The Internet of Things (IoT) will end the decade as a trillion-dollar market. The battle over IoT consumers is already heating up, with companies jockeying to lay claim to the “smart home.” In the United States, the sheer magnitude of opportunity will alter the way companies brand themselves. It remains to be seen which types of retailers will be recognized by consumers as IoT brands, and which retailers will succeed.
Here are six consumer markets where the IoT is set to grow big:
Home improvement: To succeed in consumer IoT, these chains will have to expand an IoT-friendly brand to attract renters and urban shoppers. Computerworld recently reported on Lowes is urging reluctant smart product manufacturers to adopt open-API requirements. This could improve integration, increase choice, consolidate apps, and build long-term customer satisfaction. The move, coupled with its Iris Smart Hub, demonstrates Lowes’ commitment to building an IoT brand.
Office supply: Staples Connect is a smart home solution that includes a hub, app and connected devices. Whether this represents a true foray into domotics, or ends up automating office supply orders remains to be seen. Office Depot’s current efforts to compete are negligible.
Consumer electronics: Best Buy has rolled out, “Peq,” a cloud-based hub that requires a monthly fee. Branded sensors and paraphernalia suggest a strategy to gain and retain users via proprietary systems. This model is consistent with Best Buy’s approach of marketing mid and high-end turnkey products (e.g. out-of-the-box home theater systems).
Online retailers: Search, comparison, reviews, and research are all benefits of online retailers like Amazon. On the other hand, the demise of brick and mortar competition is greatly exaggerated. While not a smashing success, Amazon’s Fire phone can hint at a strategy where smart homes double as points of purchase for online shopping.
Big box general retailers: The lack of smart product news out of Target and Wal-Mart isn’t surprising. Competition is driven by high volume and low cost—not defining qualities of the nascent IoT market. While these retailers frequently do lead the adoption of smart, connected technology behind the counter—particularly in distribution and fulfillment (e.g. ship-to-store), it’s a safe bet that we shouldn’t expect big box retailers to corner the market on smart products.
Telecommunications providers: Verizon and Comcast have locked horns over the phone, cable, and Internet market. Telecoms have a huge advantage over the previously mentioned retailers—hardware capable of supporting smart products is already in many homes.
The recent introduction of home security packages reveal the direction these providers are planning, as they look to offer remote monitoring, control and automation for devices throughout the household.
With a customer base softened by years of bundling, vendors will likely market turnkey smart home packages for security, efficiency, and convenience. It’s not all rosy for telecoms, however. As service providers, their customer support reputations are relatively low; put another way, you only think about your cable provider when your TV isn’t working. Uphill battles include establishing confidence in product and support quality.
Who has the clearest advantage?
Currently, home improvement retailers and telecommunications providers seem best positioned to define the market. Players like Lowes can provide an affordable, open base station and complementary products for more seamless installation.
Telecommunication providers have already staged homes with the seeds of smart infrastructure. It wouldn’t be impossible to see a formal partnership pairing a telecom with a retail chain.
While change is coming, the paradigm shift is not immediate. This first generation of products is smarter than it is connected—siloed devices run apps that control one or two smart products (or smart “adapters”). As more connected systems emerge, the stakes will increase as people decide not just which retailer to trust for connected products, but what kind of retailer.