Smart Home Industry Grapples With Over-the-Air Updates vs. Product Refreshes, Says Parks

One of the challenges attendees discussed was lifetime expectancy of smart home products, which will increasingly be an issue as software update capabilities bump into manufacturers’ need for product refresh cycles. In Q&A, an attendee noted consumers replace mobile phones regularly even though regular firmware and operating system updates improve their functionality and extend their life cycles. Though the life cycles have been stretching out since phone subsidies went away, consumers largely don’t mind the smartphone product refresh to get something “later and greater,” the attendee noted.

Smart home devices don’t have the same flash or personal association, the attendee noted, asking analysts their view of how smart home products will be updated going forward in a way consumers will accept. The industry is struggling with “how do you justify rollout of a new device versus an over-the-air update, and I think every manufacturer and category has to navigate that,” said analyst Brad Russell. “Is it a form factor change, an aesthetic change?” he said, “because it’s an odd new world we’re living in where you can push so much change over the air, but you really need that replacement cycle to happen to make your business model work.”

Security continues to be the top use driving smart home interest and purchases, said Russell. Thirty-eight percent of smart home device owners said home safety was the No. 1 reason they bought a connected device.

Uses that mitigate risks or give peace of mind are leading drivers for security features, said Russell. Consumers find “very appealing” notifications letting them know someone entered their home (53 percent), when someone is calling “help” (46 percent), glass breaks (43 percent), loud crashes (34 percent) and unusual noise detection (34 percent). Of less interest were notifications when family members come and go (21 percent) or when someone is crying or upset (19 percent).

Though home or personal security leads smart home purchase driver interest, only 23 percent of broadband households own a system, said Kerber. At $100 upfront for installation and $40 per month for monitoring, the industry needs “something different” to drive further security system penetration, he said. That could be a self-install solution to lower acquisition cost or an alternative product that “does the job of providing peace of mind, and does that at lower cost,” he said.

Second to security, consumers in a 2017 Parks survey cited energy management highly appealing at 53 percent, mostly for the user experience rather than actual energy savings, said Russell. Smart home thermostat purchases, for instance, are driven “much more by convenience,” remote access and control than by energy savings. Energy control “saves you money and that pays for the cost of the hardware, so it offsets your investment,” he said. Water management found some interest, too, though not high, the analyst said. In a lot of smart home use cases, lack of consumer education plays a role, he said. “They can’t rate something highly appealing that they don’t yet understand or haven’t seen.”

Parks is updating its smart speaker market research, surveying usage patterns of Alexa and Google Assistant owners six months after they first use the product, said Russell. He recounted a call last week where a European analyst suggested smart speaker usage faded half a year after purchase. “I said, no, in fact usage goes up,” said Russell. Google Home usage in the U.S. “dramatically expanded usage six months down the road,” he said, citing release dates of certain skills and “pent-up demand.”