Smart appliances represent profound shift business paradigm
On Monday, 5 September 2016, IHS Technology hosted a series of informative panel discussions as part of the prestigious IFA+ Summit. Subjects covered included Autonomous Vehicles, Smart Home Appliances and VR Technology.
The discussion format was new for IHS, but it worked very well, says Dinesh Kithany, Senior Principal Analyst, Home Appliances and CE IHS Technology. “For the rst time, we presented to IFA delegates in the form of moderated panels. This was a way for us to combine the insights we have gathered over the years through our research with those of experts from across the industry.”
Kithany moderated the smart appliances session, with participants including Electrolux head of innovation/connectivity David Cronstrom, Arrayent CEO Cyril Brignone, NXP Head of Smart Cooking Dan Viza and Naonhome CEO Jan Krog. He says the main message was that there has been a surge of activity: “We’ve been tracking the issue of connectivity in this segment for a while and until now there have only been marginal advances, but this year is different. Two years ago, smart appliances was all about prototypes but this year a lot of companies are active.”
This is down to a combination of factors though there are two main ones in Kithany’s opinion: “The cost of building connectivity into an appliance has dropped signi cantly, so this is now much less of a consideration for manufacturers. But I also think there is now a fear of being left behind. With the lead times involved, companies want to ensure they are staying competitive.”
This is a welcome development, says Kithany, who believes that connectivity is opening up a new world of opportunities to enhance consumer engagement as well as boost profit margins. At first, he says, consumers will plug into connected appliances because of simple to understand functionality: “There are devices like air conditioners where people are already used remote controls, so switching operational control to their smartphones won’t be difficult. Then they will start to see some cost benefits, for example operating their appliances during low cost tariff periods.”
The bigger opportunities come when connected appliances allow manufacturers to move from a one-time relationship with a consumer (the sale) to a long- term relationship. In phase one of this relationship, the opportunity is to provide after-sales care and accessories. “But maybe then it can move towards a model where the appliance is providing valuable data about a family’s lifestyle,” says Kithany. “The times they come home, the brands they use, the products they consume, the places they like to shop, the other devices they are connected with…”
CONNECTIVITY IS OPENING UP A NEW WORLD OF OPPORTUNITIES TO ENHANCE CONSUMER ENGAGEMENT AS WELL AS BOOST PROFIT MARGINS.
This kind of information is valuable to numerous companies in the supply chain, says Kithany, “so the discussion moves from product usage to business partnerships. Channel partners, e-commerce giants, local e-retailers, service providers, utilities companies, FMCG companies, spares and servicing contractors all have a vested interest.
“For example, what if Ali Baba or Amazon get involved in the process? Maybe it becomes possible to offer extended warranties or product discounts in return for access to information about customer behaviour. Or what about manufacturers? They spends such a lot on R&D that data on appliance usage could help then with the design of next generation appliances.”
Kithany doesn’t expect this trade off to happen straight away – but he sees it as a logical development in the market: “Connected devices will come on to the market at a premium price, but this access to information does create the potential for connected devices to become cheaper than traditional devices.”
He also believes the market will start to make clearer differentiation between different connected devices: “Manufacturers will start to emphasise the distinction between connected refrigerators and connected ovens – rather than just selling connectivity. Samsung’s Family Hub refrigerator is a good example.”
If there’s a challenge with all of the above it’s inter-operability: “In every home there will be question of brand to brand communication, Android to IOS and so on. Companies are now discussing this issue because it is one of the key barriers to driving growth in the connected appliance market”.