Parks Points

Smart home adoption is expanding in Western Europe. New consumer research from Parks Associates shows over 40% of U.K. broadband consumers who plan to buy a connected device in the next 12 months intend to purchase these devices -- such as smart door locks, sensors, or security cameras -- as part of a home security or control system that can be monitored or controlled by a smartphone, tablet, or computer. Parks Associates’ Connected Consumer in Europe consumer research study also found that ownership of home control systems is 10% of broadband households in France and Spain, 8% in Germany, and 11% in the U.K.

The ability of connected devices to use data and intelligently control all aspects of the home is very appealing to consumers. The value shifts from a single device itself to an ecosystem of connectivity. Instead of a single interaction between a user and his device, the Internet of Things (IoT) allows multiple connected devices to communicate with each other and create a seamless network that caters to consumers’ personal preferences.

Parks Associates defines IoT as one or more devices connected to the Internet and that has an accompanying virtual object in software. Many business models will support technology use cases for the IoT, and it is creating opportunities for expanding existing business models in different ways.

Examples include:

• Subsidizing Upfront Costs and Service Fees      
• Price Expansion              
• Whole Product Solutions
• Data Exchange
• Product Sales and Commissions             
• App Sales and Upgrades            
• Advertising       
• Lead Generation            
• Home Warranty and Performance Monitoring Services               
• Insurance Cost Avoidance and Mitigation          
• API Transaction Fees    
• Energy Rebates/Savings             

Consumer intention to purchase devices and integrate them into home systems continues to be a growing trend across Western Europe. Mass-market smart home products and services are now available through numerous channels, including security dealers, telecoms, and retail stores, and both mass-market and custom-installed systems are seeing substantial growth as the combined marketing efforts of all channels are improving awareness.

Lack of awareness remains the biggest barrier to growth in the smart home space, both in the U.S and in Europe. In the U.K., Germany, and Spain, less than 10% of broadband households are very familiar with smart home services or products. And in France, less than 15% are familiar with smart home products and services.

In addition to raising awareness, IoT stakeholders also want to collect data from connected devices for analysis, forecasting, and further consumer engagement. Consumers are willing to share data—for a price. For example, over 20% of U.S. broadband households said they would share data from their fitness devices in exchange for discounts on health insurance.

However, consumers are also hesitant about smart home adoption because of concerns about data privacy and security. When surveyed, nearly a quarter of broadband households in the U.K., Germany, France, and Spain said they were very concerned about product security. Additionally, nearly 40% of broadband households in France and Spain expressed serious concern about unauthorized access to historical data. Since these concerns pose challenges to smart home adoption, the most successful players in the connected home industry will devote themselves to alleviating consumer worries about data privacy and security.

No one company -- or standard, for that matter -- will own the connected home in the European markets. Raising consumer awareness and familiarity with smart home solutions, monetizing data, and gaining consumer trust are keys to success in this rapidly evolving space.