The bottom line is that, as an industry, we need to make it much more simple and turn-key for the consumer to adopt and install connected home solutions.
Kristine Stewart | Internet Home Alliance
Home Toys Interview
Internet Home Alliance is a cross-industry network of leading companies advancing the home technology market. A non-profit organization, the Alliance provides companies with the collaboration, research and real-world testing opportunities they need to gain a competitive advantage in the home technology market. Members of the Alliance, which was founded in October 2000, come from a variety of industries and include such leading companies as Cisco Systems, Inc., General Motors, Hewlett-Packard Company, IBM, Invensys, Microsoft, Panasonic (Matsushita Electric Corporation of America), Procter & Gamble, SBC Communications, Sears, Roebuck and Co., and Whirlpool Corporation. For more information, visit www.internethomealliance.com.
Q1. Kristine, give us an update on Internet Home Alliance and its activities since our last interview.
2004 has been a productive year for Internet Home Alliance. Our members have collaborated on a variety of projects, most recently, the Mobile Worker Pilot, which looked at where and how consumers would like to be able to work, outside of their primary office or home based set-up. One of the key research findings is which business models could work best for companies building out the retail environments to serve the burgeoning mobile worker market. We also have completed the Mealtime Pilot and expect to share the results of this project early 2005. I'm also excited about our recently launched Home Integrator Initiative - a milestone achievement in advancing the connected home market.
Q2. The Home Integrator Initiative is of particular interest to the Home Toys audience. Please share your thoughts on this critical and unique industry collaboration.
The Home Integrator Initiative is indeed a unique industry-wide effort and involves more than 20 companies and organizations. Developed to address the growing interest in digital home solutions, as well as the consumer and industry confusion that exists around the integration of home technology products and services, the objective of the Home Integrator Initiative is to bring key industry players together to adopt common goals and messages around the home integrator channel and to promote consumer awareness of integrators as a key resource in their adoption of connected home products and solutions. The bottom line is that, as an industry, we need to make it much more simple and turn-key for the consumer to adopt and install connected home solutions. Research shows that consumers are interested to use these solutions in their daily lives and in order to do so, they will need qualified professionals to help them with installation and on-going support.
The Initiative includes several significant efforts. The first, available now, is an industry white paper, Net Gain: Advancing the Market for Home Technology Integrators, developed by the committee, which articulates the landscape for home integrators and provides recommendations to the industry about how to work together more effectively to promote home integrators in a clear and consistent manner.
And through our collaboration with CNET, the trusted, unbiased source of information for millions of technology buyers around the world, the CNET Home Integrator Directory has been launched. This online, zip-code searchable directory of home integrators and personal technology consultants will help consumers locate the professionals they need in their region.
Q3.You mentioned the Mealtime pilot and we spoke about it last time, too when the project was just getting going. Any updates to that pilot and insights on the future of the networked kitchen?
The results really did reinforce the appreciation consumers have for Internet access in the kitchen. On a very basic human level, our participants found that having the Internet available in the kitchen brought the family closer together. We had two types of devices, a tablet PC and a flip-down device from Icebox, both of which saw lots of use from everyone in the family. They also really like the idea of a fully networked kitchen, because they saw the tangible value of the Whirlpool's programmable Polara range, which also refrigerates food before turning itself on when it is time to cook the meal.
Q4. What is next up on the Alliance's schedule of projects?
Well, as you would expect, our members take the results of our research and look to exploring new areas of business opportunity. Projects on the horizon include research into the areas of health and wellness, safety and security, entertainment and appliance event notification.
Q5. What do you see as key trends that will help continue to drive adoption of the networked home over the next 2-4 years?
Right now, home networking is driven primarily by the increasing adoption of broadband and the desire to take full advantage of it by creating multiple access points within the home. We expect that over the next several years, the main drivers of adoption will be new products and services that leverage broadband and the proliferation of digital products. We know, for instance, that consumers consider a home network a 'natural' control point for advanced solutions in the areas of home security, energy management and lighting control. About one-in-five consumers with a home network has a strong interest in these types of home automation features-far more than currently have them.
At the same time, the living room is fast becoming the focus of activity for digital entertainment. We believe entertainment solutions that capitalize on the fact that many devices and data share the language of ones and zeros will accelerate the popularity of the connected home concept. We've evaluated several iterations of a media server over the last few years and each incarnation has generated considerable consumer interest.
Q6. Is there demographic data available on who the average purchaser of home network equipment is or will be?
The typical or average home network buyer is a knowledge worker with a strong need to be connected to friends and family and/or colleagues and clients. About eight-in-ten U.S. workers can be considered knowledge workers-employees in creative fields or professional services who use technology on a daily basis. Demographically, they tend to be males between the ages of 25 and 44-years-old. The most active purchasers of home networking products have school age children, as children are a prime reason households have multiple PCs and the consequent need to share an Internet connection.
Our research indicates that a majority of home network owners are self-described early adopters, but members of the early majority are getting into the market at an ever-faster pace. Products that have achieved a 22% household penetration or better are usually considered 'mass market' products. We're a little over half-way there at this point.
Q7. How will the installation of these products be paid for? For example will it be built into the purchase price … optional add on services … or will they be truly plug and play thus not requiring additional skills to install?
Because the home networking market is currently dominated by early adopters, many are comfortable installing products themselves. The next wave of sales, though, is coming from members of the early majority, who tend to be less tech-savvy. Many of them want help with installation and, as indicated by our research, many are willing to pay for it, when given a reasonable fee. Most of today's home networking products outside of the basic set-up aren't genuinely plug n' play and going forward, the situation isn't likely to get any easier as new products are introduced. The sheer accumulation of products, each with their own idiosyncrasies, most likely will require professional installation in many cases.
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