Communications and Technology Industry Research

ABI Research, in a report released August 16, “Home Automation and Monitoring,” stated that, while approximately 1.8 million home automation systems were shipped globally in 2011, that number will increase to over 12 million by 2016. ABI cites on reason: around the world service providers are entering the managed home automation market.

There is a certain element of intrigue here. There has been unending speculation (including ABI’s own) as to why Google is purchasing Motorola (News - Alert) Mobility and whether $12.5 billion is too pricy for a hardware business with headaches and a patent portfolio whose main value may be the fact that it is not in the hands of the enemy.  Observers have commented on how Motorola gives Google the foothold in the digital home —based on its cable modem and set-top box business and “TV Everywhere” push —it was unable to achieve with Google TV. However, they have been loath to rate it as much more than a side show and certainly have not jumped it into the meaningful category. It might be time to alter that view just a bit.

The ABI report actually holds the clue as to why. I ask your indulgence to stick with this for a few paragraphs. It all comes together.

A digression… In Memoriam to Ken Oshman Telecom and Home Automation Pioneer

First, a quick and unfortunate digression. This month saw the passing of telecom industry icon and home automation pioneer Ken Oshman.  He along with Gene Richeson, Walter Lowenstern and Robert Maxfield founded ROLM, the first all digital PBX (News - Alert) back in the early 1970s at the dawn of the age of competition. Ken, who I came to know, like and admire from my years representing the telecommunications interconnect industry in various capacities, in 1990 became CEO of home automation pioneer Echelon. He was a visionary, a great leader and a very nice guy. I learned something really interesting every time we spoke or I heard him give a talk. He will be sorely missed.

Service providers need new services revenues   

Dr. Oshman is germane because Echelon deserves citing here. I was captivated when it appeared with its home automation network. Like others, it seemed to me for almost two decades that every successive year would be the one when home automation, likely driven by security monitoring and electric load shedding, finally took off. If ABI is correct, we seem to have finally reached the curve in the hockey stick of the market growth on ramp. Onward and upward.

ABI says the reason is that service providers need new revenue sources, and that extracting them from the intimate relationships they have with residential customers -- this goes for telecom and Cable TV companies equally -- is clearly an area of growth. This is as much manifest destiny as anything.

ABI points out that the latest entrant in the race in the United States is Verizon. They have announced pricing on their home automation control system, based on technology from Motorola Mobility through its 4Home (News - Alert) acquisition (yes Google gets that too), starting at only $9.99 per month. In the basic version of Verizon’s Home Monitoring and Control, customers get:

• Remote monitoring and control of cameras, Z-Wave lights, and door locks
• For an extra cost, Verizon also offers energy management applications like automatic thermostats, special Wi-Fi adapters that control appliances and lights, and a sensor placed on the circuit box to measure whole-house energy use

ABI says globally service providers are aggressively going after this market.

• Rogers Wireless (News - Alert) in Canada now offers the Rogers Smart Home Monitoring System
• Orange (France Telecom) offers home monitoring services through its Livebox gateway-enabled broadband service.
• Telecom Italia and Telestra also offer their own version of home monitoring services. (In fact, Echelon, according to Frost & Sullivan (News - Alert), holds an 81 percent market share of the Smart Meter market in Europe with 32.5 million smart meters on its platform in Italy alone).

There is a cautionary note in the report. Sam Lucero, practice director, M2M connectivity at ABI says that, “Telco and cable operators now have to develop and deploy software management platforms to specifically enable the management of home monitoring services. This challenge has resulted in a swift consolidation within the small market that is privately-held home monitoring software platform vendors, with 4Home being acquired by Motorola Mobility, iControl and uControl merging, and Xanboo being acquired by AT&T.”

Remember Google?

Nevertheless, he is predicting robust growth for the service providers, putting Google (remember them?) in a very interesting position. This is all the more interesting based on Google’s long-standing desire to be a major play in the home automation and smart grid fields. And, as an over the top provider (OTT), positioning to be the residences digital dashboard/concierge, the acquisition of Motorola Mobility certainly puts Google squarely in the picture of how the entire home automation and monitoring markets will eventually evolve.

Do not construe this as an argument that Google’s acquisition secretly was driven in large measure by its desires in the home automation, home monitoring and smart grid sectors. Android protection and patents enforcement are not just sexier, but are far more important. However, the argument can be made -- and I am not ashamed to make it --that their entrance may be just the accelerant the market has been seeking for these many decades.

We finally seem to have all of the ingredients necessary for rapid growth —the technology (including price/performance), customer demand in a riskier and more cost-conscious world, and service provider necessity to generate new revenues and fend off competitive encroachment.  The whole world will be watching and monitoring.

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