One of the things we talk about and have written about before is the reluctance of home automation industry to adopt off-the-shelf hardware as part of their offering.
Some argue that dedicated hardware, dedicated home automation controllers, dedicated home automation touch panels, and in some cases, dedicated home automation network cables are necessary to create a stable, high-quality installation. While on the surface this argument holds true, it does ring a bit hollow. It rings hollow because we tend to be very good at defending a point of view where our income depends on it.
The truth is that these dedicated home automation instruments are extremely expensive to the end-user and the business model of many a home automation company depends on the fat hardware margins. So it makes one wonder if the established automation vendors have a true interest to see alternatives from mass-volume consumer electronics industry to work in the field of home automation?
Enter Apple and Google
Now there are exceptions to the statements above. Some consumer devices corner such a huge following that installers have little to no choice but to accommodate them. Apple iPod as storage for one's personal music collection has become a central device in many people's lives. It's only logical for the user to resist having to replicate his music collection somewhere else. So integrate we must the iPod into the system. Then came the iPhone/iTouch with their beautiful touch screen interfaces and now the latest gadget, the mighty iPad.
Our digital life-styles are being pushed more and more into mobile consumer electronic devices. At the same time these devices are increasing their capabilities by leaps and bounds. It is only natural for users to want devices that are central to their lives to be part of their home automation as well, and on top of that, use these same devices to control the automation in their homes.
We regularly see touch panel components sell on the market with price tags of 6000 to 7000 dollars or euros. It is difficult to justify prices like these for devices that have the same functionality as a $700 device acquired elsewhere. Certainly, they are dedicated home automation devices but does that really justify a ten-fold price tag? We think not. Android from Google, promises to open wide the doors to custom panels.
It's a Luxury Business
If you allow a localized analogy, Switzerland is a country with a thriving watch-making industry. They produce the most beautiful, most intricately designed, most perfect hand-made watches to the very high-end luxury market, and they sell for several thousand to tens of thousands of dollars/euros/francs. It is the very best of what the industry can offer, the perfect device to tell you what time of the day it is by glancing at your wrist (and at the same time impressing your peers), and at least for some watch-makers, a sustainable business. And while there is a consumer demand for this market to keep it breathing, the truth is that the real revenues and real profits the industry makes come from the mass market, from watches that regular people can afford, from few hundred to couple of thousand in USD/EUR/CHF.
And the same is true for home automation. It is and has been a luxury market. There is room for a small number of specialists who cater for the very high-end luxury market. But at the peak of this pyramid, there is very little space to breathe. It is also this focus, and consequently the business models that have been built around it, that prevents the industry from growing. There's a need for larger audience in order to grow the revenues and profits, and that means catering more to the masses with higher volumes but lower mean prices. And that means taking benefit of the off-the-shelf products where possible.
Off-the-shelf hardware is produced in huge mass volumes by the Apples, Intels, Asuses, Acers, Dells and AMDs of the world. The competition drives the prices down quickly and into margins that are fraction of what the luxury home automation vendors might make on similar devices. Apart from the very high-end luxury market, it seems necessary for automation vendors who want to expand their audiences to co-opt rather than compete with this trend.
Now, generic off-the-shelf hardware comes with its own set of trade-offs. It is not dedicated for the automation domain so needs to be adapted accordingly. This means new challenges in testing, quality assurance and certifying working components and integration. Nevertheless, these challenges can be addressed and have been done previously in other industries.
Another analogy we can use is the modern PC industry. While home computers started as dedicated devices in 1980's with each vendor designing their hardware and software from scratch - whether it was Atari, Commodore, Amstrad or any other of the number of vendors designing their home computers - the real break-through came when IBM PC was cloned and brought to mass market with a flood of companies offering software and hardware components to this generic computing platform. A whole ecosystem emerged and the industry took off. Since then, various hardware and software certification processes have emerged to ensure a smooth end-user experience. While niche markets still exist for dedicated hardware, majority of today's home computers and all the way up to business datacenters are built on this same generic PC computing device or some of its offspring. IT professionals have learned how to build systems that we trust with most critical business transactions despite of the sometimes "imperfect" foundation of the technology. In home automation, we must do the same.
And Then There Was the Internet
Finally, the most fundamental technological change in the last 15 years has been the Internet. There's hardly any industry not affected by it, and home automation is no exception. Internet at home is now as central to media consumption as what TV was before it, and radio before that. Music, video, photos, books and magazines are distributed through it.
And because of that, the core of what makes the Internet work - the IP network - is becoming as common a communication infrastructure in people's houses as the TV cable or the phone line was before. Hardly any new buildings go up these days without Internet cables and connectors installed into the walls.
This means homes are equipped with a communications infrastructure that is usable for control and automation. And as with off-the-shelf hardware, vendors who are looking to expand their markets towards a wider audience, must take advantage of it.
Now, when talking about IP networks and home automation, people often confuse this with an idea that every electric device must have an IP address bound to it and must be connected to the IP network directly. This is not the case. There are areas at home where IP network won't reach for some time to come (lighting for example), and in some areas wireless sensor networks are a better alternative (although we may eventually see Internet protocol on top of WSN).
What the prevalence of Internet and IP network means, however, is that the backbone infrastructure of an automation network consumed by masses is likely to be based on Internet protocol.
This in turn means dedicated gateways or translators that integrate the home's IP network with the necessary protocols to automate all electric devices, be it serial connections, infrared, Zigbee or Z-Wave, and so on. This is what we call the "last-meter" connection between the IP network and the end-device.
It also means expanded know-how towards IP network setups and switches, such as understanding virtual LAN setups to improve the end-user control experience. This is part and parcel of IT professionals and network administrators today who use IP networks for critical tasks in corporate environments and is a needed transition for installers creating IP-based home automation setups as well.
The Changes Future Will Bring
Taken all the points together, what does this mean to home automation industry?
(1) Dedicated Home Automation Hardware Will Still Have Its Place
But the kind of dedicated home automation hardware that we are going to see are the components usually hidden from the view of the home owner. Dedicated gateway products that specialize on translating automation protocols to and from the home IP network are still needed. The mass consumer electronics industry will have little interest to target this area, at least not yet.
Expect to see less and less dedicated touch screens or dedicated home automation controllers that are easily replaced with off-the-shelf products. Their pricing, and therefore their utility, can only exist at the very peak of the luxury market, targeting high-net-worth-individual homes, not the mass market. There's not much space at the peak of the consumer pyramid, few vendors will survive in this segment but most will need to adjust their business models to cater to a different kind of home owner.
(2) IP networks Will Have an Increasing Role
As with the off-the-shelf hardware, IP networks are already in the homes, already installed around the house in new buildings, and they are being used to transfer media for user consumption. Undoubtedly, whether it is music, video, photos etc. the distribution happens on an IP network. Media centers are enabled for IP based controls. Web's HTTP protocol and Universal Plug'n'Play protocols are being used over IP to control things.
This means the backbone communication and control infrastructure is often in place already and it is IP-based. A fact that cannot be ignored by any vendor that wishes to reach a wider market that demands lower initial investment to experiment with the automation technology. What needs to be supported by automation vendors is the "last-meter" of network integration between IP to Infrared, IP to serial, IP to Z-Wave and so on.
(3) Increasing Need for Interoperability, Testing and Certification
Both off-the-shelf hardware and IP networks are generic technical solutions that must be adapted to automation purposes accordingly.
IT industry today uses these same components to support critical functions in the business enterprise. Same can be done for automation. But it requires establishing new processes that tackles the challenges of quality assurance in testing components, ensuring they work together and ultimately, certifying them as a supported solution for an automation installation. Training programs will need to be created and updated to include technical and configuration details of third party components.
(4) Re-adjust Business Models
Home automation today is stuck in a deadlock that prevents growth. This is due to several factors, including lack of standardization, proprietary systems, high cost of integration and business models that target the very high-end of luxury market.
What we need to create is a virtuous cycle that fosters growth. This means expanding the target market and enabling vendor ecosystem and partner network growth. We can achieve this by using technologies that are open, adopting existing de-facto standards and creating technical solutions that are available to all participants.
Integration is a key here. Any solution looking for mass adoption must take into account several market realities: existing investment in already installed systems, the need to integrate with devices from mass consumer electronics market, the dynamic nature of automation as more consumer devices become control-capable at ever increasing pace and finally, the ability to provide the home owner with a complete solution that adapts to their needs over time without a prohibitive cost structure.
Needless to say, we at OpenRemote believe Open Source plays a key part in this picture as a growth catalyst. How this happens is worthy of a full article. What we can achieve is to lower the cost of integration and enable integrators and installers to expand to a larger market segment. We can enable integrators and installers to deliver a complete solution to the home owner and we can help installers to manage higher volume mass market (see the final point of this conclusion). This in turn will mean higher revenues, and hopefully in the end, higher profit.
(5) New Kind of Installer
As with any change of status quo, the need for adjustment rises. None of the above conclusions means installers will disappear or become obsolete. In fact, quite the opposite. But change does mean some new knowledge must be acquired and some existing knowledge may have less use in the future.
Ability to manage IP networks is a given. Not just installing a wireless hub in the corner of a room but skills more akin to network administrators. Provisioning the network bandwidth may be necessary. Understanding the required hardware, switches and their configuration is very likely necessary.
At the same time, in order to facilitate higher volume customer relationship management, tools need to exist to easily monitor, change and configure installations. Minor changes and tweaks should be possibly to implement remotely. Basic issue diagnostic should be possible remotely. The installer tools should drive towards minimizing the cost of change for the installer. This simply due to the fact that the installation environments are becoming ever more dynamic in the future.
We at OpenRemote want to bring such tools to integrators and installers. We are preparing the next 2.0 version of our online tools which you can test drive here: http://composer.openremote.org/demo (you will need to create a new temporary account even if you have registered with us before).
The main aspect we've added for installers is the ability to dynamically change the user interfaces and controller configuration online, using a shared account with the customer. These changes can be automatically downloaded to OpenRemote controller without additional on-site work (Internet connection assumed, of course). You can read some more about features we've added here.
The five points made above follow from key trends occuring today. Every one of them warrants further discussion with counter-points and solutions to those. To keep this brief, we'll talk about each of the points in greater depth in future articles.
First trend is the ever increasing pace of new consumer electronic devices capable of acting as sophisticated automation controls being added to homes. In the last couple of years we've seen the introduction of iPhone, iPod Touch and iPad. A huge amount of Android devices is about to hit the market. The pace at which these control devices need to be integrated will increase in the future.
Second, IP networks will be de-facto communication infrastructure at homes. Whether it is voice over IP, video over IP or control over IP, the importance of managing IP networks at home will increase in the future. Media is already distributed in homes using IP network and is used to control media centers. The most important integration of home automation protocols is to this IP backbone.
These two trends add up to a more dynamic nature of a home automation installation. This requires a new take on tools, on monitoring and diagnostics, on quality assurance and certification. At the same time, the industry needs to find a better growth model and expand to wider markets which will inevitably add additional requirements to both integrators and installers in terms of customer management.
The key to manage these changes is through open systems which will lower cost of integration, to create ecosystems of hardware and software vendors, of integrators and installers. Proprietary and closed technology stumps growth and brings with it high cost of integration which limits us to small segment of luxury market. It is possible to bring a complete home automation solution to a larger audience.