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IoT Consumer Research Report

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Consumer insights report commissioned by the Internet of Things Consortium. IDC fielded this study in November 2014.

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IoT Consumer Research Report

  1. 1. The Internet of Things Consortium (IoTC) Research Presentation JANUARY 2015
  2. 2. Table of Contents  Research Background & Methodology  What does “Smart Home” mean?  Dimensionalizing the Smart Home Market & Opportunity  Identifying the Market Barriers  Defining the Core Target Market for Smart Homes  Understanding How Consumers Research & Purchase Smart Home Products  Future Smart Home Opportunities  Summary  Appendix 2
  3. 3. Research Background & Methodology  1,005 U.S. consumers, aged 18 and older, were surveyed about their attitudes towards Smart Home product purchases  Survey fielded in November 2014  Research conducted by International Data Corporation  Study commissioned by the Internet of Things Consortium (IoTC) Sponsoring Members: 3
  4. 4. What does “Smart Home” mean?  The terms “Smart Home” and “Automated Home” or “Internet of Things” are often used interchangeably, though there may not be universal agreement to the meanings nor differences of the various terms  For this research study, Smart Home is defined in the consumer survey as follows: 4 Smart home solutions refers to being able to control home settings and security through electronic devices such as smartphones, tablets, and PCs. “ ”
  5. 5. Dimensionalizing the Smart Home Market & Opportunity 5
  6. 6. The interest in Smart Home solutions is wide and far-reaching 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 1 2 3 4 5 6 7 8 9 10 Interest in Adopting Smart Home Solutions  65% of those surveyed are moderately or extremely interested in Smart Home Solutions  Projected to the US 18+ population, that equates to a potential market size of roughly 157 million Americans* Not at all interested Extremely interested *Based on 2013 US Census figuresQ1. What is your level of interest in adopting smart home solutions? Smart home solutions refers to being able to control home settings and security through electronic devices such as smartphones, tablets, and PCs. (Scale of 1-10) 6
  7. 7. This interest is driven by energy efficiency and home security 64% 60% 48% 41% Improving Energy Efficiency Improving Home Security Creating Convenience Improving Well- Being Appeal of Smart Home Benefits (Top 3 Box: ≥8)  Improving energy efficiency as well as improving home security are the two most appealing benefits to consumers  The promise of better energy efficiency and home security is what fuels the most interest in Smart Home solutions Q2. How appealing are the following benefits of a smart home in your mind? (Scale of 1-10) 7
  8. 8. Current Smart Home device ownership remains fairly low Smart Home Device % who own Home security system 19% Set top box for your TV 18% Smart thermostat 12% Smart light bulb 9% Wearable fitness device 8% Smart watch 7% Smart washer/dryer 7% Internet connected security camera 7% Smart refrigerator 6% Smart power outlet 5% Smart locks 5% Smart sprinklers 4% Connected health monitor 4% Google Glass 3%  Outside of core computing devices (PC, phone, tablet) and connected TVs, Smart Home device ownership is still in the early adoption stages with the most popular ones being home security systems (19%) and smart thermostats (12%)  There is tremendous opportunity for the Smart Home solutions industry to broaden consumer adoption Excludes PC, Tablet, Smartphone, Smart/Connected TV 8
  9. 9. Early Smart Home adopters are finding high utility 90% 89% 79% 73% 69% 68% 66% 63% 62% 61% 60% 60% 57% 56% 52% 50% 43% 41% % WHO USE AT LEAST DAILY  With but a couple of exceptions, all the devices listed were being used by the majority of their owners at least once a day  Data suggests that theses devices have, for the most part, replaced their “dumb” counterparts in the home  The high frequency of Smart Home device usage by their early adopters implies the products are more than mere fads and can have sustained longevity 9
  10. 10. Identifying the Market Barriers 10
  11. 11. Concerns around data privacy, cost, and hacking are most prevalent 55% 51% 51% 39% 32% 29% 29% Data Privacy Hacking Cost Brand Unfamiliarity Setup Difficulty Too Complicated Where to Purchase Concerns Related to Smart Homes (Top 3 Box: ≥8)  Easing consumers’ fears around data privacy, hacking and cost are the most significant hurdles the market has to overcome to broaden its appeal to more Americans Q3. How concerned are you about each of the following as related to smart homes? (Scale of 1-10) 11
  12. 12. Privacy concerns are intertwined with concerns around hacking and security 66% 64% 64% 64% 61% 60% 54% 52% Not knowing who has data access Hacking financial accounts Invasion of privacy Using data to break into home Using data illegally Knowing where data is stored "Big Brother" Using data for marketing Data Privacy Concerns (Top 3 Box: ≥8)  Digging deeper into Data Privacy (cited as #1 concern) reveals a mix of privacy and cyber security fears  All of the concerns surveyed scored >50% (more than half of consumers were very or extremely concerned), indicating that privacy and security worries pose considerable challenges for the Smart Home industry Q11. How concerned are you about each of the following ways your user habits (the data) may be known and shared? (Scale of 1-10) 12
  13. 13. But some are more willing to forego privacy concerns for product benefits 17% 32% 18% 18 - 24 25 - 44 45+ AGE  Amongst those who list privacy as their top concern, 25-44 year olds, males, households with kids, and those familiar with IoT are more likely to be willing to sacrifice such concerns for certain product benefits  These traits line up well with those of our core target audience 30% 13% MALE FEMALE GENDER 34% 15% WITH KIDS WITHOUT KIDS CHILDREN IN HH 11% 23% 65% 100% N O D ON 'T K N OW M E AN I N G K N OW A LI T T LE K N OW M E AN I N G IOT FAMILIARITY Q3a. You indicated that concern that your private data may be shared with or without your knowledge is your biggest concern (from the above list) that is preventing you from adopting a smart home device, are there any particular situations that are more important to you than your privacy concerns? (Yes respondents) Those willing to forego privacy concerns by segment 13
  14. 14. And younger consumers are less sensitive to cost benefits75% 72% 63% 63% 72% 69% 68% 65% 81% 80% 74% 70% 85% 84% 79% 79%GOOD VALUE FOR PRICE NO MONTHLY FEES LOWERS HOME MAINTENANCE COSTS LOWERS HOME INSURANCE COSTS IMPORTANCE OF COST-RELATED PRODUCT ATTRIBUTES BY AGE (TOP 3 BOX: ≥8) 18-24 25-44 45-64 65+  Though concerns around cost rank high for all age groups, younger consumers attach lesser importance to cost-related product benefits  Younger consumers think less about cost when considering Smart Home product attributes and may be willing to spend more to receive desired benefits Q5. How important are each of the following attributes that you would want in a smart home device? (Scale of 1-10) 14
  15. 15. Defining the Core Target Market for Smart Homes 15
  16. 16. The Core Target is younger, male, affluent, with children and urban 53% 49% 31% 19% 18 - 24 25 - 44 45 - 64 65+ Age  The demographic traits which exhibit the greatest interest and potential for Smart Home solutions and technology are:  Younger age segments (18- 44)  Male  Higher HHI ($100K+)  With children in the HH  Living in an urban area 44% 33% Male Female Gender 55% 30% With Kids Without Kids Children in HH High Level of Interest in Smart Home by Demographic (Top 3 Box: ≥8) 32% 39% 56% <$49,999 $50K - $99,999 $100K+ Household Income 49% 37% 29% Urban Suburban Rurual Residential Area Q1. What is your level of interest in adopting smart home solutions? Smart home solutions refers to being able to control home settings and security through electronic devices such as smartphones, tablets, and PCs. (Scale of 1-10) 16
  17. 17. These demographic traits reappear throughout study results  The same set of demographic segments universally and consistently demonstrate greater interest in Smart Home technology throughout study results, including when looking at:  Ownership of Smart Home devices (with exception of the PC)  Familiarity with IoT  Those currently engaged in or are interested in home network activities  Interest in “What If” future scenarios for Smart Homes (except for gender) 17
  18. 18. Understanding How Consumers Research & Purchase Smart Home Products 18
  19. 19. Word of Mouth is the most important info source for researching purchases 54% 43% 27% 27% 15% 13% 11% 11% 6% 5% 0% 10% 20% 30% 40% 50% 60% Information sources for Smart Home & device shoppers  Word of mouth endorsements are the most cited source of information when researching for Smart Home and device purchases  For those familiar with IoT, word of mouth is significantly less important as they may be the ones providing such shopping advice to others  Retail store employees rank as the second most important source of information, underscoring importance for device manufacturers of educating retail sales associates  Though TV is where much of larger ad budgets go, online ads rank equally with TV as an info source Smart Home shoppers rely on. Q7. When you are purchasing items such as smartphones, home automation systems, security systems, tablet, computers, etc. where do you get information to help you with your purchase decisions? Select all that apply. 19
  20. 20. E-commerce is on par with physical retail for sales of Smart Home devices  Online sales and retail store sales are at parity as top sales channel for Smart Home devices  For the core computing devices with highest ownership, PCs, smartphones and tablets, retail sales remains top channel  For the less ubiquitous devices in this category, their products may not benefit from wide distribution with physical retailers so online sales channels are vital 0% 10% 20% 30% 40% 50% 60% 70% 80% Purchase channel by device Retail Store Online Other Q6b. You indicated you own the following devices. Where did you purchase each of these devices? 20
  21. 21. Smart home shoppers have a slight preference for DIY solutions 33% 38% 29% “Smart Home in a Box” vs. DIY Single package solution Individual components and customize my own Not sure  38% of consumers would prefer to build their own DIY Smart Home setup vs. 33% who would prefer a packaged “Smart Home in a Box” solution  Those who prefer to customize their own Smart Home are likely to be:  Younger (18-44)  More familiar with IoT (have heard of it and know at least a little about it)  Urban and Rural (vs. Suburban) Q10. If it were available, would you prefer to purchase a “smart home in a box” solution – that is a solution that contained home remote controllers, devices, etc that came as a package solution or would you rather purchase individual components (such as smart lights, smart TV, smart locks, smart appliances, smart sprinklers, etc.) separately and build out a more personalized system? 21
  22. 22. Future Smart Home Opportunities 22
  23. 23. Imagining the near future of Smart Homes guides product development Receive recommendations on ways to reduce costs / drive efficiency based on personal smart home data 44% Transfer shows / content that you are viewing to another device without disruption in viewing 37% Control home appliances via voice 37% Receive incentives to pay less for home services by watching advertisements on connected home devices 37% Access virtual healthcare services and recommendations based on personal data recorded from devices 35% Television shows or video games that you watch/play in-home would become full entertainment experiences 34% Traditional appliances would be activated by information that entertainment/media/news companies provide 33% Receive information and discounts on sporting events from sports viewing behavior at home 28% Change home preferences/device settings based on information from your social networks 28% Purchase items from unique connected devices 27%  Survey respondents were asked to consider various scenarios for what Smart Home technology can offer 1 or 2 years from now  The scenarios that emerged as the most interesting and/or useful reflect ongoing trends in technology and media, but also provide an insightful glimpse into opportunities for smart home product development in the near future  Highlighted in following slides are the Top 4 scenarios Q20. 1 to 2 years from now, connected home devices may soon allow you to experience situations that aren’t currently possible today. How interesting/useful would the following scenarios be to you if they were options you could choose? (Scale of 1-10) Most interesting/useful potential Smart Home scenarios (Top 3 Box: ≥8) 23
  24. 24. Reducing costs based on personal smart home data (Ranked 1st)  Reinforcing data previously seen, for many Americans the promise of home automation now and in the immediate future is about utilizing technology to attain efficiencies and cost savings  With heating/cooling and lighting making up largest sources of energy consumption for US households, early solutions have focused in these areas 24 Current Examples Perhaps the most popular example of this, the Nest Learning Thermostat automatically adjusts your home temperatures based on personal preferences it remembers over time, while also saving on heating and cooling costs when away from home. Similar cost-saving applications include smart lighting systems that turn on/off based on usage history, motion detectors, or programmed settings. Some Smart Homes have installed power meters that track and analyze energy usage of different appliances and equipment to recommend savings opportunities. U.S. Residential Electricity Consumption Heating & cooling Lighting Refrigeration TV & related Laundry equipment Computers & related Cooking Other  Future smart home products may focus on conserving energy costs around other household needs such as refrigeration, TV viewing, and laundry Source: US Energy Information Administration, Estimated U.S. Residential Electricity Consumption by End Use, 2012
  25. 25. Transferring shows from one screen to another while viewing (Tied – 2nd)  With the proliferation of screens in the household, TV and video viewing is no longer confined to the living room 25 Current Examples Pay TV providers such as Comcast, Verizon, and DIRECTV offer multi-room viewing where you can start a program on one TV and finish viewing on another via their DVRs Google’s Chromecast and Apple’s AirPlay allow users to transfer video viewing from a smartphone or tablet to their TV  Future opportunities would be to broaden such technology beyond TVs and core computing devices and into emerging smart home device categories with screens (i.e. refrigerators and other appliances)
  26. 26. Controlling home appliances via voice (Tied – 2nd)  The increasing popularity of Siri and Google Now have brought voice command technology into the mainstream 26 Current Examples Amazon’s new Echo product, a voice-activated intelligent speaker, is a bold first step towards taking voice control and assistance technology beyond personal devices like a smartphone or smart watch and into the living room or household level setting. Controlled only by voice, the Echo not only plays music but will answer basic queries, give you the weather, news, and more  Incorporating voice control into the Smart Home for simple commands and functionality will likely be what many device makers will pursue independently  For those seeking to turn the Smart Home into more capable and intelligent voice assistants, it may require complex integration with popular OS providers like Apple (Siri), Android (Google Now) or Microsoft (Cortana)
  27. 27. Receiving incentives to pay less by viewing ads on devices (Tied – 2nd)  There is a surprisingly high tolerance for ads and marketing if it reduces Smart Home costs  Current ad opportunities, beyond core computing devices and TVs, are minimal on Smart Home devices  Likely limited by the lack of screen real estate with many of these devices 27  The larger opportunity may rest in the mining of Smart Home usage data and patterns to build consumer profiles and power more targeted ads and marketing efforts  Smart home device makers will need to carefully weigh such ad revenue opportunities with data privacy concerns Food or supermarket brands looking to make recipe and product suggestions based on the contents of your smart refrigerator Detergent brands interested in targeting ads to households that are more frequent users of their smart washers and dryers Potential Smart Home Ad Targeting Scenarios
  28. 28. In the near future, the Smartphone will be the new Universal Remote  There is strong evidence that the smartphone is the central device for controlling Smart Home technology:  57% would be very or extremely interested in using a phone to control their automated home (ranked 1st out of 6 devices)  23% of people would consider a total Smart Home solution only if they could control it with their smartphone  Using a smartphone to control other Smart Home devices ranked 2nd (tied, out of 11) for the most common or most desired home network activities  48% of people find the Smart Home benefit of managing things with a smartphone very or extremely appealing (ranked 3rd out of 6 benefits)  45% of people would find smart locks to be helpful if they could manage access via a smartphone 28
  29. 29. Summary & Conclusions 29
  30. 30. Smart Home products are poised to take off but not without some obstacles  Smart Home products are still in early adoption stages but early adopters are finding heavy use for such products. With a potential market of 157 million Americans, the future shines bright for the industry  The interest in Smart Home is driven by benefits of improved energy efficiency/cost savings and home security, but there are strong concerns around privacy, hacking, and cost  Costs may come down and improve over time with technology, but stronger cyber security precautions and greater privacy controls are crucial to growth of the industry  Smart Home device makers should start with word-of-mouth marketing to the core target of males 18- 44, HHI $100K+, children in HH, and urban  Online sales and physical store sales channels deserve equal focus  Driving energy efficiency, transferring TV/video content across screens, voice command technology, and incentivized advertising are four strong potential areas for future Smart Home development  Device makers need to design with smartphone compatibility and control in mind 30
  31. 31. Greg Kahn greg@gkdigitalmedia.com @GKmediaBUZZ

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