Smart home an $11.2 billion opportunity by 2022

Aug. 6, 2018
According to ABI Research, smart home opportunities are expected to reach $11.2 billion by 2022. ABI believes that communication service ...

According to ABI Research, smart home opportunities are expected to reach $11.2 billion by 2022. ABI believes that communication service providers (CSPs) such as AT&T, Comcast, Orange, and Verizon must accelerate what the research house calls "UnTelco" strategies - activities they should pursue beyond their traditional offerings to foster revenue growth - in smart home.

"CSPs are being threatened in a market increasingly driven by the likes of Google and Amazon with a range of products and services from AI-powered smart home voice control smart speakers to security solutions," said Pablo Tomasi senior analyst at ABI. "But things are changing, and CSPs are accelerating their strategies for the smart home. Telefonica with Aura, Orange with Djingo, and SK Telecom with Nugu lead the way of CSPs' developing AI assistants to support their smart home play. Now is the time for CSPs to be more aggressive in tying the usage of their AI assistants to their other connected and smart home offerings."

To win the smart home, CSPs must take a platform approach, ABI believes, as done by Deutsche Telekom or Comcast, two of the leading CSPs in the space. A platform strategy must be supported by the creation of a wide partner ecosystem and must be underpinned by an innovative monetization approach favoring freemium services over traditional bundles. CSPs have assets all around the connected home from providing connectivity, creating content and delivering video, to specific applications such as monitored security; as such, they have a wider reach than any other competitor. CSPs should use this mix of essential (e.g., broadband connectivity) and value-added services (e.g., monitored security) to tailor a strategy fine-tuned to customers' needs and regional dynamics.

"CSPs should not impose their legacy fixed-line business model to the smart home," Tomasi said. "The smart home is core to the CSPs' future, and it is a real test to assess how far CSPs have developed their business beyond their telco heritage and how they can adapt their bundling business to market condition, experiment with innovation, and compete head-to-head with webscale players."

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