Parks Points

Digital Living: IoT & The Connected Consumer

by John Barrett | Tom Kerber | Barbara Kraus | Brett Sappington | Harry Wang | Jun. 1, 2015

For consumers around the world, the Internet of Things (IoT) opens the door to a new and convenient connected lifestyle. The wide range of networked products and services that make up the IoT encompasses consumer-focused devices and services within the smart home, connected entertainment, connected health and fitness, and connected car markets. The IoT enables the connected consumer lifestyle.

Market trends within each of these verticals will continue to drive growth in the connected lifestyle, expanding services to virtually every part of the connected living environment. This growth is generating new competitors and creating new challenges for each part of the IoT ecosystem.

Connected CE Makers Focus on User Experience Innovation
CE and software makers are looking for a competitive edge by improving the user experience through immersive and interactive innovations. They are developing new form factors to increase the immersive experience while also designing technologies that enable consumers to use all of their senses when communicating with devices, and they can leverage the connectivity of their devices to deploy enhancements and new features to their products. These efforts are dedicated to creating a more natural and intuitive communications environment. The high-speed connection also creates a wealth of data points on consumer usage and interaction that companies can use to improve the individual experience.

Virtual reality specifically is poised to be a game changer because it can provide consumers with new and immersive experiences. While gaming is expected to be its initial use case, the innovation can be disruptive enough to attract non-gamers and expand the market.

Device interaction methods also contribute to immersive experiences. Voice, primarily natural language interaction and movement controls, including gestures and head movements, enable consumers to communicate with devices in much the same way as they would communicate with another person.

Rather than a one-size-fits-all interaction approach of interfaces like the remote control, communications solutions will evolve over the next few years to become hybrid solutions, aiming to replicate users’ natural interactions with their environments. Consumers will be able to communicate with an interface in whichever way is most natural and instinctive to obtain desired results, which could also surmount physical handicaps and generational gaps among the user population.

Pay TV, Networks Respond to Challenges Presented by OTT
The rise and expansion of OTT video services are challenging the traditional video ecosystem, including strategies, experiences and montetization. They are also facilitating a rapid shift in consumption. The time- and place-shifting trends that began with the DVR and physical media have moved into the online world. As video availability has become nearly ubiquitous on connected devices, consumers are squeezing ever-more video entertainment into their daily lives. As a result, on-demand consumption is now rivaling broadcast TV consumption. Non-linear video consumption will overtake linear video consumption on the TV screen in 2015.

The success of Netflix and a handful of other OTT services has motivated traditional players to jump into the OTT video services market, seeking to capture those consumers who are opting out of traditional broadcast or pay TV. 2015 has seen the addition of several new services, including:

  • CBS launched CBS All Access, which includes current episodes, past seasons on-demand and live local television
  • Hulu announced new partnerships with Discovery Communications and FX Productions
  • DISH Network announced Sling TV, a streaming pay-TV service with access to popular linear programming
  • HBO launched its highly anticipated stand-alone OTT service in April 2015
  • Showtime plans to launch its OTT service in 2015

Content distribution is evolving in other ways as well. Some smaller and independent content providers have turned to multichannel networks (MCNs) and digital video platforms like YouTube and Dailymotion as alternative platforms for distribution. These platforms are highly popular with young consumers and are heavily oriented towards ad-based business models.

The expansion of video into the IP arena stands to significantly impact the IoT space. Video is a primary driver of broadband network traffic, and broadband providers are actively upgrading their networks to handle the expected explosion of video consumption. This expansion of network capacity and increases in speed provide fertile ground for IoT expansion within the home and among connected devices.

Expanding Smart Home Market Depends on Value Propositions
The market for smart home systems has grown, in large part, due to the success of bundling security services, smart devices and energy-management services. Cable and telco service providers will continue to expand the smart home category in the U.S. by bundling smart home and security services with other service offerings.

No killer app or single value proposition is driving adoption of smart home solutions. Safety and security are the key value propositions, and as part of a bundle of value-added services, they can drive the purchase of smart home products and services. Offering products with the most flexibility with regards to interoperability, installation and device services is attracting the broadest segment of consumers.

Continued advancement of smart devices with home-energy-management value propositions will occur as consumers become more aware of smart devices that help them manage their home’s electricity usage. Currently, one-third of U.S. broadband households find at least one smart-energy management feature to be appealing. However, when bundled together, these value-added services become attractive enough that a significant percentage of consumers are willing to pay for a package of services. Utilities and smart home service providers should oblige consumer preferences and position their offerings as services in addition to provisioning devices.

Connected Cars Converge with the IoT
The automobile is increasingly becoming a core part of the Internet of Things as vehicle connectivity capabilities are embedded deeper in the design while addressing more use cases, from entertainment services to smart home functions. Mobile network operators and software developers in particular are in a great position to benefit from this new platform for connected services and applications.

However, all players in the connected vehicle market must consider the continued development of IoT in their long-term connected car strategies. Early vehicle-to-vehicle, vehicle-to-infrastructure and vehicle-to-home services are already on the market, with many more just over the horizon. The long lifecycle of vehicles and the potential crossover opportunities of connected cars to smart home and smart-city applications require OEMs, app developers and carriers to assume that the platforms they are designing now will be employed for IoT applications many years into the future.

Connected Health & Wearables Benefit from “Quantified Self”
The arrival of connected health and fitness devices is good news for consumers. However, they are a challenge to a healthcare industry hoping to make good use of the data from these devices. Care providers are not in the business of collecting personal health and wellness data from a variety of devices, even though they have an interest in what their patients do between visits. This challenge translates to a market opportunity for technology vendors that can integrate and aggregate sensor and device data for healthcare providers.

Big data analytics for health applications promises to create a better and more comprehensive picture of an individual’s health risks and can help develop personalized care plans that promote healthy lifestyles in a highly effective way. Specifically, Parks Associates expects companies to experiment with big data primarily in the categories of chronic care management, fitness and social media, and independent living in 2015.

Additionally, health and wellness have become the most dominant use cases for wearables. Consumers are drawn to the benefit of self-tracking as wearables and apps have made health and wellness tracking so convenient that a “quantified self” experience–in which consumers use technology to track their daily routines to gain new insights into how they might improve or optimize their lifestyles–is now more mainstream. The success of the entire wearables category will draw interest from care providers in leveraging wearables to collect more meaningful patient data and offer more personalized support for health improvement.

Overall, the U.S. market is still the best connected health market in the world in terms of size and near-term growth opportunities. Chronic care markets in Germany, Spain, France and Japan also look promising. For virtual care markets, the U.S., Spain, France and China are poised to experience faster growth than other nations.

The Growth of IoT
Innovation, new products and services, sufficient broadband performance, resolution of security and privacy concerns, and ease of use and management of connected devices and services will fuel continued growth in connected lifestyle products and services.

Industry players should:

  • Ensure that broadband performance is sufficient in order to enable a satisfactory connected lifestyle user experience.
  • Find the “sweet spot” between provision of a satisfactory user experience and generation of new revenue streams. A smooth user experience will support customer retention and fuel growth.
  • Leverage cloud-based data analytics to improve customer service, provide product offering enhancements and generate additional revenue streams while, at the same time, placing customer privacy and security at the core of product and services design to eliminate a potential barrier to adoption.

John Barrett

John Barrett

Director of Consumer Analytics

John Barrett leads Parks Associates questionnaire development and specializes in survey design that elicits accurate, insightful, and actionable data. He regularly advises companies across consumer technology markets on research methodology and business strategy and has authored dozens of industry reports. He also teaches college-level courses on research methods and other topics at LeTourneau University.

He holds a PhD in Religion, Politics, and Society from Baylor University, an MA in international economics from the Johns Hopkins University: School of Advanced International Studies (SAIS) and a BS in international affairs from Georgetown University.

Tom Kerber

Tom Kerber

Senior Director, IoT Strategy and Custom Research

Tom leads Parks Associates research in the areas of home controls, energy management, and home networks. Tom authors numerous reports on energy management and home controls covering the evolution of technology, partnership opportunities, and new business models. Tom’s work at Parks Associates includes managing consumer surveys that track trends and market opportunities and enable insightful evidence-based forecasting for energy, security, and home controls. Tom speaks frequently at key industry events, and his views are sought out by national press organizations and publications.

Tom has done extensive consulting with electric utilities operating in a variety of regulator structures and numerous firms within the smart home ecosystem. Recent utility engagements include defining the home area network roadmap for a California IOU, updating the consumer engagement strategy for a traditional vertically integrated IOU, providing consumer and industry analysis to refine EE and DR programs for an IOU in a restructured market, and providing insights on the evolution of the connected home for a large Midwest IOU. Tom has also led projects for many Fortune 500 companies, helping clients refine smart home strategies, develop scenarios of the future of the smart home market, enhance product roadmaps, and refine specific product features.

Prior to working at Parks Associates, Tom worked as director of engineering and director of product management in multiple industries. Tom began his career in the U.S. Navy nuclear power program on submarines. He holds a Bachelor of Science degree from the U.S. Naval Academy in systems engineering and a master's in software engineering from the University of Texas.

Industry Expertise: Residential Security, Smart Home Products and Services, Home Network Technology, Software Systems, Electric Utilities, AMI, Home Energy Management, Demand Response

Barbara Kraus

Barbara Kraus

Director of Research

Barbara Kraus joined Parks Associates in early 2013 and currently studies the connected consumer electronics field. Barbara’s expertise is delivering and monetizing consumer insights through the provision of compelling product and service technologies and experiences.

Barbara’s background includes more than 10 years with technology service providers in the telecom and home security industries in marketing, strategy and insights, operations, and business development. She also worked for EDS, now HP Enterprise Services, in market intelligence and large-deal sales support. Barbara received her bachelor’s degree in liberal arts from the University of Kansas and MBA from WSU.

Industry Expertise: Consumer Electronics, Connected Home Entertainment Devices, CE Consumer Adoption and Usage Patterns, Security and Privacy, Cloud Platforms and Applications, International Research

Brett Sappington

Brett Sappington

Senior Research Director and Principal Analyst

INDUSTRY EXPERTISE: Pay TV and OTT video services, entertainment content distribution, video and cloud technologies, broadband services

As Senior Research Director and Principal Analyst, Brett Sappington leads Parks Associates research practice for entertainment, broadband access, and consumer electronics markets. His personal and custom research focuses on trends and technology innovations among major service providers, content producers, networks, and technology vendors and the market forces affecting their businesses. Brett is an internationally recognized thought leader in the television, broadband, and online video service industries.

Brett has spent over twenty years in the industry as an analyst, executive manager, and entrepreneur for companies specializing in cloud, communication, and IP-related technologies. He founded a successful networking technology startup, built new divisions of wireless networking and audio software products, and was involved in the development and marketing of early-market products for Wi-Fi, VoIP, video-over-IP and other technologies.

Brett holds an MBA from the University of Texas at Austin with a concentration in high-tech marketing and a BA in physics from Baylor University.

Harry Wang

Harry Wang

Senior Director of Research

Harry Wang oversees Parks Associates’ mobility and apps research, which covers mobile/wearable devices and services, apps and APIs, and mobile commerce/marketing, payment, and connected car industries. He is also the founder and lead analyst of Parks Associates’ digital health research program since its inception in 2006. He and his team cover emerging health technologies, applications, and services in areas such as chronic/preventive care, independent living, wellness and fitness, and virtual/convenience care.

Harry has published more than 40 industry reports and white papers and presented his mobility and digital health research at numerous industry events including CES, Mobile World Congress, CTIA, Open Mobile Summit, World Health Congress, the American Telemedicine Association Annual Trade Show, and Parks Associates’ CONNECTIONS™ and Connected Health Summit conferences.

Harry earned his MS degree in marketing research from the University of Texas at Arlington. He also holds an MBA degree in finance from Texas Christian University and a BA degree in international business from Guangdong University of Foreign Studies, P.R. China.

Industry Expertise: Digital Health Products and Services, Portable and Mobile Access Platforms and Applications, Digital Imaging Products and Services

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