Amazon Echo Show, Alexa, and Google Home have been positioned as the next big thing for companies and consumers. Content companies, marketers, and advertisers have scrambled to get up to speed on the technology behind them and are actively trying to figure out how to incorporate them into their planning. Certainly, there are a slew of companies anxious to get in on the Internet of Things (IoT) home automation game. However, they all realize that what will make them the most money is delivering their messages on the home automation system that reaches the most number of households.
Nevertheless, home automation is a new game with a whole new set of rules. The winner of this space will be whomever can master a very different skill set: providing subsidies through tax credits and insurance claims, and developing tight relationships with residential and commercial general contractors.
There are two main obstacles to mass adoption of home automation:
1. It’s too expensive: To get the full effect of the IoT transformation, a homeowner would have to replace every appliance in their house. That includes everything from the garage door, the thermostats, and doorbell to every light bulb, roof, pool pump, possibly even an entire music library, and more. Not many will be able to afford this.To reach mass adoption, someone else will have to pay for it. But who?
Using smartphones as an example, they didn’t hit mainstream until carriers helped subsidize the cost of the phone by rolling it into the service plan. Similarly, broadband effectively crossed the chasm when it started getting bundled by default with TV and phone service. Providers and appliance companies need to figure out a way to subsidize the cost of every upgrade. This can be accomplished through tax credits and subsidies for environmental upgrades or through insurance companies willing to foot the (partial) bill to replace elements of the home due to age and wear-and-tear.
2. Integration is too difficult: Seamless integration is another major obstacle to the adoption of home automation. Setup is prohibitively difficult. Many products won’t work together because they’re made by competing companies. Users often are forced to use separate apps or hubs for each appliance.
Thus, whichever company can offer a full-package solution has the best chance of solving this integration problem. And whichever company has the capacity to work closely with residential and commercial general contractors will have the advantage since selling a “full package” is only financially realistic when rolled into the mortgages of new-build homes. There’s a domino effect here since the solar roof you choose will require a battery store, and that battery store will work best with the related fuse box, which might act as the control hub to the rest of the house. This, in turn, will determine most of the other appliances, such as wall switches, light bulbs, thermostats, ceiling fans, etc.
Who Will Win?
One may argue that there is already a company set up to dominate the home automation market, which already has cachet with consumers, and is both full of shine and substance. Tesla is the only major tech company making it an integral part of their business to embrace the complexities of insurance companies and residential and commercial general contractors. This is necessary for them to drive adoption of their Solar Roof. They are also already masters of helping consumers with government subsidies that come with environmental tax credits from buying their cars. These are the types of moves needed to, gradually over 20 years, deck out a house, top to bottom, with a seamless, consistent, single-vendor solution that was paid for by rolling it into standard maintenance costs or mortgages.
There’s another reason why the winner in home automation won’t be one of the usual giants in consumer tech today. This will be unfamiliar territory for them since they focus on glamorous consumer electronics rather than practical products meant to last a generation of home ownership. Apple will miss the boat by trying to “design” their way to success. But let’s face it: Home appliances are not “objects of desire” like jewelry. Amazon will try to reach success by slashing margins but “cheap” is still more expensive than subsidized. Google will try winning by having smarter devices than their competitors but most devices only need to be smart enough to turn themselves on or off.
For now, it’s a dream state as we wait to see how home automation can work together for an entire household in a way that’s not cost-prohibitive. It must also be seamlessly integrated into the home. Until these hurdles are “solved problems,” home automation—and the opportunities that come with it for content companies of all types—simply cannot cross the chasm.
Rylan Barnes is the co-founder of ShopSavvy, one of the largest shopping/deals apps, that is part of Purch’s portfolio of brands, and Vice President of Software Engineering – Mobile and Emerging Platforms at Purch.