The Evolution of the Connected Home

The new digital universe is focused more on the individual than on the physical home.

By Michael Philpott

The connected home vision has been around for decades, and yet never has the topic been as hot as it is today. There are a myriad of different players—from software and electronics vendors to consumer retailers and Internet service providers—all trying to get a piece of the action. Why? Because the broadband-enabled, digital evolution is finally with us and growing fast. The future is multimedia communication and entertainment, accessible online, 24/7, from any location.

There used to be a saying, “own the living room, own the customer.” This is no longer applicable. Today’s consumers no longer wish to be restricted to accessing services in the living room. Instead, they wish to access their chosen services and applications from any room, as well as outside the home and while on the move. The new digital universe is therefore focused more on the individual than the household.

This evolution represents a significant revenue opportunity to a multitude of players. Software vendors can migrate from one type of device to another. Hardware vendors can include a wider range of services, features and applications. Retail outlets can expand into new managed services, and service providers can offer new services and applications to a greater number of customers.

But this move to a more personalized world, along with the merging of boundaries between devices and services, is creating a complicated and confusing environment for consumers. It also generates a lot of unknowns for the different companies involved. Opportunities, of course, rarely come without risk. To try to remove some of these unknowns, equipment vendors and service providers have been quick to publish white papers and online demos that paint their grand vision of the connected home. Such visions are a mile away, however, from where mainstream consumers are today. By moving too quickly, these companies risk either confusing the average consumer or scaring them off completely. Players therefore need to lead their customers gradually down the path to this final vision, adapting that vision along the way if for some reason the customer strays from the original path envisioned.

Ovum believes there are three big hurdles that players should be addressing today.

Interoperability Remains the Biggest Challenge

In Ovum’s opinion, interoperability is one of the major barriers that will slow the development of a true connected home vision. The online digital content market is still relatively immature, but it is growing fast. As consumers get used to obtaining and keeping their content in this format, any barriers that prevent them from using it in the ways that they wish will result in frustration, and hamper the take-up of certain services, applications and devices.

Finding solutions that break down these barriers, even if only to a limited extent, is a must for the whole industry, and will provide the early players who succeed in this area with a unique differentiation over their competitors.

Maintenance is an Issue

The maintenance of the home network will become a serious issue going forward as the number of devices connected to it, and therefore the complexity of the network, increases. When things go wrong, it is unlikely that the average consumer will be able to fix the problem without help. This could come in the form of networked home software that the consumer buys, installs and runs themselves, or it could come from a trusted third party, such as a specialized IT firm or network service provider. All three options are already available in the more advanced regions, such as North America.

The real issue for service providers is that, when things do go wrong, customers may call the service provider regardless of whether the fault has anything to do with their broadband service. This is due to perception. Today, if a customer orders a broadband service from ISP X, and attaches a Wi-Fi router to it from vendor Y, and the service stops working, the customer will most likely call the ISP first, even if the problem could be with the CPE device. The customer just sees that the service has stopped working and doesn’t have the know-how, or the inclination, to work out why. If the services and applications running over the broadband network, and the number of devices connected to it, increase significantly, then so will the number of customer service calls if the customer is not able to see where the fault is quickly and easily. It is therefore in the service provider’s own interests to help the customer accomplish this, either by providing the right tools or home management services.

There is Still No Optimum Transport Medium

There have been significant developments in home networking technologies over the past couple of years—both in the wireless and wireline camps. Wi-Fi, powerline, MoCA and UWB technologies, to name just four, are quickly developing into solutions capable of delivering not only data round the house, but time-critical and bandwidth-hungry applications such as high-definition video-on-demand. However, not one of these technologies really provides a single solution for all occasions as yet. This means service providers have to pick solutions that are right for a particular circumstance, and may need more than one solution in their portfolio to make sure different customers can get the same level of service. This adds complexity and costs, but is reality in a world where few homes come with a ready-installed, dedicated LAN.

Michael Philpott is the principal analyst at Ovum, a leading provider of research, advisory and consulting services in the global information, communication and technology sector.