Home Toys Article
- Reza Raji May 2000 -
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Reza Raji
Director of Business Development
Echelon Corporation

The main revenue source for the service providers, namely services, can be a set of dynamic, money-saving and convenience-rich offerings for homeowners to pick and choose from much the same way they select between long distance or cell phone carriers, or telephone service features (call waiting) today.  Global deregulation of the utilities market is prompting utilities (power companies, telcos, etc.) to look for new and improved services that differentiate their offering from their competitors.


The Big Picture?

There has been a lot of talk about Home Networking in the past few years.  I am happy to see that most of the players involved are finally starting to differentiate between the different kinds of networks that could reside in a house.  For review, there are three basic networks that could reside in a home: Data, Audio/Video, and Control, as shown.

Of course true home networking should included interoperability, or at least smooth coexistence of these  three distinct but complementary networks.

So What Is Home Automation?

Home automation and control deals with “light-weight” devices with very limited computing resources with high cost sensitivity such as light switches, dish washers, washing machines, thermostats, dimmers and motion sensors, to name a few.  Control devices are practically everywhere around us.

Control devices have very unique set of characteristics that are different than those for data networks.  Compared to data networking devices (PCs, printers, laptops, etc.), there are more control devices that can be found in a typical home.  Other attributes of control and automation networks are the relatively low network bandwidth (i.e. bit rate) requirements as well as the need to support multiple media (twisted pair, power line, RF, etc.). 

Control and automation networks also need to be more reliable and secure than the other forms of home networking. For example, a security system cannot tolerate a “re-boot” every few days (I know of many PC users who can’t either!).  Nor can it tolerate intentional attacks from hackers.

Given all the above, it can be seen that there is a need for an architecture which addresses device networks.  For more details on the requirements of home control and automation networks refer to this Hometoys article http://www.hometoys.com/htinews/oct99/articles/echelon/echelon01.htm.

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Show me the Money

You are probably expecting to read now about how a home networking company can make money in home automation.  Well, that’s what this industry has focused on for the past few decades – nothing wrong with that, except it’s not enough.  What is even more important is this question: what is going to make a system compelling to the homeowner?  Compelling enough for them to spend money on, that is.   Sounds like marketing 101, but it’s amazing how many companies still don’t get it.  I think there are four main attributes that make any consumer product compelling:

1)       It saves money

2)       It provides safety and security

3)       It provides comfort and convenience

4)       It’s cool  (the WOW factor)

There are no real and viable home automation products or systems that meet more than one or two of these characteristics today.   But there is good reason to believe that this is finally going to change.  Actually there are two good reasons:

1)       Increased accessibility of low-cost always-on broadband connection to homes

2)       Global deregulation and increased competition amongst utilities and other service providers

These two reasons alone are enough to usher in the era of the service-driven home networks to the consumers.  The extension of the home network to the Internet and allowing service providers to leverage off of that network is what allows the hardware cost of the home automation system to no longer be a limitation for the market as a whole.   It would also allow homeowners to save money by taking advantage of services that enable them to take advantage of lower electricity rates, for example.

An end-to-end service driven security system could effectively provide a more secure living environment while reducing the monitoring and maintenance cost.

Smart white goods (dish washers, washing machines, etc.) can not only talk to each other to regulate the overall power usage but also allow a service provider to monitor their status remotely and inform the homeowner of any impending service-related issues (e.g. the belt should be replaced before it breaks down).  Additionally, helpful hint and advice on improving your dishwasher performance or your oven usage could be provided on a much more personal level by the appliance manufacturer.  Incidentally, these are the exact things that Merloni, one of the largest white good manufacturers in Europe, is doing right now.

Lastly, being able to monitor and control your house remotely (via the Internet or your WAP-enabled phone) is a pretty cool conversation piece as well for those who are determined to wow their neighbors.

The main revenue source for the service providers, namely services, can be a set of dynamic, money-saving and convenience-rich offerings for homeowners to pick and choose from much the same way they select between long distance or cell phone carriers, or telephone service features (call waiting) today. Global deregulation of the utilities market is prompting utilities (power companies, telcos, etc.) to look for new and improved services that differentiate their offering from their competitors. They are motivated indeed. In fact, this is a proven model that allows all players (OEMs, service providers and homeowners) to benefit - a win-win-win, if you will. See www.echelon.com/solutions/Markets/home/benefits.htm  for more information on the benefits of the service-driven model for each of the home automation players.

The Digital Home™ Is Coming

It is for these reasons that I believe the Digital Home is finally going to happen. In the next year or two you will see the arrival of the home automation systems and services that work together to offer most if not all the benefits described above. I am often asked what the range of services is going to be. Trying to answer that would be like trying to predict what the Web would be like five or ten years ago. We can come up with a few obvious services that are extensions of today's life styles and existing offerings, but once an end-to-end infrastructure for providing services to the home is in place, imagination will be the only limiting factor as to the actual services offered. Given what has happened to the Web, we are definitely poised to see explosive innovation and growth in this market in the next few years.

Reza Raji ( reza@echelon.com )is the Director of Business Development at Echelon Corporation, a leader in providing solutions to extend the power and benefits of networking to everyday devices. He joined Echelon in early 1991and has held various positions in the technical and marketing roles within the company.