What will the smart home of the future look like? Despite drawing the crowds at CES this year, it’s clear that the industry is still in its very early stages. Yes, the big boys are all involved – Amazon, Apple, Google et al. – but at the moment it’s a messy hotchpotch of competing standards, point products and exaggerated claims.
I may be biased of course, as my house is about as dumb as you can get – save for a couple of Sonos speakers dotted around the place.
But where I see things really coming together over the next few years is when we start to get more industry alliances, partnerships and/or M&A to consolidate competing platforms. At CES more than 10 smart home vendors announced integration with Amazon’s Echo/Alexa, for example, which begins to tie together a bunch of disparate tools for the smart home. Apple’s HomeKit, Google’s Nest ecosystem and Samsung SmartThings all have similar potential.
Strategy Analytics’ senior analyst, Joe Branca, claimed the biggest challenge facing the industry as a whole is finding a business model that works for vendors and their customers.
“The price point for solutions offered by traditional security companies helps to prevent a lot of consumers from buying into the smart home concept,” he told me when I interviewed him for a recent feature article.
“Our data shows, however, that there’s a strong interest in the benefits offered by security and smart home solutions – not to mention digital health and elderly care solutions – but at a lower price point than what’s available in the market at present.”
However, there may be other ways to subsidise the cost for consumers – for example, by getting insurance companies and marketers on board. The latter would be prepared to access user-generated data while the former benefit from more safe and secure houses, he claimed.
“Other big challenges have to do with customer service and installation,” Branca added.
“With multiple product and service offerings part of a single smart home ecosystem, consumers want to know who they will speak to when they need assistance. With regard to installation, DIY products have gotten a lot of praise, but we believe that to succeed with a mass market offering, installation by trained professionals is key.”
That’s a problem the Silicon Valley giants may need to partner up on to solve.
So what of the future?
Branca reckons more personalised, seamless, user-friendly experiences. I’d agree, but I think the usability and interoperability problems will still mean homes full of point products rather than smart ecosystems. As for the vendors, he argued that firms will end up transitioning to service-based business models.
“The real opportunity for smart home is in services that generate recurring revenue, and not simply the sale of hardware,” he concluded. “In the US, the security model is well-established. However, there is both an opportunity for security services that don’t fit the traditional mould – i.e., services that are lower cost and/or are a better match for renters or apartment owners – and services outside of security, including home maintenance and repair, for example.”
Long story short: I can’t wait for the smart home of the future, but I think I’ll be forced to for several years yet.
First of all, the app market will see an ever-tightening regulatory regime following new regulations passed in October, according to co-founder Percy Alpha.
“I fear that in the future, apps will be like websites, i.e you have to get a license before publishing any,” he told me by email.
Then there’s the current trend for Man in the Middle attacks as a way to monitor and block access to various online services and sites.
The Great Firewall has already tried this tactic on Google, Yahoo and iCloud to name but three. It’s the only way the authorities can see what people are up to once a site switches to HTTPS.
The smart money is apparently on more of these attacks in 2015, but increasingly focused on smaller sites so as to not arouse much media attention.
The Chinese authorities have also been going after Greatfire itself of late, proof the anti-censorship group must be doing something right.
Their mirrored sites, which allow users behind the Great Firewall view blocked content, have been a minor irritant to the authorities until now. But since last week Beijing upped the ante in two astonishing moves against the content delivery networks (CDNs) Greatfire uses.
The first resulted in EdgeCast losing all service in China – which could mean tens of thousands of sites affected. Then another swipe took out an Akamai subdomain also used by HSBC. The result? Its corporate banking services became unavailable. It just shows the lengths the Party is prepared to go to control the flow of information.
The last word goes to co-founder Charlie Smith:
“I think we will continue to see the kinds of crackdown we have seen this past year. I think that for a long time, many optimists have said, give the authorities some time, restrictions will loosen up and information will flow more freely. If anything, the exact opposite is happening – I’m not sure why people seem to make comments otherwise.
If anything, I think the authorities will take censorship too far in 2015. They will push the Chinese over the limit of what they are willing to tolerate.”
The big news from the Orient this week, or at least this small part of it, has been Google’s decision to pull out of plans to build a $300 million datacentre in Hong Kong.
Now the web giant claimed this was due to high costs and the difficulty of getting enough land for its requirements, which at first glance seems fair enough. It ain’t cheap here and land is at a premium in the tiny SAR.
However, the more I think about it the stranger it seems, and here’s why.
- It’s not short of a bob or two – was cost really the reason for its decision?
- The project has been trailed way back since 2011 when Google announced it bought 2.7 hectares of land in the Tseung Kwan O Industrial Estate near Sai Kung, although interestingly a link to the Google page on it now results in a 404 error message.
- At the time, Google said: “We chose Hong Kong following a thorough and rigorous site selection process, taking many technical and other considerations into account, including location, infrastructure, workforce, reasonable business regulations and cost.”
So what’s changed?
Mainland China is admittedly a small market for Google and that probably won’t alter unless there’s an unimaginable change of heart from Beijing. But it knew that back in 2011 when it bought those 2.7 hectares of land that are suddenly deemed not enough.
It’s more likely that with projects underway in Singapore and Taiwan, Google is concentrating on those first to ramp up its datacentre presence in the region.
We must remember it’s still a baby in the IaaS space when compared with the AWS behemoth.
But I personally wouldn’t rule out a return to the HK project for Google in the future as it looks to grow its Google Compute Engine offering in the future. Rival Rackspace has been steadily building out its operations from Hong Kong, for example, recently launching its first public cloud service in Asia from the former colony.
It must be added that Google already has a healthy complement of servers in the SAR and recently announced a tie-up with the local Chinese University of Hong Kong, so rumours of dissatisfaction with and interference by the local government may be wide of the mark.
However, news of the pull-out will still be a big blow to the Government CIO’s Office as it tries to sell HK over its near neighbours as Asia’s premier datacentre destination.
If any more PR blows like the Google story start landing next year, it might be time for the HK government to rethink its strategy.
“Entrepreneurship is the solution to all the world’s problems,” according to Google executive chairman Eric Schmidt, who was in Hong Kong today to launch a new program to foster greater start-up talent within the Chinese SAR.
Schmidt’s visit was something of an anti-climax in the end. Media were not invited to ask any questions and what we finally got from the Google man after a half hour delay was less than insightful.
He trotted out the usual argument that more innovation and technical invention will likely gravitate to this part of the world because there is a “numerical advantage” in terms of graduates with degrees in STEM subjects.
Several times he also repeated the notion that “the native underlying Chinese culture is entrepreneurial”.
“We all know this, it’s been true for 1000 years. It’s a great asset of Chinese history,” he said.
The inference here is that the region and its people should be more inclined than most to producing innovative technology start-ups.
However, we heard very little about why that’s simply not happened thus far, in Hong Kong at least, although Schmidt did acknowledge that there wasn’t enough of a VC industry here and that, although entrepreneurial, the locals are also culturally afraid of being “different”.
Google’s announcement today – a program of mentorship and incubation with the Chinese University of Hong Kong – is surely yet another indication that the SAR government has singularly failed to foster the kind of innovation that can start local and grow internationally.
It’s a view I’ve heard time and again – even from successful international technology companies who came to Hong Kong with an impression of a hi-tech city and found instead something much less mature to work with.
The conversations at most local tech conferences I’ve been to are still at a “what is the cloud?” stage. It’s difficult to believe sometimes.
When asked whether Google was thinking of founding a formal incubator project even Schmidt had to admit: “You don’t have a big enough software industry. Your lack of software … will hurt you in terms of your global ambitions.”
The one year project announced today is unlikely to change that much.
We don’t know exactly how much access to Silicon Valley “mentors” and help with start-up costs local entrepreneurs will get as part of the initiative, but at first glance it seems like a pretty good way for Google to cream off some of the best of that limited Hong Kong talent.
Just finished an interesting piece on what to expect from Chinese tech firms in 2013 so thought I’d précis the key points below.
To be honest as with any year end predictions to an extent there’s always more-of-the-same than anything else, and to that point there’ll be greater international expansion on the mobile handset front by ZTE, Huawei, Lenovo, and potentially TCL-Alcatel.
Aside from the big names, Canalys analyst Nicole Peng told me there could also be attempts by feature phone vendors like Gionee and K-Touch to make it overseas, claiming that the technical and business support offered by chipset companies like Qualcomm and MediaTek is making it easier than ever to break into new smartphone markets.
But away from hardware, what about China’s growing raft of web companies?
It would be easy to write a story saying “the Chinese are coming, look out Facebook, Twitter et al!”, but the honest truth is that the likes of Tencent, Sina, Alibaba and others have become successful in China in part by copying their US rivals and in part thanks to local restrictions banning their rivals.
Where they have done well is in localising their platforms for the domestic user – something Alibaba and Baidu are doing now even for their mobile OS platforms – and innovating on top of what has gone before.
Aside from the odd service like Tencent’s WeChat which has managed to cross the Great Firewall to acceptance elsewhere, I’m sceptical that these firms will expand successfully in 2013, and to an extent, with less than half of the vast Chinese population online, there’s probably enough untapped growth left domestically to keep them busy for now.
Peng is slightly more optimistic, however.
“Many of the local mobile services/applications we have seen in China, such as Tencent Weixin, Sina Weibo provide great user experience and innovative features that we could not find from the international big name,” she told me.
“As long as they continue to innovate and own their IPs, I do not see Chinese internet companies having any major disadvantages in competing, as mobile services become device/OS agnostic in the future.”
Perhaps. But with local incumbents like Twitter, Facebook, Google et al, mature Western markets will certainly be too tough a nut to crack.
On top of this, Chinese tech firms will have to put up with increasingly hostile attitudes from various national governments.
National security concerns will continue to dog Huawei and ZTE on the telecoms infrastructure front, and there are signs that US regulators may soon begin the process of de-registering Chinese firms from US stock markets for failing to comply with domestic securities laws.
Oh, and there’s the small matter of a potential conflict over that bunch of barren rocks known as Diaoyu/Senkaku.
Plenty to look forward to, then, in 2013!