The home
automation market size is around $8.8 billion. What’s more Google purchased Nest, and whole
home automation market is blasting now. Here’s an overview of some business
models to capture the opportunity.
If we think about the homes that have a broadband connection today as
the total addressable market for home automation, the home automation market
size turns out to be around $8.8 billion at $100 spent per home or $880 billion
at $10,000 for example in the U.S. If we are a little more conservative and say
that only those broadband subscribers who use smartphones are targets, the
range turns out to be about $5.63 – $563 billion. In order to capture this
opportunity a number of business models have come into play. While these are not
new business models, it is interesting to see how this opportunity is being
captured.
The Free approach: Here home builders are embracing the the
art of negative margin by giving away connected devices for free as part of
home sales. In doing so home builders appear progressive and invested in home
innovation with the goal of attracting more buyers.
Building block sales: There is money to be made by providing
the building blocks for IoT, be it sensors, hardware platforms or software. For
example, Wulian selles ZigBee products , include the hardware and software.
Piecemeal: Here the manufacturer concentrates on
one or a few devices e.g. Nest or August. Each manufacturer has its own app
that lets you remotely and intelligently control devices.
Integration: The piecemeal approach lends itself to the rise
of integration platforms. Hardware integration platforms such as Revolv and
Staples sell hubs that can understand various protocols that home automation
devices use. They additionally provide a smartphone app that can control
various devices through the same app.
Subscriptions: Here cable providers such as Comcast
network operators such as AT&T and some home improvement stores such
as Lowes subsidize the cost of hardware or give it away for free in exchange
for monthly subscription to monitor homes for security or setting up custom
home automation rules as an example. This approach enables them to
attract customers who may otherwise be unable to invest in automating their
homes.
DIY: Before IoT became more mainstream, the rich and the
famous built fascinating homes using custom service providers that build connectivity into the home. This business model will continue to
exist but will account for a smaller percentage of the home automation market
over time as IoT devices mature, become cheaper, easier to install and use.
The
promise of double digit sales growth is attracting a number of players, big and
small, to the home automation market. As competition heats up and prices
decline, business models will evolve. But we will continue to see a wide
spectrum of models in use as different players target different segments of the
market. In fact players may adopt more than one business model to capture
bigger pieces of the pie.
More you can email me xixy@wulian.cc
or visit
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