Services generate far greater sales than devices in smart home space

Services generate far greater sales than devices in smart home space
Smart home and security-related services generate sales three times that of smart device-related sales, a Silicon Labs manager said in a Z-Wave seminar held at Secutech 2019.
 
According to the latest figure, annual sales of Z-Wave devices total US$1.2 billion, while the associated service sales total US$3.6 billion.
 
Z-Wave is a popular protocol among U.S. households, according to Peter Huang, SmartHome IoT Business Development Manager at Silicon Labs. “Up to 90% of the connected homes in the U.S. use the Z-Wave protocol.”
 
American households jumped on the smart home bandwagon mostly for home safety and security reasons. They subscribe to services from ADT and other companies, Huang noted.
 
In the last couple of years, more American households are getting water damage insurance. There is a need because during the winter times, water may be frozen to cause pipe bursts, which can result in water leaks.
 
Water leaks can be easily detected if the house is occupied most of the time; however, for a vacation home that is seldom occupied, water leaks wouldn’t be necessarily detected.
 
Insurance firms therefore have the incentive to install water leak sensors, so that they may respond promptly to have water damage reduced to the minimum.
 
It is unlikely for insurance companies to want to provide water insurance only; they will push for other home protection products such as fire insurance and burglary insurance. These policies, along with smoke and gas detection, are considered inelastic demand because people will always need them, as opposed to elastic demand that is “nice to have” such as using smartphones to turn on or off lights, Huang noted.

Ecosystem is necessary

One of the main selling points of Z-Wave is that its products are guaranteed to be interoperable with one another. Consumers can buy smart locks, smart lights, etc. and as long as the products use the Z-Wave protocol, they can be linked together.
 
Silicon Labs is the sole chip provider for Z-Wave products. Huang said about 2,700 device types are now Z-Wave certified, meaning they can all work together. In total, more than 100 million Z-Wave devices are in the market today.
 
Manufacturers would need to obtain certification and Z-Wave logo before they can sell Z-Wave products.
 
With Z-Wave certification, manufacturers of locks, gateways, light switches, curtains, etc. can have interoperable products within an ecosystem.
 
It is difficult to sell products in the absence of an ecosystem. A smart lock manufacturer, for example, may not have the expertise to make gateways for its customers. It doesn’t have the TCP/IP knowledge. It doesn’t understand the cloud.

Z-Wave in South Korea 

Z-Wave also has a strong presence in South Korea. LG Uplus, a South Korean cellular carrier owned by LG Corporation, is using Z-Wave for its connected devices, according to Huang.
 
The regulations in South Korea dictate that smoke detector is mandatory in every household. This aids the push of smart home adoption in the country. LG Uplus would not be satisfied to install smoke detectors only. It now has plans that include home security and other smart home services, depending on what consumers want, Huang said.


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