The home networking/home automation segment beckons as one of the most promising of the many potentially lucrative opportunities that the industry is assessing as 2014 dawns.The attraction of home automation/home security is that it is virtually all upside and relies on infrastructure that largely is already in place. It also has a long list of follow-on services: Central station-based home security can be followed by home security that uses cameras but doesn’t connect to central station, energy management and utility control, home health applications, and others even "nichier" niche services. A good example of the creativity in this field is ambient assisted living: A home - usually occupied by seniors - is liberally outfitted with sensors. Alerts are sent if, for instance, a bathroom door doesn't report being opened by a particular time.The bottom line is that the pot of gold at the end of the development cycle is big. "The smart home opportunity is bright and shiny, and investment has been increasing," said Jonathan Collins, a principal analyst for ABI Research. "It's proven to be popular among existing subscribers. When you add another layer of services, it makes everything bit stickier and profitable."Growth is expected to be significant. ABI predicts that during the period from 2013 to 2018, shipments of home automation equipment will increase annually from 2,519,360 to 11,847,960. That represents a compound annual growth rate (CAGR) of 47.2%. The numbers represent the entire industry, though cable operators represent a good proportion of the whole.While the promise of home security/home automation has been well-accepted for a couple of years, the category has a lot of evolving to go through before the great promise is realized. A significant element of that maturation process is likely to occur this year: To date, central station-based home security was the base from which the business worked. Subscribers signed off for that service and, if they desired, added other services.The next phase is creating true a la carte offerings in which central station home security is an option, not a requirement. Such an approach has been implemented by Comcast (NASDAQ:CMCSA) in its Xfinity Home Control offerings that launched last summer, said Jim Johnson, the executive vice president and general manager of iControl, a vendor of home networking technology used by several operators.iControl offers the Touchstone platform for the more flexible service offering. "It's a different business model," Johnson said. "We built the cost-reduced product to target specific apps."Another change that is likely during 2014 is the effort to reduce, at least to some extent, the silos that could make home networking a maze through which end users will be reluctant to travel. An industry-wide program was put in place to confront the issue. The year ahead will likely see certification begin.The base standard for interoperability across network approaches is IEEE 1905.1. The certification and marketing process that was set up around it is labeled nVoy. The idea is that the devices owned by consumers that eventually will be benefit by inclusion in home network are connected by MoCA - the approach favored by cable operators - WiFi, electrical wiring (through the HomePlug Powerline Alliance), Ethernet and perhaps others.Progress was made on nVoy during 2013: National Technical Systems of Culver City, CA, was named the first interoperable lab for nVoy, and a couple of interoperability "plugfests" were held. More progress is expected during 2014, said HomePlug President Rob Ranck.Of course, home networking will be a crowded sector. Cable operators will compete against the usual telco and satellite suspects. There will be a new layer of competitors as well: Home security companies such as ADT and even retailers such as Lowe’s and Staples, Collins said. It will be a crowded field into which each industry sector brings its strengths and weaknesses.The dynamic around home networking in 2014 is compelling: niche services offered in standalone fashion and nVoy-based "coop-etition" with other companies. "The cable industry is becoming more and more focused on the segment, and more and more providers are deploying, and those that are also are investing more and marketing more and so on," Johnson said.The year ahead looks to be pivotal: The momentum is here at the start. Whether that builds to actual progress in the marketplace or fades away remains to be seen. Dan Lehman, the VP of security, monitoring and automation for Comporium, said the category is gaining traction. "Everyone has had strong interest during the last two or three years but were not ready to commit," said Leman. Comporium is a cable operator in South Carolina and wholesales iControl equipment to other operators. "In 2014, we anticipate a readiness to commit."Carl Weinschenk is the Senior Editor of Broadband Technology Report. Contact him at [email protected].
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