How would you describe the Connected Home market status and perspectives for Europe, from your headquarters, here in Sophia Antipolis?
In order to answer your question, it is probably appropriate to first define what we mean by “Connected Home”, to avoid any misunderstanding.
In our mind, the term Connected Home is one of the words that appears to be suited to characterize an important evolution, over the last 20 years, of the market for technologies and services for the home. This evolution has been and is still mainly driven by the rapid progress in the IT field. Some fashionable words representing milestones on the road of this technological progress include: “micro-electronics” in the late 80’s (giving birth to “smart devices”), “information highways” in the early 90’s (enlarging the perspectives for added value services to and from the home), the “digital” and “the Internet” booms in the nineties, and more recently, the “broadband” and “wireless” waves. This constant technological progress, the increasing number of IT-based products and services for the home, have made it possible, over the years, to imagine, promote and realize more “connected” homes, that are homes offering an increased connectivity with the outside world, through “home gateways”, as well as inside through the use of “home networks” to connect home appliances and extend their functionalities.
So, the term “Connected Home” can be taken as quite a relevant focus by the industry involved in products and services for the home. However, no one should ever forget that very few customers would look for “connected homes” or “home gateways”, or “home networks”. Most customers will buy the products or services which they find attractive, easy to buy, simple to use and affordable. Customers will never buy everything that technology makes possible!
As Roger said, avoiding too fashionable terms, being specific about what terms mean and concentrating on real issues is essential.
When we set up Homega Research a few months ago, as a specialised division of Sigma Consultants, we hesitated quite a lot on the choice of the logo’s baseline. Should it be ” Connected Home “? We finally chose “Technologies and Services for the Home”, which may be less appealing and might appear conservative, but which describes our business best and our mission: providing all market players in this field an appropriate range of services (market research, technological support, business events) so they can better face rapidly changing environments and take full advantage of existing market opportunities.
This is also why, the theme of our annual Net-atHome conference and exhibition, is not “The Connected Home”, but “Home networks and gateways, connected appliances and Internet related services”, so that all industry participants can more precisely understand the actual focus of the event.
To return to your question, while agreeing with what Karine has just said, I would say there is a benchmark for measuring the status and trends of the market for the Connected Home in Europe and around the world: our Net-atHome. The expected success of Net-atHome2003, to be held in Cannes at the end of October, can be considered as a good indicator that the market is quite dynamic at the moment despite an unfavourable economic environment.
For sure, the present period is not quite favourable in Europe and in North America, and even in Asia, due to the effect of SARS. As all industries targeting end consumers, the Connected home industry is suffering from uncertainties, limited GNP growth, increasing unemployment rates, etc.
Nevertheless, we do expect a big Net-atHome event this year, based on the early registrations and on the number of event sponsors and exhibitors who have already confirmed their involvement. Last year we had over 300 participants and 45 exhibitors from over 20 countries. This year the figures should be comparable, which is, as Roger said a good indicator of the present market dynamism and a confirmation that, from it’s rather humble beginnings in 1995, Net-atHome has become the “not to be missed” event in this field in Europe.
To be noted, we are witnessing an increased participation from Asian market players at Net-atHome. For sure, the market potential is very important in such countries as Korea, China, Singapore and Japan, and many Asian companies will come to Net-atHome to get information, network and make deals. But Asian market players are also quite interested in European markets and have visions, ideas and solutions quite suited to our markets. We can in fact anticipate a growing connection between Europe and Asia in this field, which we first had the opportunity to experience last year, through the very successful EuroChina2002 conference and the IT exhibition we organised in Beijing on behalf of the European Commission.
How would you compare the market growth potential in Europe to the rest of the world?
We can compare it quite favourably for a couple of reasons.
First, in terms of technologies and services, many European companies compete favourably on the global scale with their North American or Asian competitors. This is due in the first place to the strategy and to the capacities of these companies. But for some of them it is also thanks to the support of the European Commission, which I would like to underline here. This year, for example, in the area of Connected Homes, the European Commission will sign (within the framework of the so called IST Programme) up to 60 million euros worth of contracts to help European companies develop innovative products and services. An example of supported projects is the TEAHA project, coordinated by Spanish Telefonica, an initiative to allow major European companies to work together to unite the two worlds of narrowband and broadband technologies and applications.
The TEAHA IST Project objective
Another reason is the situation in Europe in terms of broadband infrastructure which is very favourable and which is undoubtedly a market driver in the field of connected homes. We also have here a very significant development of wireless technology: many cities are installing large coverage Wi-fi hot spots free of charge, and some providers are offering ADSL and Wi-fi together directly to customers. Although it is important not to overestimate what wireless can and will do, the rapid development of this technology and of these applications here in Europe are also important supports to the development of Connected homes.
Broadband European Households (in 1000)
Another aspect, which is very much a European phenomenon, is the move by energy utilities to deploy broadband powerline communication (PLC) technology on a mass scale. Although not yet adopted by the largest of these companies, there have already been commercial rollouts in Scotland and Germany. If the biggest utilities follow through on this initiative, the effects on the market could be profound.
Do we know what the consumer needs are in terms of “Connected homes” and what the killer application is?
As I said when addressing the focus of our talk, needs in terms of “Connected home” are probably quite low. But if you ask someone who has two PC’s today if they need a simple to use, affordable and reliable way to connect them to share their broadband access and avoid paying twice, the answer is a resounding yes. Similar questions could be asked about the myriad of products that make up the typical home entertainment system of today.
Let’s stay focused on today’s markets and forget the dream that most people will soon live in fully automated homes. Sure, Bill Gates has one, as does Michael Jordan, and some others. But this will remain an unaffordable dream for most consumers who need and can afford a number of products and services that technology makes possible today. And we know a lot about these needs. The challenge is to focus on these needs and make the right products and services available in the marketplace.
As for the “killer application”, this is also another (industry) dream that has to be kept away if a company wants to succeed. Consumer needs are diverse and the market is quite segmented, though some of these segments look promising in the short term. Let’s focus on them!
I of course agree with Roger: understanding, stimulating and addressing consumer needs is important. This is why, although our principal role with Net-atHome is to support the supply side, we have decided this year to dedicate a whole session to consumer needs, above and beyond sessions typically devoted to specific applications or market segments such as Asian markets, today’s drivers, in-home PLC, aging in place, trials and deployments, etc.
Where can the average man-in-the-street see the future?
First, I would say: let’s concentrate on today’s markets, on today’s consumer needs and not on tomorrow’s markets or on the “home of the future”.
To answer your question, I would say that everyone should find more and more attractive products and services for the home through traditional distribution channels (retailers, specialised stores, the Internet, service companies, etc.). In the current period however, the contribution of the press and TV to consumer awareness remains essential and your role as a journalist is certainly as important as mine as a provider of support services to the industry.
We also think Homega can bring a significant contribution to the necessary development of consumer awareness and we are assembling a group of industry partners to design and build a pilot “home of today”, demonstrating emerging technologies, products and services which will be widely promoted not only to industry professionals but to the general public as well. We expect to begin construction here in Sophia Antipolis in the second half of 2004.
When you look at the suited technologies, the products and services that are available, and at the determination of the major players to be active, you can only conclude that in Europe, at least we are likely to witness, in the short term, the beginning of a high-growth period in many segments of the market for the Connected Home.