This article was published on January 31, 2018

Your home is already smart, and if you don’t know, now you know

Your home is already smart, and if you don’t know, now you know
Oisin Hanrahan
Story by

Oisin Hanrahan

I was recently at a conference where a speaker asked the audience: put your hand up if you have a “smart home”.

Very slowly three out of five hundred hands went up. The speaker expected this response, obviously, this was his routine. Apparently, nobody thinks they have a smart home. So, why is there so much hype? Why is Amazon pushing the Echo so hard? Why is Google pushing the Google Home so hard? Why is Samsung pushing Bixby? Why does McKinsey have a Connected Home practice?

Then the speaker asked: “hands up if you have an Amazon Echo… or a Google Home… or a Nest Cam… or a Sonos speaker, or an August Smart Lock, or a Philips Hue light bulb?” In 30 seconds four hundred of the five hundred hands in the audience were in the air.

Largely people don’t identify as buying abstract things they don’t understand.

People aren’t buying smart homes, but they are buying specific technology-driven solutions or experiences. Unless they are early adopters, people don’t buy technology for the sake of technology, they buy it to solve a problem or to have an experience. The smart products people are buying are the thin end of the wedge. But what’s at the other end of that wedge?

It helps to imagine a future state to see who has the most to lose.

Imagine a world where you’re in your kitchen making Sunday dinner and you run out of aluminum foil. You say “Housebot, order more aluminum foil”, and magically the voice-activated box in the corner of your kitchen orders whatever foil you ordered last time.

If this happens for foil, paper towels, olive oil, milk, butter, eggs and the hundreds of household products that are replacement purchases then a very large shift in power will have occurred. Retailers will have lost, Google will have lost, Amazon will have lost, and whoever controls the voice-activated search box will have won.

The search bar will have become the voice-activated bot in the corner of your room, the “buy button” will be your voice, and the shopping aisle for all replenishment items will be your kitchen. This is scary for retailers and the dominant player in search today — Google.

The race is on to do everything possible to win the battle of the voice-activated bots. The race is on to get you to put a Google Home or an Amazon Echo in your home.

For consumable retailers and search giants, the goal is not to make money from selling you smart home products as an end result in itself, but to own the voice-activated box in the corner of your home. One of the ways to do that is to show you the value of all the things you can connect to it — locks, speakers, cameras etc.

That’s why Google and Amazon are not just pushing the Echo or the Google Home, but instead, they are using the practical use case of lights, speakers, and locks to encourage you into the smart home ecosystem. They are the thin end of the wedge.

It’s still unclear if market share of the voice-activated box will follow the same market share dynamics as the search bar — where Google today has 90%+ of the search market. What is clear is that Amazon is leading the charge today with Echo having more market share than Google Home, Samsung’s Bixby, or Microsoft’s Cortana, and Apple has yet to release a smart hub product.

For hardware retailers like Home Depot and Lowe’s, there is a different game at play.

Unlike Google who makes money from monetizing intention and search, or supermarkets who primarily make money from selling consumable goods, Home Depot and Lowe’s make money from selling hardware and hard goods. As homes get smarter they get more complicated to manage.

It’s relatively easy for most customers to buy one smart home product, e.g. a Sonos speaker and install it. However, people aren’t going to stop there.

People are going to add more and more smart home products and then expect them to interact in a consistent way. After the smart speaker, people will buy smart lights, thermostats, cameras, locks and more. It gets complicated fast when you’ve got dozens of wifi devices connected to your router.

Some of the biggest categories for hardware retailers are roofing, flooring, HVAC, kitchen, and bathroom. As homes get smarter retailers selling these categories will experience disruption.

Roofing, flooring, kitchen, and bathroom installs will increasingly need smart temperature and humidity management systems, security system integration and more. If home improvement retailers get left behind in the push to smart home then their core business of roofing, flooring, kitchen, and bathroom will be destroyed as they lose the competency to sell the customer the home products they need.

The more the search companies and supermarket retailers compete to accelerate smart home adoption the faster Home Depot and Lowes need to run to keep up or someone else will emerge to serve their customers with smart home improvement solutions.

Some of the big questions that remain unanswered include, how will the voice control markets breakdown between Google, Amazon, and others? How will Apple enter the ecosystem? And what are the limitations on what products will be ordered by talking to the box in your kitchen?

Irrespective of these big questions, “smart home” as a term may not be working for consumers, but the individual products are selling rapidly and for supermarkets, retailers and search companies the stakes are huge.

Smart home has the potential to destroy the search bar.

It’s an exciting time to be in retail.

This story is republished from Hacker Noon: how hackers start their afternoons. Like them on Facebook here and follow them down here:

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