Home monitoring services: Where is the market?

by / Tuesday, 08 January 2013 / Published in Smartgrid-CI Blog

Cisco and ATT are partnering in home monitoring services. This market is overcrowded before even taking off.

Turn on lights, activate door locks remotely, monitor energy usage, adjust thermostats, and activate home security all from your PC, smartphone or TV, this is the promise of home monitoring services. After Verizon entered this market a couple years ago, ATT is tackling it through a partnership with CiscoSystems. 

Starting in March, ATT will offer three home monitoring services packages, one in home security system that will include a video package with the ability to view live video of the outside or inside of the home, and an energy package, which allows remote control of lights, heating, air conditioning and appliances. Another package will allow subscribers to remotely open their door for a pet-sitter or repairman or to check from afar if the doors are opened or closed. A water package will detect a water leak and shut of the supply before any flooding occurs.
In order to provide the service, ATT will create its own monitoring centers. Remote monitoring is a brand new business for the telecom operator.

The mobile market is highly saturated and like all other operators, ATT is looking for ways to generate more revenue from its platform. The future will tell us how much customers appreciate the possibility to lock or unlock their doors from a distance or to readjust thermostats that are by definition programmable and are therefore becoming more and more intelligent.
According to some market research, demand has not really taken off yet and the entire market for cellular connections for devices beyond computers or phones will only generate under $1 billion by 2016 in the United States.

$1B may not look negligible but it is very small compared to ATT’s total revenue of $127B last year or to Verizon’s $111B that same year. Furthermore, potential growth may be limited and margin may be relatively low in a market that appears to be commoditized from the start. A recent report from IMS Researchshowed that customers are not ready to pay more than $10 a month for home monitoring services subscriptions 
and they expect many features to be delivered for this price.  

In the future also, the market should become more and more crowded with new entrants coming from various horizons such as home security service providers, software companies  or even hardware manufacturers such as DLink who are also always looking for new ways to generate revenue.
On top of that, anyone handy enough can already install its own systemand manage it with a cell using a free app. 
The overall landscape may look depressing but this does not mean there is no hope. More sophisticated applications could emerge in the future such as health monitoring, pushed by the development of ambulatory medicine.  Other potential applications may emerge from elderly care for instance.

Serving these needs will require from industry players to approach the market in a very different way. They will need to identify a brand new set of partners and to understand how to build and deliver high value services in areas they are not familiar with. But there always some risk in venturing away from ones’ core business.

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