Education, Service Key to Mainstream Smart Home Adoption, Say Panelists

Education and service will play key roles for the smart home industry as it moves mainstream, said smart home industry members on a Parks Associates Connections webcast Thursday.

“Technology breaks -- a lot --" and having the ability to respond to service calls “at a moment’s notice is becoming very important,” said Kevin Huisman, service manager, Grand Home Automation, a CEDIA integrator in Hudsonville, Michigan. That's especially true as more people are working from home since the COVID-19 pandemic, he said. It has been a challenge for Grand Home to keep up with the bump in service calls for entertainment systems and work-based technology “as we’ve adjusted to that service-on-demand mentality,” Huisman said.

Level Up Automation, a showroom-centric integration firm with locations in the Boston area, Orlando and Phoenix, is seeing products it installed five or six years ago “starting to have problems,” said CEO Jennifer Mallett. Manufacturers have been pushing through firmware updates to their products, “and sometimes that breaks things,” Mallett said. She said that begs the question: “Who is going to service all these smart homes?”

CEDIA integrators have historically filled that role, with a luxury clientele that could afford high-end systems and their associated support rates. But CEDIA is “in transition,” said Ian Bryant, CEDIA senior director-strategic partnerships. It's “striving to be more inclusive and less exclusive,” Bryant said.

Bryant observed the historical trajectory of the audio video market, where products debuted at the high-end at steep prices and then moved to the mainstream in subsequent years as prices dropped. Plasma TVs started as a luxury item 20 years ago at $25,000 for a 42-inch set. Today's comparably sized LCD TV with LED backlight is $300, he said: "We’re now seeing innovation starting in the middle market and actually going up to the luxury market.”

Economies of scale made it easier for manufacturers to produce electronics at lower prices, and “the middle market is blowing up so big and expanding so fast” because of how people are living with technology, Bryant said. COVID-19 created a surge in demand for streaming entertainment, for example, and the increased chatter about electric vehicles put the smart car in the spotlight, he said: “It’s that middle market that’s just growing and growing."

Savant Systems President JC Murphy said an “aspirational” segment transcends all industries: “If Elon Musk didn’t sell $160,000 electric vehicles to really wealthy people," Ford wouldn’t be launching the F-150 EV truck,” Murphy said. The industry needs something "that people aspire to,” he said, noting Savant bought GE Lighting “to develop technology to bring that aspirational connectivity and feeling to the broader market with very value-oriented product and capabilities.”

The “big wrapper,” Murphy said, “is that it comes down to software and service.” A consumer can buy something “for $1,000 or a million dollars, but if they don’t see that value continuing to age with the product, then you have a disconnect in the customer experience.”

In the past two years, “COVID changed everything,” said Grand Home’s Huisman. The pandemic "didn’t generate any new technology, but it brought a lot of emerging technology into the limelight,” he said. Premium VOD and work-from-home technology that were possible pre-COVID-19 “didn’t get the focus they should have,” he said, but now “everyone wants to take advantage of the technological options.”

Murphy noted the “explosion in IoT devices” entering the home, burdening an already-taxed home network. Devices that weren’t expected to be smart “are now Wi-Fi-connected,” such as a smart Crock-Pot, he said. The result, he said, is a “tremendous amount of bandwidth consumption on the network." Video streaming, camera feeds, gaming and video conferencing are consuming “a ton of bandwidth and you have to come up with a way to effectively manage that,” Murphy said. That includes having visibility from the cloud into the home to know "who’s using the bandwidth and how it’s being used."

Energy savings are driving smart home interest to varying degrees around the country, said Level Up's Mallett. Consumers visiting her Massachusetts showroom are drawn to a section marked by a lightning bolt that’s designed to educate customers about energy use, she said. People who own EVs are interested in battery storage systems and connecting with solar panels, she said. Many who don’t have EVs are “starting to think about how to manage their energy use," she said. “It’s not a huge market right now, but we see it as something that will be exploding in the next couple of years.”

Parks President Elizabeth Parks said a survey found consumers with smart thermostats believe they save about $45 a month automating their heating and cooling. But the once-hot category of smart thermostats stalled at about 11%-13% penetration of broadband homes over the past several years, Parks said.

Jason Wade, founder of Doorbell Ninja, operating in Orlando and Tampa, said convenience, not concern over energy savings, drives his smart thermostat business. Walking into a home with low humidity and a comfortable temperature is a strong selling point for his customers, plus the convenience of “not having to get out of bed to raise and lower the temperature,” he said. From his experience, “no one cares about security, and they don’t care about energy.”

It's different at Level Up in Massachusetts, where consumers can earn $125 rebates for up to three smart thermostats under a state energy efficiency program, Mallett said. Similar policies elsewhere in the country will lead to higher smart thermostat adoption, to a point where homebuilders start to put in smart thermostats as a standard item, said CEDIA's Bryant.

Savant's Murphy concurred, noting federal incentives in the transition to LED lighting from incandescent bulbs for energy savings drove $100 million of business at retail for GE Lighting. Incentive programs with smart thermostats, plus utilities' adoption of time of use management, could drive further smart tech adoption, he said.

Parks noted some states are rolling back rebates on solar panels and installation, citing Florida, “oddly,” as one of them. Despite confusion in the market over whether solar energy is economical, Savant’s Murphy thinks adoption will grow, he said. “You can generate solar, and you have to use it when you generate it,” requiring a battery storage solution, he said. “If you don’t have great battery storage available, or you can’t offload that to the grid in the case of a grid outage, that’s where you have a problem.” Integrators can help homeowners figure that problem out, he said.

Doorbell Ninja’s Wade wants manufacturers to take a bigger role in facilitating the installation process for smart home devices, he said. “I see what they can do when they want to do it,” he said, recounting an experience as a Nest installer helping a large air conditioning company launch smart home services in the D.C. area. In training, Nest communicated to installers that they should install a thermostat in 30 minutes or less and could tell from back-end diagnostics if it was working correctly. “If they can tell after you’ve got it connected that it isn’t working right, imagine that service,” he said. “They can see when it’s blowing heat when it should be blowing cold. That’s what I think will amaze customers and help them feel safe.”

Mallett of Level Up said manufacturers need to look at the field service team -- whether it’s CEDIA integrators or electricians -- “as an extension of your sales and service team.” One of the biggest factors determining the success of a product or platform is how well it gets installed and performs in the home, she said. As trusted advisers, “we need to be able to advocate for all these different product lines, and in order to advocate, we really need to understand them inside and out,” she said. When a product fails or there’s a known issue, having transparency from the manufacturer “is really, really important,” she said.