Deutsche Telekom is working with many leading consumer brands, including Sonos, Miele, Philips, Osram, eQ-3 and others, supporting their individual initiatives by providing an open platform.
Europe’s leading telco, Deutsche Telekom, has been in the smart home business for more than five years since 2011. SMAhome has had the pleasure to speak with Thomas Knops, head of Connected Home Marketing and Sales at Deutsche Telekom AG to share the company’s five-year observations on the connected home and their strategies for creating growth in the field.
Deutsche Telekom founded an alliance of companies from different markets in 2011, under the name of QIVICON. The companies collaborate on a cross-vendor, wireless-based home automation solution that has been available in the German market since fall 2013. Deutsche Telekom now also offers its Connected Home platform as a white-label solution, which has an interoperable, expandable and scalable architecture that enables companies from multiple industries to develop connected home products and services and integrate them into a larger ecosystem.
How is the QIVICON platform leveraged for different markets?
Our strategy is to use QIVICON internationally where it makes sense.
In some international markets, we will not use the QIVICON brand right from the beginning. QIVICON is the name of the platform, but if there is only one company starting to offer something based on the platform, it is not necessary to use QIVICON to communicate with the customer. However, as more companies join the platform, we will be more than happy to start using the QIVICON brand.
Thomas Knops,
Head of Connected Home
Marketing and Sales,
Deutsche Telekom AG
How can companies benefit from using the QIVICON platform or the Connected Home platform?
Both QIVICON in Germany and our internationally available Connected Home platform are open and technologically expandable systems that enable companies to develop new solutions or services, extend existing products and adapt to new market potential and target groups.
The partnership opportunities we offer with QIVICON and the Connected Home platform as part of our smart home business allow companies of all sizes, including major telcos and start-ups, to cooperate with other strong companies. Already, we have more than 35 partners on board that are each benefiting from cooperation on product development or on new and additional sales channels, to name just two of the many possibilities.
Other benefits include a constant opportunity to open up additional sales potential in addition to existing business. For example, access new target groups, extend existing customer relationships with up- and cross-selling opportunities or use of applications and related services to create new bundles.
Do you suggest Asian manufacturers to join QIVICON?
There is not one answer, and the company needs to decide if they want to utilize the platform. If the company already has a footprint in Germany or Europe, then it makes sense for them to launch products on their own because they already have some experience. They have everything in place, like the sales channels and the logistics. But if it’s a new company, not necessarily one that has been seen in Europe, they might need support in different areas.
In my opinion, it makes absolute sense to utilize a platform because first of all the platform helps you collaborate with other brands. Utility companies like Vattenfall in Germany, Entega and others already use the QIVICON platform to sell certain product bundles. Some Asian manufacturers might want to utilize the sales channel of different other companies, for instance utility companies. They can also collaborate with Deutsche Telekom or others who have already a good history in the market and all the sales channels ready. So it makes perfect sense to contribute and participate in the QIVICON platform in Germany or talk to us and use the white label platform.
The manufacturer can also utilize the platform to hook the product to an existing application, for instance to include their product in a mobile app, and the manufacturer will be included in this application. It works because it is one platform, and customers don’t care in the end how it works. In terms of scaling the business, we are now starting to internationalize, so if you’re a part of this, you can expand to other countries. Joining the QIVICON provides additional business opportunities. For example, D-Link is part of QIVICON. Its products are incorporated in the application of Deutsche Telekom, and they will be sold via Deutsche Telekom. That is the QIVICON side of it, but D-Link is also doing their own business.
What are the biggest challenges Deutsche Telekom faces?
One of the greatest challenges facing any firms seeking to enter the connected home market is the lack of common standards and architectures for connectivity itself, as well as a lack of openness in terms of the APIs between platforms. Today, many proprietary and incompatible wireless protocols exist, which is a major obstacle to mass market adoption of connected home services.
Currently, there are many mutually incompatible solutions, both at the connectivity and the platform level. Based on this situation, Deutsche Telekom assumes there will be no market-dominating technical standards and the many standards will coexist for years to come.
What are the key findings in your new market analysis smart home professionals should know? How can they utilize these findings?
Deutsche Telekom’s new market analysis report “How to create growth from the connected home” by Strategy Analytics sets out the principal opportunities and business models for this burgeoning sector. The report details several areas of opportunity, such as home automation and energy management, that could be exploited by a range of players – telcos, utilities, retailers, insurers, warranty providers, home assistance providers, and appliance and consumer hardware manufacturers.
In total, it finds that the Western European connected home market will be worth up to €12 billion annually by 2019, covering almost 50 million homes. A great deal of this revenue will be from market growth, but much of the change in the coming Internet of Things (IoT) revolution will be about value shifting from one sector to another. One of the many insights in the report is that companies will need to move from selling mainly consumer hardware to a services approach, which will impact business models, margins and routes to market.
There are many ways of entering the market but innovation is likely to be increasingly important, no matter what the approach is. An underpinning theme for all players is the launch of services for the connected home – for example, the value to consumers of buying into subscription-based appliance monitoring schemes for their homes will need much development, and potentially partnerships with other key brands.
How do you see the roles Apple and Google play in the smart home?
We believe that ecosystems, such as Alphabet’s Google (incl. Brillo/Weave) and Nest, Apple’s HomeKit and Amazon’s Echo will play a significant role in the global connected home market.
The Android platform is a prime example of an open environment that has triumphed because it allowed others to build on its products. The Android platform has enabled other companies – manufacturers as well as app developers – to build their own solutions for the market. Something similar will also happen in the connected home market to help spur the creation of new products and extend the usefulness of old ones. In turn, that will give consumers more reasons to buy connected home products, growing the market.
In terms of interoperability, there are no industry-wide platforms or standards, and Deutsche Telekom believes that many companies will not survive without partnering.
What can users expect from Deutsche Telekom for 2016?
We’re likely to witness an explosion in smart home technology, which goes beyond personal and media-based devices to include everything from boilers, radiator valves and smart meters to previously inanimate objects, such as furniture and children’s toys. As such, we will also see major changes in many industries as visionary companies as well as start-ups take advantage of the opportunities available within the smart home space, by offering new value propositions, based on new value chain designs and business models.
This is where Deutsche Telekom’s open Connected Home platform comes in. One of the key developments we foresee – and that Deutsche Telekom is promoting – is the move from connected devices to connected services.
Home insurance could become one of the most innovative areas of a future smart home market. There is an opportunity for smart security services to provide a reduction in premium cost for consumers – insurers may even offer monitoring devices for free to reduce liability.
For the insurance sector, insight from smart homes can completely change the business model. Valuable data on occupancy, water leaks, water usage and other risk areas can be analyzed. For example, a smart home may be able to pick the potential for a water leak up before it happens, leading to significant savings.
The provision of insurance ties into other home services such as fulfilling warranties, providing assistance and performing remote diagnostics. By monitoring smart home devices, providers should be able to prevent serious break-downs by recommending replacement before they fail. This keeps consumers happy, lowers the potential for insurance claims and offers retailers/manufacturers the potential for further after-sales.
We will be seeking out for more partners across multiple industries; promoting our Connected Home platform as a business enabler for telcos, retailers, utilities and insurers; and we will be working closely with developers to create and integrate more devices that answer consumer needs.
Deutsche Telekom's experience
Deutsche Telekom is working with many leading consumer brands, including Samsung, Sonos, Miele, Philips, Osram, eQ-3 and others, supporting their individual initiatives by providing an open platform, which integrates multiple devices from different manufacturers and enables consumers to create their own scenarios.
Deutsche Telekom’s observations
- For many in the industry, security and safety are often seen as the ‘low hanging fruit’ or entry strategy into the connected home market – and the means by which to capture value in the short to medium term.
- Smart thermostats are the first step on the journey to enabling a broader vision of energy efficient homes that will also see innovative new value added services, and in the future on-site generation and storage.
- To date, most devices in this category are silo-based, single use cases, yet all our insight suggests that consumers will increasingly demand ‘cross-functional’ use cases that can create scenarios for multiple devices, i.e. IFTTT (If This Then That) functionality.
- Technical support represents a means whereby both telcos and retailers can deepen and strengthen their relationship with customers by proactively resolving customers issues and extending the range of services that they provide.
- Connected home insurance is a major development which is set to have a profound implication on the industry.
- There is a clear market need for ambient assisted living (AAL) technology – or telecare – in Europe and the Western world. That is often a complex health and social service landscape – with boundaries between ‘health’ and ‘social’ aspects of monitoring often blurred.
- There is rarely a conversation on the subject of the connected home or IoT that does not simultaneously include data analytics: often it is seen as synonymous with one of the prime drivers, both of manufacturers and service providers to capture sensor data.
- Despite the many advantages, analytics raises concerns. Consumers want their data to be respected and know how it is being used. If companies are not transparent, then there is a risk consumers reject the connected home and all the benefits that it brings.
- As in all markets, the adoption of innovative business models is one of the principal means of creating new value – the connected home is no different.
- The models that we expect to be deployed will need to support the development of multiple capabilities, many of which will often rely on a number of third party firms, from financing, maintenance, connectivity, prognostics, insurance and installation companies.