This document summarizes the past, present, and future of smart home technology. It discusses how early smart home devices revolutionized household chores after WWII but have changed little since. New technologies like voice assistants, smart lighting, and thermostats are making homes smarter, but issues around standardization, security, and cost remain. The document predicts that homes will become truly intelligent through artificial intelligence, embedded smart devices, and interconnectivity between all home appliances and systems. This will optimize home management and provide new opportunities for companies to improve customer service, leverage data, and increase energy efficiency.

1. THE LAB REPORT
In the economic boom that followed the Second
World War, homes around the world saw an influx of
technology that would revolutionise the way we live;
creating large amounts of leisure time that would have
once been spent doing household chores.
Home appliances that we take for granted today would
have been an expensive novelty in the early part of the
20th Century, if indeed they existed at all.
But in the most part, little has changed since then.
While cheaper and more efficient today, devices like
vacuum cleaners, irons, kettles, washing machines and
dishwashers function in much the same way as they
did when they were initially conceived.
And as the productivity gains of new technologies
plateaued, consumer appetite for the next “time saving
gadget” waned. New entrants to the market were
often viewed as expensive and unnecessary.
THE SMART HOME
REVOLUTION
Rob Smith
Rob Smith is Strategy and Insights Manager for the Digital
Products, Innovation and Insight team within IT. He looks
at emerging trends in business, society, and technology to
identify opportunities for the O2 business.
New technologies could revolutionise how we understand, engage with, and
serve our customers. In these special reports from The Lab, we take a look at
how future technology trends could shape the way we do business at O2.
Smart home technologies could provide the biggest
shift in how we live for over half a century.

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TECHNOLOGY
But real life implementation of the technology was
limited to enthusiasts and hobbyists, building DIY
systems using an array of component parts. Specialist
electronics manufacturers and retailers targeted their
products at these innovators and early adopters, and
they often required a high level of technical knowledge
to configure.
However, over the past few years this has started to
change, and smart home technology has become more
accessible to a wider portion of home owners.
This is due to a confluence of forces:
○○ The ubiquity of home broadband & Wi-Fi – As of
2015 close to 80% of homes in the UK had Wi-Fi1
,
making it easy to retrofit internet enabled devices,
without having to worry about installing an access
point to connect them.
○○ The smart phone revolution – Whether
connecting over Wi-Fi or Bluetooth, the mobile
phone provides a simple way to interact with and
configure smart devices, through a mechanism that
is familiar to virtually everyone.
○○ Simplification of the user journey – Entrance into
the market of mainstream technology companies
like Apple, Google and Samsung have helped to give
devices mass market appeal, by focusing on design
quality and ease of use.
This sits along-side the falling price and increasing
sophistication of the underlying technology, which is
making new devices economically viable to produce for
the first time.
Removal of the technical barriers to adoption has
coincided with an increasingly tech savvy target
audience, who are not intimidated by the proliferation
of new technology throughout our lives.
What is currently available?
Globally, a number of service providers including AT&T,
Deutsche Telecom, SK Telecom and Telstra, have started
selling connected home ecosystems. Their offerings
focus on providing help and support as well as devices
from multiple different suppliers.
THE LAB REPORT
THE STORY SO FAR...
The concept of home automation has been around for a long time and has been a
feature of many popular sci-fi movies.

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3TECHNOLOGY
Phillips Hue - This range of LED light
bulbs and strips can be controlled from
your phone, to create different lighting
effects depending on what you are
doing.
Amazon Echo - The smart speaker
from Amazon enables a range of other
smart devices around the home to be
voice controlled. The inbuilt virtual
personal assistant, “Alexa” is also
capable of responding to user questions
and completing simple tasks.
Nest - Nest Labs was acquired by
Google in 2014, and sells a range of
smart home technology including a
smoke and carbon monoxide detector
and a smart thermostat.
Hive - (British Gas) – The Hive range
of connected home products began
with “Hive active heating”, a smart
thermostat that enables you to control
your heating and hot water from
your phone. Other Hive products now
include motion sensors and lighting.
Source: nest.com
Source: hive home blog Source: meethue.com
Examples of todays technology
Over the past few years, there has been a flurry activity in this space, with companies from a variety of
backgrounds launching new products and propositions. Some of the better known products include:
Source: androidcentral.com

4. 4TRENDS
THE LAB REPORT
WHAT DOES THE
FUTURE HOLD?
The technology that we see today is really just the starting point for the
connected home. Over the coming years we’ll see the emergence of some key
trends that will accelerate adoption and forever alter the way we interact with
our homes.

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TRENDS
Three big trends impacting smart home
1. ZERO UI
Today we think of our smart phones as the centre of
our connected world, referring back to our screens to
control the devices around us. But our interaction with
many devices in the future will be screen-less2
.
The concept of zero user interface refers to a world
where devices are controlled primarily by voice, gesture,
biometrics or even simple eye movements.
We already see this technology in existence today,
in devices like Amazon Echo and Microsoft Kinect,
but it will become more widespread in the future as
designers seek to remove the friction between user and
technology.
More human, intuitive ways of interacting will
become the norm and devices will become capable of
processing ever more complicated instructions.
2. TRULY SMART
Most of the technology that we refer to today as
“smart” isn’t really very sophisticated at all and
would be better described simply as “connected”.
But the tidal wave of advances in machine learning
and artificial intelligence that is already underway will
unquestionably change this.
These advances will underpin a revolution in home
appliances, making them truly smart for the first time.
Ultimately, smart eco-systems will take over some of
the thinking from their human masters, proactively
making decisions on their behalf as to how best to run
the home. This will include devices becoming self-
configuring; with new devices instantly recognising the
larger eco-system they are part of and finding their role
within in.
Smart thermostats like tado° are already moving in
this direction, automatically using your phones GPS to
detect when you’re not in the house and turning the
temperature down. It will also look at the weather to
make sure it is heating the house in the most efficient
way depending on the outside environment.

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TRENDS
3. INTEGRATED, INTERCONNECTED &
EMBEDDED
Most existing smart home solutions involve installing
modern devices into often decades-old buildings. But
as IoT technology is still in its relative infancy, there is
a lack of standardisation and many of these devices
function in fairly standalone manner. Sales of point
solutions have led to a proliferation of connection
hubs and a requirement for multiple disparate apps to
control them.
As the technology matures, interconnectivity between
devices will improve, removing the need for duplication
of components and creating a web of devices around
your home that can automatically talk and interact with
one another.
Standardisation will also help to drive adoption,
and we’ll move to a scenario where technology is
embedded into the very fabric of the building. As
opposed to door sensors stuck to the door frame,
they’ll come as standard, built into the doors. And we
won’t need to buy smart plugs, because every plug will
be smart from the moment pen is put to paper on the
first designs for the building.
WHAT WILL ALL THIS ENABLE?
As the technology becomes more sophisticated, smart
home systems will proactively take on complex tasks to
support and enhance our daily lives:
○○ Monitoring the power consumption in your home to
decide the optimal time to use certain devices, and
proactively switching between energy suppliers and
solar power to control costs
○○ Home appliances triggering alerts when components
need repair, automatically scheduling time with a
certified engineer and ordering the relevant parts,
without need for assistance from the owner
○○ Lights automatically coming on, the kettle
automatically boiling and your car heating up when
the system detects that you’ve woken up in the
morning
GRADUAL ADOPTION
While the proliferation of technology
throughout the home is somewhat inevitable,
it will take many years before the sci-fi vision
of home automation and virtual assistants
becomes widespread.
The typical lifecycle for most home appliances is
long; in some cases over 10 years3
, and people
don’t tend to upgrade early due to the large
cost and perceived lack of benefit.
In the short term, devices that can be retrofitted
to existing purchases will gain the most
traction, while other devices will be replaced
and upgraded as part of their usual lifecycle.
We’re already seeing this with the popularity
of things like smart plugs, lightbulbs and
thermostats. But the full benefits of the smart
home revolution won’t be realised until other
appliances start to catch up.

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LEARNING TO LIVE WITH IOT
THE LAB REPORT
TO THE DOUBTERS
OF THIS NEW WORLD
Critics have questioned the usefulness of existing
smart home solutions, suggesting that in many
cases they are incredibly expensive for the limited
incremental benefits they offer.
A recent Huffington Post article quite rightly asked
“is saying ‘Alexa turn on the light’ really better than
just turning on the light?”4
Even if your answer is “no”, this apparent
uselessness doesn’t make it a bad product.5
In fact, sales of Amazon’s Echo products suggest
that Alexa will do very well.
We expect smart home technology to exist in
parallel with, rather than replacing traditional
fittings around the home like light switches.
But if the instruction had been “Alexa, turn on
the light if I’m not home before it gets dark” then
things start to get a bit more interesting
One of the ongoing questions of the burgeoning Internet of Things age seems to
be “why would my kettle even want to talk to my toaster?” And if we’re brutally
honest, we’re still not 100% sure, but as the cost of data capture continues to fall
exponentially, and our ability to process it increases at the same rate, we look set
to find out.
At £99 Nest Protect could easily be branded just
an incredibly expensive smoke alarm (compared
to as little as £10 for a standard model).
But as the cost of the technology falls and
disposable incomes rise6
, people will be more
likely to pay for the improved safely features
and convenience, even if the benefits are only
marginal.

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LEARNING TO LIVE WITH IOT
In a 2015 survey by Barclays Bank7
, 61%
of respondents said they are worried about
internet-connected technology within their
home being hacked.
Many people have expressed concerns about the
security of the large number of connected devices that
are entering our homes. As we become increasingly
reliant on this technology, we also expose ourselves
to the threat of being hacked, personal data being
compromised, our privacy being violated or even being
put in the way of physical harm.
If we can turn our plugs sockets, irons or kettles off
using our smart phones, presumably that means that
someone else could turn them on?
Similarly, there have already been reports of baby
monitors being hacked.8
Device manufacturers have a responsibility to ensure
that their products provide the necessary levels of
encryption to make intrusion suitably difficult in the
first place, as well as mechanisms to promptly detect
intrusions should they occur.
But there is also an onus on the end users to protect
their devices, ensuring that they use suitable passwords,
and that their security software is up to date.
Of course hackers and cyber criminals are not the only
thing to be concerned about. There is also the risk that
law enforcement agencies will try to get hold of your
personal data.
In a recent court battle in the US, Amazon refused to
give access to data captured by one of its Echo devices,
which prosecutors believe may provide evidence in a
murder investigation. But is it simply a matter of time?
Even if you have nothing to hide, you might not want
investigators9
listening to your private conversations.
“Alexa, please take the stand…”
SECURITY AND PRIVACY CONCERNS

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OPPORTUNITIES
THE LAB REPORT
OPPORTUNITIES
FOR O2
With the launch of O2 Home last year, we have already established a presence in
this space, and plan to expand aggressively over the coming years, delivering both
innovative new products and excellent service to our customers.
As the technology continues to evolve there are several
trends that we could monitor, and at the right time
look to incorporate them with our offering:
FOCUS ON SERVICE AND SECURITY
With fierce competition amongst manufacturers, and
consumers facing an overwhelming range of options,
curating a small selection of high quality devices and
focusing on the service element is likely to be a winning
combination.
○○ As there are high levels of concern about the security
of connected devices, there could be an opportunity
for home antivirus and network monitoring solutions
that alert users to suspicious activity on the network
and provide information as to how to resolve it.
○○ When we start to move into an era of automated
purchasing, with our smart homes taking
responsibility for management of our finances
consumers will look to a trusted brand to ensure
their details are safe, and that can help them if
things go wrong.
ROBOTICS
The internet of things is blurring the lines between
our digital and physical lives, enabling us to digitise
and process information about the world around us.
Advances in robotics will enable this trend in reverse,
empowering machines to take action in the physical
world. Robot vacuum cleaners10
and lawn mowers are
already widely available, and other devices are likely to
become more common place over the next few years.

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OPPORTUNITIES
DATA MONETIZATION
The proliferation of sensors throughout the home
presents a new opportunity to capture massive
amounts of valuable data about how we live. This data
can be harnessed in a number of ways, creating new
revenue streams and business models:
○○ Set up a marketplace enabling customers to sell their
data
○○ Leverage data to sell insurance products
○○ Help customers to make sense of the data to
optimise their own lives (as part of subscription
service)
○○ Subsidise device cost in exchange for permission to
use customer data
ENERGY EFFICIENCY
Integration of smart meters into the home ecosystem
will allow far more intelligent optimisation of how we
power our homes, giving people granular visibility of
how they consume energy for the first time.
○○ Solar power and energy storage – Solar panels
and energy storage solutions will enable the most
efficient and cost effective use of power. Harnessing
solar energy during the day and storing it for later
use, or selling it back to the grid, will become a
reality for the majority. Energy storage will also allow
intelligent systems to purchase energy at times when
the price is lower.11
○○ Sound, light and air pollution – As the capabilities
of smart home systems expand and merge with
other systems like health, capturing data about the
environment around us will become important. Is
sound or light pollution disrupting our sleep? How
does the volume of your entertainment system
respond to an increase in background noise?
Furthermore, particularly in built up cities, people will
look to air quality monitors and purifiers to remove
potentially harmful toxins from the air around them.

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OPPORTUNITIES
In the future, artificially intelligent
technology will permeate everything
we do.
But we won’t refer to it as “smart” in the same
way that we don’t refer to things today as being
“electric”. It will become so ubiquitous that we won’t
expect anything less.
Our network of connected devices will proactively
and intelligently use data to optimise our lives,
starting initially with our homes, but quickly
extending to our cars, our health and wellbeing, our
schools, our place of work and our social lives.
We believe we are at the start of an exciting journey
and that we’re uniquely positioned take advantage of
the technology trends that will play out over the next
decade.
1. UK Internet Statistics - OFCOM
http://bit.ly/2mytV6g
2. “Zero UI” – Fastcodesign.com
http://bit.ly/2cw4NJf
3. How long do kitchen appliances last? – CBS News
http://cbsn.ws/2mRc1aJ
4. How smart homes are becoming rather stupid –
Huffington Post
http://huff.to/2kNLCtU
5. The Bad Product Fallacy – Andrew Chen
http://bit.ly/2kR07jy
6. Disposable income statistics – ONS
http://bit.ly/2m0bXrz
7. Barclays Digital Homes Report
http://bit.ly/2m0gZo4
8. Baby monitors hacked – The Independent
http://ind.pn/1PLomnI
9. Amazon resists Echo murder evidence call – BBC
http://bbc.in/2mowWln
10. Robot Vacuum cleaners – The Independent
http://ind.pn/2lF4trLww
11. Time Variant electricity pricing – Environmental
Defence Fund
http://bit.ly/2mykjZc
REFERENCES

12. Please send any queries about The Lab Report to monique.tsang@o2.com
Want to send us an innovative idea for us to look into?
Check out The Lab’s Front Door
This Lab Report was created by Rob Smith (strategy & insights), Jez Sherwin (creative director),
Tim Newton (designer)