If this then that - Disrupting Smart Home?


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If this then that - Disrupting Smart Home?

  1. 1. IFTTT If This Then That: Disrupting Smart Home? June 2013 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 IFTTT enables its customers to easily connect digital services as well as internet compatible devices using a simple “if this then that” logic. Introduction IFTTT IF THIS “Someone tagged you on a photo on Facebook.” THEN THAT Upload this photo to my DropBox. Functional Principle 1) As of June 25, 2013 Source: MS&C Analysis 12/2011 04/2012 3.77 06/2013 0.43 +771% 1.00 10 Social Networking Services 6 Bookmarking Service 5 Cloud Storage Service 5 Smart Home Devices 4 Internet Information Provider 3 Shopping Services 10 Content Sharing Services 7 Communication Services 8 Other Services 7 Blogging & News Examples# Category Number of Recipes (in mio.) Channels1
  4. 4. 4 While IFTTT already adds three new categories of triggers for Smart Home systems, future applications could fundamentally change Smart Home use cases. Smart Home Use Cases Device-to-Device Data Transfer IF THEN Hotel Check-In Max Muster checked in at the Plaza, suite 301. Prepare a Cozy Room Transfer Max‘s nest settings to the hotel suite‘s thermostat. Complex Logics and Comprehensive Data IF THEN Jim checked in at your party. Jim is on your guest list. Unlock the front door. Play Jim‘s favorite Spotify songs. Source: MS&C Analysis Current Possibilities Future Application New Remote Control Elements IF THEN “Siri, text WeMo to open the garage door.“ WeMo Switch opens garage door. Connection of Two Devices IF THEN Opening a door is detected by the motion sensor. Hue is switched on. Integration of External Services IF THEN Internet time says it‘s time to wake up. WeMo Switch turns the radio on.
  5. 5. 5 IFTTT shows typical characteristics of a new – probably even big bang – disruptive technology. Disruptive Technology and Characteristics Is IFTTT a Disruptive Technology?  Nearly 4 million generated recipes and three-digit growth rates since the official launch in September 2011  Potentially large customer base through participation of big players like Facebook or Twitter Unchecked Growth  Undisciplined Strategy  Competition in each of the three strategic disciplines:  Cost leadership: free service  Product leadership: constant improvement of IFTTT, e.g. look, language, channels and triggers  Customer focus: involvement of customers by integrating personal communication channels e.g. email, sms and voice Unimpeded Development   Arose out of the personal experiment to shape an environment that better fits the needs of today’s digital world, i.e. connect digitals tools to let the internet work for you  Made ready for the market by some beta tester, an event-driven programming for the masses has been established Innovators Early Adopters Early Majority Late Majority Laggards Big Bang Disruption1 Big Bang Disruption Traditional Innovation Source: MS&C Analysis 1 Downes, L and Nunes, P. F. (2013). Big Bang Disruption. In HBM (6/2013).  Disruptive technologies are superior to already existing technologies and can thus completely change a whole market  They are often underestimated by competitors, because they start in a low-value customer segment, slowly working their way up to high-value segments  Big Bang disruptions are innovations establishing very quickly on the market, almost excluding the possibility to react
  6. 6. 6 The new opportunities provided by IFTTT pave the way for new ecosystems in the Smart Home market, disrupting today’s physical platform pattern. Change of the Smart Home Ecosystems Without IFTTT With IFTTT  Provide deep functionalities on a single field of application, e.g. “lighting”.  Usually provide better solutions on this single field than platform solutions can.  Hardly interact with other smart home solutions, thus preventing a comprehensive smart home user experience.  Provide broad functionalities on several fields of application.  Usually cannot keep up with specialized solutions in terms of usability but provide comprehensive functionalities.  Create a lock-in through interdependent non-exchangeable components.  Lag in terms of costs and functionality, flexibility and user experience.  Long extension process  Lock-in is undermined if the platform participates in IFTTT.  Platform might lose base if not participating in IFTTT.  IFTTT immediately connects formerly independent solutions and their functionalities.  This ecosystem provides almost unlimited smart home use cases, growing with each new participating system.  All components of a smart home system become exchangeable. Specialized SolutionsPlatforms Source: MS&C Analysis
  7. 7. 7 While IFTTT is still quite limited in its functionality, it is remarkably easy to use, making it attractive to a broad and increasing customer base. SWOT Analysis Strengths Weaknesses ThreatsOpportunities  Simple and fast connection of two different solutions  Increased number of use cases through new triggers and possibility of sharing recipes  Enhancement of isolated and specialized solutions by combining best-in-class smart home products  No need for physical gateway, recipes can be designed and used from everywhere in the cloud  Cross selling of now complementary smart home products  Connection of channels limited to two services or devices  Each channel can only be configured once  No awareness of conflicting rules  Dependency on internet connectivity  All information and user data collected through IFTTT (privacy issues)  Increasing customer base for specialized solution providers by addressing especially younger people with high internet affinity.  Increasing customer base by opening the digital platform to countless internet services and devices  Opening up of new market segments through combining different specialized functionalities as well as internet services  Limitation of IFTTT’s efficiency and functionalities through new legislation regarding data security  Security concerns of consumers and manufacturers  Risk of unauthorized access to connected devices  Crowding out of current Smart Home providers through the entry of “new to the industry” players Source: MS&C Analysis
  8. 8. 8 Whereas specialized solution providers can mainly benefit from IFTTT, platform providers should prepare for new competitors. Recommendations • Establishment of an own community to enable customers to share scenarios and rules (swarm) • Simplification of user interface and applications • Involvement of other (foreign) components so that customers feel more free in combining different providers • Implementation of own cloud solution specialized to the needs of specific smart home solution Platform Providers Creation of unique selling points to fight off competitors 1 2 3 4 • Establish open interface to IFTTT • Encourage development of suitable recipes • Active management of recipe community • Monitoring of interconnections created by recipes and active partner management to systems that are thus connected Specialized Solution Providers Active use of IFTTT (partnerships, recipe ecosystem) focussing on being best in class 1 2 3 4 Source: MS&C Analysis
  9. 9. 9 IFTTT has the potential to disrupt the Smart Home market. Conclusion IFTTT can …  open new opportunities especially for providers of excellent specialized solutions  potentially threaten existing platforms by taking away their central USP: a physical platform that allows interoperation of devices from different manufacturers What IFTTT Will Change – and Why Source: MS&C Analysis We are constantly analyzing industry trends and developments in the sector of technology, media and telecommunications. If you would like to discuss the impact of IFTTT on your business, please get in touch with: Michael Mücke Managing Partner m.muecke@muecke-sturm.de