using your devices, because they’re with your competition, or they’ve not yet been convinced of a need for you in their lives. Wouldn’t it be useful to pick their brains on why they aren’t your customers (pain points, price needs, hurdles stopping them from buying) so that you can devise a strategy that will cater specifically to getting them on board in the future?

Similarly, if you’ve not yet started your product line, or company, you’ll probably want to talk to people about everything around their home routine and behaviours, so that you can work out where you might fit in.

Which is exactly where Attest fits in! If you’d like to get in touch with consumers to speak to them about their home habits, and how you could help make them smarter, we’d love to help you.

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