Bundling services to Smart Home Internet of Things

Presented by:
Internet of Things: Smart Home
Success through Bundled Services
Parks Associates Webcast
Sponsored by:

www.parksassociates.com | © Parks Associates | info@parksassociates.com | 972.490.1113 | @ParksAssociates
Audio Recording
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2

Presented by:
Stuart Sikes, President, Parks Associates

Internet of Things: Smart Home Success through Bundled
Services
Agenda
 Defining Internet of Things and the evolution of the smart home
 Audience perspectives on success factors for an emerging market
 Current offerings from 3 industry leaders (Verisure, Orange, Panasonic)
 Leading value propositions
 The value of bundles
 Business models
 Interoperability
 Questions
4

Internet of Things: Smart Home Success through Bundled
Services
Alvaro Gallardo
Smart Home
Services &
Assistance at Home
Director at Orange
5
Takeshi Kubota
Managing Director,
Panasonic Eco
Solutions Europe
Dick Seger
CEO
Verisure Group

Defining the Internet of Things
• Internet of computers
7
• Internet of CE devices
• Internet of any devices

Quirky + GE www.quirky.com
Quirky.com

www.parksassociates.com | © Parks Associates | info@parksassociates.com | 972.490.1113 | @ParksAssociates 9
Phase I:
In place today
Phase II:
0-5 years
Phase III and Beyond:
Next 10 years
Data Collection
Display, Reporting
Modeling Behavior
Knowledge
Based Reporting
Prediction
Intelligent
Control
Follow Orders
Adapt and Learn
Coordinate Environment
Connected Home Smart Home
IoT in the Home: 3 phases of home controls…

Lessons Learned: Success Factors for Smart Home
1. Point solutions are limited in attractiveness
2. There is no single killer value proposition
3. There exists a hierarchy of needs
4. Bundles will win
5. Multiple paths to market
6. Interoperability is simple … from the consumer’s perspective
10

Audience Survey -- What Industries will Benefit Most?
11
3%
6%
8%
6%
11%
9%
14%
11%
30%
4%
4%
9%
9%
10%
11%
12%
9%
15%
17%
10%
4%
7%
6%
10%
6%
10%
18%
17%
11%
0% 10% 20% 30% 40% 50% 60% 70%
Other
Insurance
Software
Alarms
Home appliance…
Cable
Utilities
Online
Electronic hardware
Telecom
Top Industry
Second Industry
Third Industry
Industries Benefitting Most From Smart Home Industry Development (Q2/14)
"Q1. Which three industries have the most to gain by the development of the smart home market?"
(Among IoT Webcast Attendees, n=109, ±9.39%)
Source: Internet of Things Survey Q2 2014
N=109 Webcast attendees
© Parks Associates
% Selecting

Audience Survey -- What Industries are Overestimating
the Benefit?
12
9%
8%
15%
17%
17%
19%
20%
22%
30%
38%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Other
Software
Electronic hardware
Cable
Telecom
Home appliance…
Online
Alarms
Utilities
Insurance
© Parks Associates
Industries Overestimating Future Role in Smart Home Market (Q2/14)
"Q2. Which industry(ies) are overestimating its future role in the development of the smart home market?"
% Selecting

Audience Survey -- Most Important Driver
13
User-friendly interfaces
and easy to use products,
30%
Increased general
consumer awareness,
24%
Bundling of services, 14%
Energy management, 10%
Remote access to home
systems, 8%
Care services for an aging
population, 6%
Well known companies
investing in the market,
4%
Security services, 3%
Health and medical
services, 2%
Most Important Driver for Developing Smart Home Market (Q2/14)
"Q3. What factor will be the most important driver for developing the smart home market?"
© Parks Associates

Audience Survey -- Most Significant Barriers
14
Interoperability between
different applications,
28%
Raising awareness of
product benefits, 15%
Bundling the right
services, 13%
Consumer unwillingness
to cope with new
technology, 12%
Lack of consumer
demand, 12%
Installation and
maintenance, 8%
Integration of technology
and communication
services, 6%
Finding the right prices to
charge, 6%
Service, 1%
Most Significant Barrier to Smart Home Adoption (Q2/14)
"Q4. What is the main barrier to widespread smart home adoption?"
© Parks Associates

Audience Survey -- Successful Business Models
15
Device sales with no
or low monthly fees,
37%
Included with energy
management
systems, 13%
Included with
entertainment
systems purchases,
14%
Monthly professional
service fees and little
to no up-front
product fees, 37%
Winning Business Models for Smart Home Adoption (Q2/14)
"Q5. What business model will be most successful in delivering smart home products to a large market?"
© Parks Associates

Case Studies
Alvaro Gallardo
Smart Home
Services &
Assistance at Home
Director at Orange
16
Dick Seger
CEO
Verisure Group
Takeshi Kubota
Managing Director,
Panasonic Eco
Solutions Europe

ORANGE : A Worldwide Leader
• 2013 Turnover: €bn 41,0
• >50% of turnover out of France
• Present in 35 countries (Consumer Market)) et 220
(Equant on the Enterprise Market)
• 236 million customers worldwide
» 178 M mobile (55 M en 3G)
» 6,5 M IPTV, leader in Europe
» 42 M fixed
» 4G launched in 9 countries
• EBITDA: €bn 12,6 M€
• Free Cash Flow 2013: €bn 7,0
• Investment €bn 5.6 (>13% of turnover)
• ~170, 000 employees A Leading Brand
17

There are critical elements that the whole industry, regardless of individual
approach, has to face to enable new services to take off in different areas
Holistic approach to the
service
Quality, customer
experience and support
Integration and simplicity
Keypoints
• Customers are demanding
services ‘whenever,
wherever, whatever’.
• Partial solutions are likely to
take-off, but could fade
against integrated players.
• Customers are to drive the
demand of services, not
players.
• Regardless the business
model, providers should
address the whole customer
experience, including post-
sale elements, continuously
improving the service.
Otherwise, they are likely to
fail.
• New services will need
strong customer support,
being able to identify where
the issues are located and
fixed them.
• Customers are not to add
boxes and boxes.
• Integrating the services and
simplifying the overall
experience would be worth,
and customer will pay for it.
• Single solutions (boxes,
support, billing) would
facilitate adoption.
Offer should be built
around customers’
demands
This is about services,
they should be delivered
like them
Make it easier for
customer (and partners)
18

Company Summary
19
Dick Seger
CEO
Verisure Group

Securitas Direct Group
We are specialists in security for the home and family
1.6million customers
Europe’s leading
provider of full-service
safety, security and
home control solutions.
6,500
Employees and
large partners
organisation
14Business in 14
countries in Europe
and South America
390Portfolio EBITDA, million €
Net Sales 812million €
Full Year 2013
Owned by Bain
Capital and Hellman
& Friedman

Securitas Direct Group
Verisure – a portal
to the connected
smart home
• The Verisure eco-system provides full
integration of functionalities in the
home – the alarm, lock, in-door
climate, heating and cooling, doors
and windows and control of electric
appliances.
• The Verisure app offers control of all
functionality in the system.
• 15,000 Verisure systems are installed
each month.
• App
• My Pages
• SMS

Panasonic Corporation
Eco Solutions Company
Net Sales in Panasonic Corporation:
US$ 73 Bil. / FY2012
Net Sales in Eco Solutions Company:
US$ 17 Bil. / FY2012Appliance Company
Eco solutions Company
AVC Company
Automotive & Industrial System Company

Becoming the No.1 Green Innovation Company
in the Electronics Industry
By linking and combining
technologies that achieve comfort
in harmony with nature
and
technologies that achieve comfort
with minimal energy use,
we are aiming to improve comfort and
further reduce environmental impact
Green Life
Innovation
Creating green lifestyles to
Enrich people’s lives
100th Anniversary Vision 2018
Eco Solutions Company

Leading Value Propositions: Entry Points
25

Discussion 1: Leading Value Propositions
Alvaro Gallardo
Smart Home
Services &
Assistance at Home
Director at Orange
26
Dick Seger
CEO
Verisure Group
Takeshi Kubota
Managing Director,
Panasonic Eco
Solutions Europe

The Power of Bundles
Home Safety System
Alerts you by text
message/email in the
event of:
 Fire
 Flood
 Gas/Water Leak
 Home “Panic
Button” is Pressed
$199.99
Home Security
& Safety System
Alerts you by text message/
email in the event of:
 Break-Ins
 Fire
 Flood
 Gas/Water Leak
 Home “Panic Button”
is Pressed
INCLUDES:
Home monitoring camera
viewable from your
smartphone or a computer
$349.99
Home Management System
Alerts you by text message/email in
the event of:
 Break-Ins
 Fire
 Gas/Water Leak
 Home “Panic
$199.99
viewable from your
$349.99
the event of:
 Break-Ins
 Fire
 Flood
 Gas/Water Leak
 Home “Panic Button” is Pressed
INCLUDES:
Home monitoring camera viewable
from your smartphone or a computer
Ability to adjust your thermostat
and turn on/off your home’s lights
using your smartphone or an
Internet-connected computer
$499.99
Home Safety System
Alerts you by text
message/email in the
event of:
 Fire
 Flood
 Gas/Water Leak
 Home “Panic
$199.99
Home Security
& Safety System
Alerts you by text message/
email in the event of:
 Break-Ins
 Fire
 Flood
 Gas/Water Leak
 Home “Panic Button”
is Pressed
INCLUDES:
viewable from your
$349.99
the event of:
 Break-Ins
 Fire
© 2014 Parks Associates

When prices are presented, the safety system becomes the
most appealing package.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Preferred (without pricing) Preferred (with prices)
Safety System Safety & Security System Home Management System
Preferred Smart Home Package with Pricing Shown (Q4/13)
"Q7230. If offered these three systems for the following prices, which one would you be most likely to purchase?"
(Among All BB HHs, n=2,500, ±1.96%)
Source: 360 View: Energy and Broadband Households Q4 2013
N=2,500 Broadband heads-of-households
© 2014 Parks Associates
%PreferringPackage

Discussion 2: The Power of Bundles
Alvaro Gallardo
Smart Home
Services &
Assistance at Home
Director at Orange
29
Dick Seger
CEO
Verisure Group
Takeshi Kubota
Managing Director,
Panasonic Eco
Solutions Europe

Getting Past Early Adopter
30
-7%
10%
17%
24%
44%
60%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
1 feature
(n=354, ±5.21%)
2 features
(n=182, ±7.26%)
3 features
(n=184, ±7.22%)
4 features
(n=176, ±7.39%)
5 features
(n=103, ±9.66%)
6 features
(n=103, ±9.66%)
NetPromoterScore
NPS for Primary Home Control System by # of Features Adopted
"Q7020. How likely are you to recommend your home control system to your friends, colleagues or family?"
(Among BB HHs Having Specified Features)

Discussion 3: Moving Beyond Early Adopter
Alvaro Gallardo
Smart Home
Services &
Assistance at Home
Director at Orange
31
Dick Seger
CEO
Verisure Group
Takeshi Kubota
Managing Director,
Panasonic Eco
Solutions Europe

www.parksassociates.com | © Parks Associates | info@parksassociates.com | 972.490.1113 | @ParksAssociates 32
Business Model Preferences
48%
42%
43%
40%
39%
35%
30%
32% 32%
34%
38%
39%
25%
30%
35%
40%
45%
50%
55%
18-24
n=285, ±5.81%
25-34
n=500, ±4.38%
35-44
n=489, ±4.43%
45-54
n=573, ±4.09%
55-64
n=399, ±4.91%
65+
n=254, ±6.15%
ConsumerBusiness Model Preferences (Q4/12)
"Q7470. Assuming you wanted the home management equipment and services
described earlier, which option would you prefer?"
(Among BB HHs, N=2,500, ±1.96%)
Purchase equipment with no subscription Free equipment with subscription
Source: Home Systems and Security: New Offerings and Features, November 2012
2013 Parks Associates

Discussion 4: Winning Business Models
Alvaro Gallardo
Smart Home
Services &
Assistance at Home
Director at Orange
33
Dick Seger
CEO
Verisure Group
Takeshi Kubota
Managing Director,
Panasonic Eco
Solutions Europe

Interoperability Scenarios
34
Home Networks Gateways Cloud
Business Data
Services
APIs
Partners
Peer to Peer
34

Discussion 5: Creating a Seamless Platform
Alvaro Gallardo
Smart Home
Services &
Assistance at Home
Director at Orange
35
Dick Seger
CEO
Verisure Group
Takeshi Kubota
Managing Director,
Panasonic Eco
Solutions Europe

Question and Answers
Alvaro Gallardo
Smart Home
Services &
Assistance at Home
Director at Orange
36
Dick Seger
CEO
Verisure Group
Takeshi Kubota
Managing Director,
Panasonic Eco
Solutions Europe

©PARKSASSOCIATES
Stuart Sikes
President
ssikes@parksassociates.com
Office: 972.490.1113
Fax: 972.490.1133
tom.kerber@parksassociates.com
Thank You.

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