The smart home: Part data mine, part minefield

April 18, 2018
According to ABI Research, smart home devices and systems promise to deliver a new world of detailed consumer data and insight ...

According to ABI Research, smart home devices and systems promise to deliver a new world of detailed consumer data and insight. Retailers, advertisers and service providers are keen to leverage their insights from their smart home customers to improve existing offerings and bring in new revenue streams. However, consumer sensitivity about the collection and use of their personal data could be a concern.

"The smart home is the battleground for a range of players across multiple industries looking to secure a valuable grip on understanding the end-user through a growing pool of smart home data," said Jonathan Collins, research director at ABI. "Smart home data offers a wealth of insights able to be used to improve existing offerings, help develop new offerings, and underpin a range of services for smart home players and their partners."

In their own efforts to capture smart home data, the fourth quarter last year saw Amazon and Google deeply discount their Echo and Home voice-control devices with pricing on some devices close to the cost of the components within them.

Smart home data can play to the core services of Alphabet, Amazon, and Apple. Among many others, all three are significantly engaged in the smart home market and together represent more than $500 billion of revenue. If leveraging smart home data to improve their sales by just 1%, then the potential remains significant. By 2022, nearly 300 million households around the world are expected to have some level of smart home adoption. Alphabet already captures a dominant share of online advertising spending, close to $70 billion in 2017. If it can better target its ads with additional insight from smart home data and charge a premium for its services, Alphabet holds the potential for significant revenue growth. Likewise, Amazon can not only better target its own marketing but can also provide key sales leads and infrastructure for a raft of in-home services.

However, not all companies have the same approach to smart home data and monetizing its value. There are traditional players that are committed to keeping the data they collect within the company, while Apple looks to differentiate its smart home through highlighting the limitations on its own data collection and management within their HomeKit smart home platform.

Consumer sensitivity regarding personal data collection may yet change, especially given the revelations regarding the collection and use of Facebook data.

"The ongoing exchange of data between home and device/system provider is at the heart of the modern smart home. Understanding how that data can and will be used will likewise remain at the heart of the impetus behind smart home investment," said Collins.

On a related note, research from Parks Associates indicates that purchase intentions for smart home devices among U.S. broadband households have increased by 66% year over year, which the research house expects to drive an accompanying increase in consumer expectations for premium and personalized technology experiences in all aspects of their digital lives.