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There’s Money to be Made in the Smart Home

Smart Home Blog_image[1]The race for the smart home is off and running. Almost every global tech brand, from Apple to Amazon to Google and Samsung, to smaller entrants like Canary, August and tado, want to firmly establish themselves in the home.  Why? They see the home as the next big thing to go digital. The market for smart home services and devices is big. And it’s going to get much bigger in the next 5 years. The total smart home market is estimated to be $115 billion by 2019. Service providers can address a good chunk of it – about 55-60%.

There’s definitely money to be made here. To help service providers understand their specific opportunity, we developed the Cisco Monetization and Optimization Index Model for Smart Home. Use this tool to get customized views of revenues, profitability and rate of return for various smart home services.  With the popularity of Google Nest and Dropcam, it’s evident that the smart home is no longer just the realm of millionaires or technophiles.  Strategy Analytics forecasts that 40% of U.S. households will have at least one smart home device in use by 2020.

Cisco Smart Home MOI: North America TAM

Cisco Smart Home MOI: North America TAM

The fact that the smart home is rapidly becoming mainstream doesn’t surprise me. I don’t consider myself a true gadget geek or DIYer. However, just in the last year, I personally installed a wireless home security system and several monitoring cameras. Now, It’s hard to imagine not being able to see my toddler at home with the nanny anytime using my iPhone.

Strategy Analytics recently released the results of a survey of 7000 consumers throughout North America and Western Europe, which assessed interest in smart home services as well as willingness to pay for them.   The results are unmistakable. There is large, pent up demand for residential services that provide security, peace of mind and convenience.  What was surprising to me was the size of the gap between those who currently have a smart home service and those who do not (but were willing to pay for them). For example, in Germany only 2% of respondents had professionally monitored home security. Yet, 45% who did not have the service were very interested and willing to pay up to 17 euros a month.

Consumers clearly see the value in services such as home security, energy management, and elderly monitoring. What has held back purchasing? The market is fairly price elastic, so high price levels have been a deterrent. People are willing to pay for these services, but less than what’s currently charged. Awareness was another barrier. People generally weren’t aware that these services are available. For those who were aware, they had concerns about cyber intrusion and privacy.  Now, what does this mean to service providers who have entered or are considering entering the smart home market?  Recognize that you have unique advantages and assets that can help you take a leading position in this market. Initially, your marketing influence and retail reach can overcome low awareness.

Then your experience “in the home” and customer trust come into play. Your residential customers expect you to understand and solve all of their in-home voice, video, and connectivity problems. If an IP-connected device in their home is not working, they are more likely to contact you than the device manufacturer. You have the tools and the experienced technical and support personnel to handle potential customer issues around the connected home.

Know also that customers want these services from you. The trust you’ve built over time is so important when it comes to services involving personal security. Strategy Analytics found that consumers preferred to get their home and family monitoring services from service providers than from OTTs in the ecommerce, retail, or electronic manufacturing space.

Along with this trust, are the advantages of established billing relationships and the ability to bundle discounted smart home services with rest of your offers. Smart home as the “Fifth Play” makes a lot of sense for both you and your customers.

A tangible advantage is the equipment (gateways, set top boxes) that you have placed in the home – devices that can potentially be used to deliver these new services. Consumers want easy set-up and one single control point for their smart home services. And you can provide it for them. You can help customers simplify how they buy, set up and use their smart home solutions.

Service providers are well positioned to be a leading player in the smart home market. To ignore this opportunity or give it short shrift means leaving large sums of money on the table or worse.   What’s worse? Being dis-intermediated from your customers in the home by aggressive OTT players.

For more information on Cisco MOI check us out here.

 

 

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Leading the Evolution of the Mobile Packet Core

I was reading the latest ACG Research report on Mobile IP Infrastructure and reflecting how the importance of the IP Packet Core has evolved, and how the technology leaders in this area have also evolved.

Back in the “3G era” the Packet Core sat alongside the Voice Core, and was considered an adjunct to the Radio Access Network. The traditional RAN vendors would often bundle the core as part their end-to-end contract. Since initial data services where Mobile Broadband, and monetisation was just based on volume, 3G Packet Cores were all about “feeds and speeds”.

With 4G/LTE the all-IP nature makes the Packet Core the heart of Read More »

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Point of View: Optimisation, Monetisation and Customer Privacy

PJ PhotoGuest blog from Paul Jesemann, Cisco Solution Consultant, Mobile Architecture, APJ

In June, a mobile operator in India was accused of spying on its customers by inserting a javascript in browsing sessions on its 3G network. The service provider admitted it was using a solution to help customers keep track of data usage, yet in press and blogs, concerns were expressed about it being a privacy breach, and a means to track subscriber browsing data for monetisation purposes.

Instead of unnecessarily debating the incident as such, maybe a Read More »

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Trading Mobile Dollars for IoT Pennies

Jeff Zucker of NBC Universal coined the prescient expression “Trading analogue dollars for digital pennies” in 2008 to describe the huge gap that he was observing between the lucrative promises of online and digital advertising and the reality of the meager revenues that it was in fact producing.  Could the same be true of the Internet of Things (IoT) revolution?  Are we trading the hundreds of dollars that we are generating from mobile users for the pennies that providers get for connecting “things”?

Connecting the 50 billion projected devices, or things, to the Internet is the cornerstone of the Internet of Things.  Given the challenges of remoteness, mobility and the cost of wiring up these devices, many of these connections will be made over mobile networks.  In fact, Beecham Research estimates that the number of cellular machine-to-machine connections will grow to 1 billion by 2020, up from 172 million in 2013.  It is no wonder that the mobile operators are salivating at the prospect of all this new revenue to be earned from connecting inanimate objects.  This windfall is especially at a time when there traditional mobile business is under attack.  Changes in voice usage and bundled minutes are causing voice revenues to decline and data revenues are under attack from Wi-Fi connections and over-the-top providers (see The Mobile Paradox). Read More »

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Sponsored Data is off to a Rolling Start

In a mobile application ecosystem dominated by Over-the-Top (OTT) providers, mobile operators need to exploit new business models in ways to create value with them. One example of a Monetization use case promising a new business model is Sponsored Data. An early proponent among operators has been AT&T, who defines Sponsored Data as: “a service that enables companies to sponsor the data usage for specific content on behalf of eligible AT&T wireless customers [who] can browse, stream and enjoy content … without impacting their monthly data plan allowance.”

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A year after launch, AT&T spokespersons remain upbeat about its Sponsored Data program, despite only signing up about 10 content partners. What are some of the services enabled? Liberty Mutual insurance customers, for example, can send their smartphone photos from accident claims up to the Liberty Mutual cloud, without incurring data charges from AT&T. Kingsoft gives users of its mobile office software sponsored access to file access and transfers. AT&T states that is sees great interest in Sponsored Data from a variety of developers and content owners, but that such a service based on a new business model will take time to establish itself.

Waving the Green Flag

Other operators are experimenting with the Sponsored Data business model. Customers of T-Mobile’s Music Freedom service can now stream all the music they want from the most popular streaming services without it counting against their 4G LTE data limits. Other operators offer similar sponsored Internet radio services such as Spotify and Pandora, or social media applications like Facebook. Read More »

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