The smart home market is a place of considerable excitement, dynamism and growth. The global smart home market was valued at around $24.10 billion in 2016 and is expected to reach approximately $53.45 billion in 2022, growing at a CAGR of slightly above 14.5% between 2017 and 2022.
There has been a vast explosion of hardware devices over the last two years, bringing the realities of the smart home within reach of nearly all consumers, but it is certain that we have only just started down this road. While device technology will continue to evolve at a sometimes startling pace, there is one key area in which many businesses are still struggling, and that is data.
Of course, enterprises are familiar with data, and many are not only getting to grips with, but seeing significant benefits as a result of harnessing ‘big data’ flows, but the smart home industry has created and will continue to create data in unsurpassed volumes and complexity. However, this data brings with it unprecedented opportunity, as well as a range of significant challenges.
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The intrinsic value of consumer data is well established, but the new world of interlinked and networked devices offers new and exciting opportunities. Insurance companies could offer consumers lower premiums and direct support from expert contractors when a leak is detected by smart home sensors, for example, while smart thermostats linked to weather stations and in-house sensors can not only cut bills, but also provide key usage and price point data when searching for new utility deals.
There is considerable value already being derived from contextual device data, for example, essentially the application of all aspects and interrelations of device use. Aggregating data to create insights has intrinsic value for manufacturers as well as service providers. It can enable them to enhance the user experience and hence improve stickiness and also support the development of successful new features.
However, the devil is often in the detail – although a recent survey by NTT Data of 100 insurance carriers, found that 59% “have made strong progress with leveraging smart home technology to improve products”, challenges still clearly remain. Insurers are frustrated with the data requirements around smart home devices, with two-thirds reporting an inability to gain access to data from smart homes, while a further 62% said that using the analytics from that data in the carrier underwriting process is challenging.
The ability to analyse this new data is a key point. While there may be vast volumes of it, the new range of data from smart home technologies is unprecedented. Some of the real-world results of cross-referencing it may be unexpected, like the father who discovered his daughter’s pregnancy after algorithms identified patterns in the family’s store card data, while one murder case is using the victim’s Fitbit tracker data as key evidence of her movements. While these cases may be few and far between, the data that makes them possible is rightly well-protected, and in Europe is about to become more so.
The General Data Protection Regulation (GDPR) will be enforced from 25 May 2018 across the EU, and will bring in a series of enhanced protections of consumer data, as well as much-increased punishments for companies flouting the rules. For the worst offenders, the maximum fine for is €20,000,000 or 4% of global annual turnover, whichever is higher, while consumers can look forward to rights such as ‘the right to be forgotten’ and ‘data portability’ when closing accounts.
>See also: The trouble with smart homes
But even without the increasingly robust stick of legislation, businesses must be aware of the carrot of consumer trust. According to Parks Associates, nearly 50% of US broadband households report having privacy concerns about using connected devices, and it is overcoming this generalised concern that is vital.
It is absolutely critical that the smart home industry ensures that customer data is treated with respect, allows customers to determine the privacy of their data and are transparent about what data is used. The concerns raised by consumers must be listened to, and at every step of the way consumers must have the right to opt out of having their data shared.
Without these steps, the industry risks losing consumer trust and restricting the potential growth opportunity of smart home data. Once that trust is lost then regaining it may prove even more of a problem than big data management might appear today – the successful future of the smart home industry lies in transparency and openness.
Sourced from Thomas Rockmann, VP connected home, Deutsche Telekom
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