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Flash Insight: Smart-Home-Giganten: Der Kampf von Apple, Google, Amazon & Co um das kundenorientierte Smart-Home-Ökosystem


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MS&C analysiert die Auswirkungen des Markteintritts der IT-Giganten in den Smart-Home-Markt und erwartet Bedrohungen und Chancen für die vorhandenen Marktteilnehmer.

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Flash Insight: Smart-Home-Giganten: Der Kampf von Apple, Google, Amazon & Co um das kundenorientierte Smart-Home-Ökosystem

  1. 1. Shaping the Digital Future Attack of the Future Smart Home Giants The fight of Apple, Google, Amazon, and others for the most customer centric ecosystem October 2015 FLASH INSIGHT
  2. 2. 2 Copyright This document is intended for personal use only. Distribution is only permitted without any changes or omissions – publication, in whole or in parts, requires prior written consent by MÜCKE, STURM & COMPANY and correct citation of sources. All mentioned company names, logos, brands, brand symbols and other copyrighted material are the sole properties of the respective company; they are only used for illustrative purposes.
  3. 3. 3 The Smart Home giants strengthen their core businesses by enhancing their dominant ecosystems with smart home functionalities. Key Take-Aways 1 Smart Home as value driver for core business model The future Smart Home giants are gradually entering the market because they see touchpoints to their specific and the adjacent markets. At the moment the smart home market is dominated by hardware sales, which lay the foundation for the data driven business models of the “giants”. Therefore, their smart home activities are not set up as independent business models and do not aim for direct monetarization yet. They rather apply a freemium entry, cost plus or even loss leadership cross- funded strategy to gear up towards their core business model. 2 Platform infrastructure secures ecosystem dominance By providing of smart home platforms, which are free to use for the end-user, and by leveraging their huge customer base, the Smart Home giants are in a position to establish a great level of control over the smart home and ultimately the IoT market. Thus, they can to a higher degree influence innovation developments, leverage their dominant position to determine hardware specifications, and establish de facto industry standards. 3 Create value alongside Smart Home Giants Existing platform business models are increasingly becoming redundant as new platforms and market entries by future Smart Home giants are offering free access which comes with free M2M connectivity to consumers. Hence, traditional platform providers, device manufacturers, and service providers need to position themselves not as competitors to the Giants but must align their strategies with them by creating additional local services based value leveraging their existing assets alongside or by specializing in dedicated niches. Source: Mücke, Sturm & Company
  4. 4. 4 In the last two years, the Smart Home Giants have intensified their smart home activities to enter the market through hardware, software, and services. Smart Home Activities (Selection) Sales1 US$ 182,8 bn ~US$ 66 Mrd.US$ 66 bn US$ 305 bn US$ 86,83 bn US$ 12,3 bn Customers Smart Home Activities > 600 m > 500 m~ 244 m (undisclosed) >1,5 bn >300 m HomeKit (2015) HomeKit is a framework for communicating with and controlling connected smart home devices in a user’s home. It is not necessary to use a gateway for remote access. Apple does not manufacture own smart home devices; instead it licenses third-party devices. Strong focus on voice commands via Siri. Nest (2012) The “works with Nest” program includes a variety of products that can be connected to the self-learning Nest thermostat and Nest Protect, an intelligent smoke detector. Project Brillo (2015) Android based operating system to be used with IoT devices and communication semantic. OnHub (2015) Router with smart home gateway functionality. Echo (2015) Voice command device (Alexa) with functions including question answering, playing music, and order selected consumer goods from Amazon. Moreover it functions as a smart home hub with the function of controlling your smart devices via voice command. Dash (2015) Consumer goods ordering service designed to make ordering products easier and faster. Samsung Smart- Home (2014) Enables users to control and manage their personal and home devices through an integrated platform and server. SmartThings (2014) Offers an open platform for smart homes powered by a hub. Customers can add a variety of products form different manufacturers. AllJoyn for Windows 10 (2015) Open source software project that aims to enable interoperability among connected devices. AllJoyn is implemented in Windows 10. Integration enables controlling via voice command on every Windows device. Partnership Insteon (2015) Full incorporation into Windows ecosystem; enhanced version of the Insteon app with exclusive features for Windows devices. Expansion of business division Alibaba, the Chinese retail giant, is establishing a smart living division. The company started to enter the market by publishing a Smart- Home app and is rapidly increasing its efforts in this area. Functionalities offered by international competitors e.g. cloud service, payment, etc. are already in place. US$ 88,9 bn 1 Sales revenues from 2014 2 Wildcard since essential functionalities for a Smart Home product are in place Source: Mücke, Sturm & Company
  5. 5. 5 Smart Home Giants identified smart home touchpoints to their core businesses and take a market entry approach with their own business model agenda in mind. Touchpoints & Strategic Reasoning Hardware E-commerce Software & Data-based services Secure price-premium strategy for hardware  Expand ecosystem  Position iPhone as a central control unit  Increase lock-in effects Increase sales through synergy effects  Create purchase incentives by connecting own product portfolio across different segments  Improve overall value proposition of brand Establish new distribution channels  Strengthen all sales activities  Increase dynamics of sales cycles  Expand ecosystem Diversify portfolio and protect home market  Secure dominant domestic market position  Extend current portfolio offering  Use core competencies to generate economies of scale in the Asian SH market Increase product reach  Provide cross-system software  Secure market position  Expand ecosystem  Develop new partnerships Improve personal data collection  Implement Android as central OS for IoT devices  Improve quality of collected consumer data  Establish new affiliated programs Source: Mücke, Sturm & Company
  6. 6. 6 Through the provision of HomeKit to all iOS9 enabled devices Apple increases its ecosystem attractiveness and secures its hardware price premium strategy. Detailed Analysis: Apple HomeKit1 How it Works Common Database Siri Manual command Sensors: Apple Watch Time Trigger Processing Action (Extract) Smart-Plug WeMo by Belkin Local control Remote control Hardware Sale iPhone, iPad, PCs  Position iDevices as access point to smart home  Expansion of the iOS operating system to create lock-in effect  Increase of market reach by enabling smart home readiness  Strengthen the customers’ relationship with the brand Smart light bulb hue by Phillips 22° Core Business Model Smart Home Potential 2015 2016 2017 2018 2019 2020 Smart-Home- Ready2 HomeKit- User Development of “Smart Home Readiness” and HomeKit Usage Households in Germany; in million; EoY view 1 MS&C FlashInsight: HomeKit – Der disruptive Smart-Home-Ansatz 2 Households that have iOS9-Devices and could therefore use HomeKit Source: Mücke, Sturm & Company 14,4 35% 7,4 18% 13,9 34% 13,9 33%12,7 31% 9,7 26% 6,9 17% 5,3 13% 2,9 7%2,5 6% 0,8 2% 0,4 1% Smart heating control by ecobee
  7. 7. 7  Offer unprofitable hardware to open a new sales channel within the home and strengthen the e- commerce business  Cross-link services like Amazon Prime Music, Video, and Fresh to boost customer usage  Gain of customer insights Amazon strategically positions a central smart device in the customer’s home to enable a quick access point to its core e-commerce services. Detailed Analysis: Amazon Echo1 How it Works Trigger Processing Action (Extract) Local control Lightning control with Wink SH-Hub 2011 2012 2013e 2014e 2015e 1 2 0 -1 Profit & Loss In bn USD Content: Apps, Movies, Music, e-Books Advertisement Devices (Kindle Fire, Kindle e-reader) 1 MS&C FlashInsight: Amazon goes Smart Home Source: Mücke, Sturm & Company Alexa Smart-Plug WeMo by Belkin Smart light bulb hue by Phillips E-commerce & Services Prime, Fresh, etc. Core Business Model Smart Home Potential
  8. 8. 8 The dedicated positioning of the Smart Home Giants along the infrastructure segments of the value chain illustrates its perceived importance to gain dominance. Smart Home Value Chain SH-Software (Semantics) Interaction Instance Smart Home Devices Hub/ Gateway Functionality Cloud (Backend) Connected Services Advantage for SH-Giants Establishment of the first access point for end- consumers in order to strengthen the brand Increased network effects of connected households and individuals to boost core business Full control over the certification process for all devices and services within the ecosystem Traditional Platform Providers Traditional smart home platform providers have positioned themselves along the same value chain segments as the smart home giants. Therefore, they will increasingly face direct competition and will be forced to match a similar offering portfolio to customers as their expectations rise. Moreover, chargeable functions currently pursued by those traditional players are at risk as most of them are being offered for free by the giants Device Manufacturers Service Providers Providers of smart home devices can currently choose from a wide variety of platforms. However, not all platforms will align and support their business model Providers of smart home services have to thoroughly evaluate the reach of smart devices in order to address a wide range of end customers Source: Mücke, Sturm & Company Smart Home Giants Selective approach In progress
  9. 9. 9 The go-to-market strategy of the Smart Home Giants will have a fundamental impact on the whole industry and significant implications on each player. Implications Implications on specific group Recommen- dation for action Through the entry of the giants into the Smart Home market traditional platform providers face an unsustainable revenue model through changed customer expectations regarding free vs. chargeable Smart Home functionalities Re-evaluate current business and revenue model Define and evaluate future positioning to secure USP against Smart Home Giants Explore niche market positions (e.g. energy, health, security) in order to create best-in-class position Traditional platform providers Although certification programs might limit the development freedom or lead to reduced direct brand identification, device manufactures gain important potential through outsourced back- end functionalities, standardized integration processes and increased customer reach Device Manufacturers Service Providers Through a huge existing customer base and access to a wide range of connected devices, platforms and their ecosystems offer new opportunities to increase customer reach and improve the current offering portfolio of service providers Use platforms of Smart Home Giants to secure customer base Provide devices for all important and relevant platforms Offer additional digital services to end customers, using the platform as vehicle Join platforms that support the digital strategy Evaluate the accessibility of connected device functionalities for each platform Develop services that make use of the market-reach of SH- Giants Source: Mücke, Sturm & Company
  10. 10. 10 Contact Munich headquarter Theresienhoehe 12 80339 Munich T +49 89 461399 0 F +49 89 461399 777 Darmstadt Mina-Rees-Straße 5a 64295 Darmstadt T +49 6151 800 400 0 F +49 6151 800 400 777 Cologne Kaiser-Wilhelm-Ring 26 50672 Cologne T +49 221 995878 0 F +49 221 995878 777Darmstadt Cologne Munich Michael Mücke Managing Partner