The smart home era is just beginning and communications service providers (CSPs) need to be quick to seize this opportunity or see themselves outmanoeuvred
Times are changing. From 5G to the Internet of Things (IoT), connectivity is becoming less about raw speed and reliability itself and more about the new technologies and experiences that these features can unlock. In the coming years, the traditional CSP business model focussed around voice and data packages alone will not garner the same revenues it once did. If CSPs want to not only survive but flourish in the 2020s, then they will need to diversify into new markets quickly and effectively.
Entering the smart home era
One of these areas is the smart home market. Just a few years ago, smart home technology was arguably relatively novel, with each household only having a handful of connected devices. But the market has been growing enormously in recent years, with research estimating that there were around 4.2 billion digital, voice-operated devices in use by the end of 2020.
Indeed, perhaps accelerated by the home-centric experience we have all shared throughout the pandemic, demand for these devices is expected to boom even further, set to reach around 8.4 billion by 2024. The range and number of devices in each home will increase, with more exciting products hitting the market every day. In fact, smart home devices are set to become so ubiquitous that Smart Home Services pioneer, Plume®, estimates that by 2024, we will see an average of 38 devices per home in many regions.
Naturally, this is a huge emerging market. According to a study from ABI Research, the smart home sector is set to be worth $317 billion by 2026, over three-times the market’s existing value ($85 billion) in 2020.
But despite this clear increase in demand, CSPs – whose connectivity is vital to the success of the smart home market – are largely failing to capitalise on this opportunity, instead being usurped by big tech.
A growing market attracts major players
Perhaps the biggest challenge for CSPs with regards to the smart home market is how to compete with cloud giants like Amazon and Google. It is not only the scale of these companies that makes them such troublesome rivals, but their inherent flexibility; with a focus on software and the cloud, these companies can pivot in ways that the legacy hardware inherent to CSPs simply does not allow.
From streaming to social media, these hyperscalers are one of the primary threats to traditional CSPs. The smart home market, where they are already well established, will be no different.
So, in the wake of such powerful competition, how can CSPs hope to compete in the smart home space? The key lies in adapting their strategic business models, leveraging their existing position, and incorporating the latest technologies.
Maximising existing advantages and generating new ones
One advantage CSPs have is their brand recognition and the consumer trust that comes with it. Indeed, customers are likely to look first to their service providers for these solutions and services, only moving on if they are not satisfied. This gives CSPs an incredible base from which to work, if they can only do so effectively.
In Plume’s Smart Home Strategy guide, they emphasise that CSPs must ‘recognise that trust and familiarity make CSPs natural partners for customers who want to add smart services to their homes’ and this extends not only into the B2C market, but into the B2B space as well.
Much of the solution here involves maximising the use of new technologies effectively. The incorporation of machine learning and AI, for example, will allow operators to better understand their customers, giving them the potential to provide hyper-personalised solutions, tailored to their individual needs. The use of open platforms, network-agnostic devices, and easy-to-deploy technologies will remove issues of compatibility for the customer, while also offering scalability and agility for the CSP.
By leveraging their well-established position and the trust of their customers, in combination with embracing emerging technologies, CSPs are in an excellent position to launch new products and services in the smart home space.
The time is now
A strong network is, of course, the foundation of the smart home ecosystem, but this alone will not lead to the much-needed revenue boost that this market has to offer. It is only through incorporating the latest technologies in a fast and flexible way that CSPs can truly hope to deliver the digital services that will help contribute to the
The smart home era has already begun and CSPs must rethink their smart home strategy to reflect this shift before it is too late.
Want to learn more about capitalising on the smart home market effectively? Download Plume’s whitepaper ‘Building a Successful Smart Home Strategy‘ here