Home Automation Pricing Seen Condensing as Mainstream Market Widens

Comcast’s announcement last week that it’s advancing its Xfinity Home Security business from a trial program that launched in the Houston market last summer to six more metro areas in Q2 -- and more by the end of the year -- is part of a technology shift that’s reshaping the home automation industry. ABI Research forecasts that the home automation market, once split into extremes of do-it-yourself hobbyists on the low end and expensive, custom-installed systems for luxury homes at the other, will reach 12 million shipments worldwide in 2016, from just 1.8 million in 2010.

Revenue growth, according to ABI projections, won’t correlate with system growth as the home automation industry fills in the middle of the market with more mainstream customers, ABI analyst Sam Lucero told Consumer Electronics Daily. Worldwide home automation revenue, $4.5 billion in 2010, will grow to $11.8 billion by 2016, which is “reflective of the shift away from expensive, custom systems in the luxury segment toward unit volume with more cost-optimized technology,” Lucero said.

Fueling the growth in more affordable home automation systems is a confluence of standards-based no-new-wires protocols including Zigbee, HomePlug, Z-Wave, and Wi-Fi Direct with software platforms from iControl, AT&T Xanboo, Control4 and Motorola’s 4Home, Lucero said. The software platforms make it “easier to deploy home automation as a service and as standalone systems, he said. Another benefit of the no-new-wires technologies is that they can be retrofitted in existing homes and don’t require new construction to run wires, Lucero said.

The combination of factors has gotten the attention of service providers who see home automation as another revenue opportunity on top of voice, data and video service. Alarm companies, including ADT, are getting into the act, too. “The market is shifting from the two niche segments at extreme ends of the spectrum to a more addressable, mainstream audience” delivered by telcos, cable and security providers who have existing relationships with customers, Lucero said. Those companies, such as Comcast, AT&T and Rogers in Canada, are able to create packages that are easy to understand, market and install, he said. Home automation is moving away from customized systems “to a model where customers can go to a Comcast to buy home control with cameras and motion sensors that’s not going to cost them $15,000-$20,000,” he said.

After a one-year test in Houston, Comcast said last week it was expanding its Xfinity Home Security business, to six more markets: Philadelphia, Houston, Portland, Sarasota/Naples and Jacksonville, Fla., and Chattanooga/Nashville, Tenn. More markets will roll out by year-end and the company plans eventually to offer the service throughout its footprint, which covers 39 states and Washington, D.C., said Charlie Douglas, senior director of corporate communications for Comcast.

Although the Houston trial used a Z-Wave based system from uControl (now iControl), the company is moving forward with Zigbee-based products, Douglas said. “Zigbee is the protocol we prefer because it offers greater range,” Douglas said. Douglas noted that while home security systems have been around since the 1950s, they have been very expensive to install. With the devices and technologies available for home control today, it’s a natural transition for Comcast to add “adjacent services” like home control and security to its portfolio, he said. Wireless home networks are making affordable home control available to a wider scale audience “more than ever before” and as a cable company, Comcast already has the infrastructure, including a broadband backbone, in place, he said. “We have tens of thousands of technicians in customers’ homes every day,” he added. Comcast is also ramping up its technical support staff, looking for experienced professionals from the custom electronics and security fields, he said.

Comcast’s Xfinity Home Security includes traditional home security features including police and fire protection with professional monitoring and adds control for Zigbee-based thermostats, light switches and motion sensors, which are sold on the company website, Douglas said. System installation is $199 and service packages start at $39, Comcast said. According to the website, the preferred package includes four sensors, one motion sensor, a control touchpad that’s proprietary to the system, a wireless keypad and a keychain remote. Users can turn lights on and off, set temperature and stream video live from up to six wireless security cameras with the system. Subscribers can use the touchscreen controller to check news, weather, traffic and sports scores, Comcast said. Comcast hopes to leverage features from its other services as well. An Xfinity voice customer, for example, could listen to a voicemail through an app on the security interface, the company said. Comcast said homeowners who use the service can save up to 20 percent on homeowner’s insurance. Control apps for the iPhone and iPad are available from iTunes, Douglas told us.

Although ABI’s forecasts for home automation are optimistic, Lucero said consumer awareness and education remains a hurdle to widespread acceptance. Consumers largely consider home automation “a work in progress,” he said. “There’s a tremendous amount of work to be done in the education process,” he said. In an August 2010 survey of consumers who were interested in home automation, ABI found that 74 percent were attracted by convenience features such as control of lighting, window coverings, irrigation systems and home monitoring. Just over half of respondents were interested in home control for security, and half wanted to use it for home management. Fourth on the list was home entertainment at 45 percent, followed by home healthcare at 14 percent, ABI said.