Bernd Grohmann, Executive VP, EQ-3 AG, will be speaking at Parks Associates' upcoming CONNECTIONS Summit: Engaging Consumers: IoT and the Smart Home at CES, January 9, in Las Vegas. He kindly provided insights, to the Parks Associates' analyst team, on Smart TVs, voice control products, increasing consumer awareness of connected products and services (and their fears of adoption), VR/AR trends, drivers for connected home products and services adoption, and what his company is doing to address privacy and security in their products and services.

Bernd will be participating on the Smart Home Platforms: Unlocking Consumer Value session, at Parks Associates' CONNECTIONS Summit. The session will be held Tuesday, January 9, at 9 AM, and will also feature the following participants:

Nina Bhatia, Managing Director, Centrica Connected Home (Hive)
Martin Heckmann, Director, Emerging Business at Chamberlain Group Inc, Chamberlain
Thomas Rockmann, VP Connected Home, Deutsche Telekom AG
Marcus Scheiber, CEO, ROC-Connect

Q. Smart speakers with personal assistants were the biggest products of 2017. What will be that next big product in 2018?
A. With the pull generated by Alexa and Co., we see additional demand for home control, i.e. driven by a new segment of voice system users. What is interesting is that we see demand from much younger users looking for lighting solutions as a starting point. However we do not see one “next big” product in 2018. Instead, the demand is split across most of the already 60+ Homematic IP products.
Furthermore, we see 2018 as a starting point for voice in control, only. Each voice platform available today leaves essential areas uncovered. In other words, the race between platforms has not even fully started yet.

Q. What can companies do to increase consumer awareness of smart home products and services?
A. We do not believe that there is insufficient awareness of “smart home”. Instead, we notice that many consumers have had bad experiences with products based on so-called wireless standards simply not meeting their expectations. This is especially true in Europe, but we also find facts underlining this in the US. In other words, we need to raise awareness about solid smart home products and services.

Q. What role has voice played in the rise of Amazon, Google, and Apple in smart home ecosystem dominance?
A. We neither see nor expect a dominance of Amazon, Google and Co. in smart home devices. Instead, they provide a very attractive new type of user interface in the form of voice control, helping to accelerate the rate of Smart Home adoption. Part of the attractiveness is that the voice platforms come free with relatively inexpensive audio devices. This is reducing or even eliminating the hurdle to test such voice platforms. We should not make a mistake: Most of the deployment is “trying out” by the consumer.
While voice will be one important form of control, it will clearly not eliminate the light switch next to the bed. There are many examples, where voice control is just not practical. Furthermore, voice control based on cloud services will never meet the sub-300ms requirement in lighting control and other Smart Home categories. This area also has safety questions underneath, which will not go away.

Q. Do you think smart TV makers will begin including voice and smart home control? What other features can allow smart TV makers to differentiate themselves from the pack?
A. Considering the relatively low cost for making a TV a voice control device, adding Google or Alexa appears as simply logical. Thanks to Android TV, Google may have some advantage over Fire TV from Amazon.
Adding home control and using the TV Screen as part of the UI device is highly attractive device to control and also for configuration of the Smart Home. Homematic IP makes this especially cost efficient with a full wireless access point at BOM cost of below USD 2.50, a free, comprehensive cloud service, and direct links between devices solving the question of low latency and high availability of services.
 

Q. Is VR and AR still a hot trend heading into 2018? Or, do you think much of the buzz has died already?
A. There may be less of a hype in 2018, but we expect AR and VR to become dominating standard interfaces to gaming, media and possibly significant areas within IT. Having said this makes us wonder where Apple stands in relation to VR.

Q. What do consumers fear most when adopting smart home products and services?
A.

1. That the solution is too hard to set up.
2. That is will not work as expected.
3. That the underlining version of the technology and compatible products are only available for less than 2 to 3 years.

Q. How will companies balance the need for improved AI, while also taming concerns many have with the future of AI?
A. Concerns around AI are largely rooted in data privacy. Delivering services in an anonymous form is a viable and the easiest approach to mitigate such consumer concerns.

Q. What innovations are having the biggest impact on the smart home and IoT markets?
A. Next to voice, the advent of lightweight access points with associated cloud services instead of a using Linux based central controller in every home marks an infliction point in customer adoption.
With the Homematic IP, the entry cost for starting a smart home solution is reduced by typically 70% to 90% this way. Furthermore, latency for reaction is reduced to under 100ms thanks through direct communication between devices

Q. Name the three top drivers for adoption of connected home products and services.
A. First, home control and Smart Home overall is about comfort, lifestyle, and prestige. We continue to see those as the primary key driver. Linked to this, there appears to be no shortage in consumer interest for Smart Home thanks to the current market hype.
Second, having made the first point, the user still needs to understand the application plus associated benefits. this is critical at the point of sale, be it physical or online. Just putting 22 devices on a shelf does not solve the issue: In typical situations, no-one will be there to consult the user.
Homematic IP has large successes in retail with simple starter kits, that a) are truly easily installed, and b) truly simply work. While it sound trivial, this is the area where most solutions fail. Homematic IP enjoys extension purchases that are in the range of 4-6x time the starter cost in the first 12-18 months.
Third, concerns of the user need to be take more serious. Homematic IP is known to be robust and reliable without requiring mesh networking or other technology the user does neither understand nor trust. Homematic IP is removing a critical obstacle to adoption by driving security to a new level and providing the best possible answer in privacy. We consider this to be among the top reasons why our solutions have the largest installed base in Europe.
If one is looking for a simpler answer in terms of ranking of security benefits, it is clearly 1) comfort, lifestyle, prestige, 2) energy cost savings, and 3) perceived increase in security, i.e. going far beyond just a wireless alarm system.

Q. How is your company addressing privacy and security in your products or service?
A. In Homematic IP, every device uses an IPv6 stack for its communication. Similar as in WLAN, all data is authenticated and encrypted. However, Homematic IP uses a more secure method of setting up a network. This is why Homematic IP has been able to be the first to get a security certificate not only for the IT portion of the Homematic IP solution, but especially also for the Homematic wireless communication protocol rom top-ranked VDE Test Institute in Germany.

Q. What risks does AI in products and services bring to the consumer?
A. We see the question of data privacy and directly connected privacy overall to be the number one risk seen today.

For more information on CONNECTIONS Summit at CES, visit: www.connectionssummit.com.