Connected Devices Bode Well for Home Automation Adoption, Control4 Founder Says

LAS VEGAS -- The home automation industry is still looking for the compelling benefit that will drive mass-market adoption, but the proliferation of connected devices is a step in that direction, Will West, founder of Control4, said on a connected home panel at CES sponsored by his company. In its fifth year, Control4 “is just getting out of the gate,” West said.

There’s a 3-1/2-month backlog of manufacturers waiting to have products certified for the Control4 platform, West said. “People are lining up behind the connected home,” he said. “It is happening.” As more technology is built into devices, he said, the number of connections needed drops, “and you'll see that more over the next 18 months.” Devices will have tech “inherently inside,” he said.

The connected home will become essential to electronic life cycles, because it provides an upgrade path, said Steve Delp, chief operating officer of Best Buy’s Magnolia stores. He said 2010 was the first year that Magnolia and Best Buy have launched offerings “where we never saw a finished product.” He described that as “almost scary” for a retailer which typically tests finished products four or five months before shipping them to stores as far as “21 weeks out.” The company sold five products that were “out of date the day we got” them and required software updates before they hit the sales floor, he said. “The market is moving so fast that at the point we set a product in the store, the first thing we have to do is a software update,” he said. The upside of the new model for consumers is that products improve and get easier to use while they own them. For manufacturers, “the more feedback they get, the more modifications they can make with software that make it better and easier to use and integrate with other devices in the home,” he said.

Panelists stressed the importance of making connected technology easy for consumers to install and use. That requires cooperation between manufacturers, not something the industry has been known for, they said. Delp said Best Buy traveled to Japan for the last year to “talk with manufacturers about how to help each other make this easy for the consumer.” He said a better customer experience emerges “when all the products are working together,” and that’s giving rise to a “middleware platform and operating system of the home that will help make different brands work seamlessly together."

Panel moderator Steve Koenig, director of industry analysis for CEA, said consumers are on a “quest for value,” which he called “the new normal.” Monetizing home automation and the connected home in a category where consumers have become accustomed to holding out for deals will be a nagging challenge, he said. Delp said software upgrades offer revenue opportunities for manufacturers. Through the new upgrade model for connected devices, consumers benefit from the features that a TV or Blu-ray player has when they buy it along with those that come out “next year and the year after,” he said. A TV has a typical lifetime of at least seven years, he noted. Manufacturers can benefit “for all seven years,” he said, “because software upgrades are an opportunity to monetize the benefits and features that will be added on top of that platform down the road."

Brian Siegel, vice president of home audio/video marketing for Sony, said 60 percent of Sony’s current Blu-ray lineup is connected. Siegel described new ad-based business models in which customized advertising can be delivered to consumers on TV and beyond the living room, “where you can access your home from your phone or your iPad,” offering opportunities “to help consumers get value” and help manufacturers “extract revenue and profit margin."

Panelists were divided about the role that energy consciousness will play concerning automating the home at the mainstream level. “You need to be careful” talking about savings, said Delp of Magnolia. Consumers like being more informed about the energy they use, “but it’s not about savings,” he said. “The raw fact is we consume more energy year over year as a nation,” he said, saying people may be able to defer costs but more expensive energy is being consumed overall. “Cost avoidance may be interesting,” he said, “but I'm not sure the savings are there.” Two-way meters and the smart grid “are going to cost money,” and the government, he said, will pass the costs to consumers.

Jason Few, president of Reliant Energy and executive vice president of NRG, differentiated between regulated and unregulated markets and said NRG is seeing a direct correlation between energy costs and usage in unregulated Texas markets like Houston. Describing “market-based competition,” he said customers given the choice to save money through demand pricing are taking it. “You have to have real-time pricing to get people to change behavior,” Few said. Consumers are choosing to run the dishwasher off-peak at 11 p.m. rather than the more expensive dinnertime, and making ice in the middle of the night when it’s less expensive, he said. That requires providing information to consumers so they can make those decisions, Few said. “Nothing changes behavior like real-time pricing does,” he said, saying the utility is helping “transform way its customers think about usage and consumption.”