Smart Home by Jeffrey Cai

SMART HOME FUNCTIONS

CONNECTIONS

JEFFREY CAI PROJECT LEAD

DAN LEE ANALYST

NICHOLAS LIU ANALYST

EDWARD SHIN ANALYST

Alpha Consulting Inc. 330 Bay Street, #820 Toronto, ON M5H 2S8 416.645.6951

ta bl e o f con ten ts 01

EXECUTIVE SUMMARY

INTRODUCTION 03 Timeline

MARKET OVERVIEW 07

GEOGRAPHIC LANDSCAPE

CURRENT SMART HOME MARKET LANDSCAPE 12 Top Market Segments Energy Security Home Living Enhancement

15 • • • • • • • • •

ENERGY Introduction How the Technology Works Driver & Trends Restraint and Regulations Market Opportunities Company Profiles M&A transaction Case 1 Product

25 • • • • • • • • •

SECURITY & ACCESS Introduction How the Technology Works Driver & Trends Restraint and Regulations Market Opportunities Company Profiles M&A Transaction Case 1 Case 2

35 • • • • • • • •

HOME LIVING ENHANCEMENT Introduction Drivers & Trends Restraint and Regulations Opportunities Company profiles M&A Transaction Case 1 Case 2

Conclusion

executive summary The transition from conventional homes to smart home is fast becoming a reality. With the accelerated growth of cloud computing, internet of things, mobile broadband, energy efficiency, and decreasing costs of mobile devices a new business model arises.

The biggest widespread in recent years of smart home technology has been energy saving related products such as smart meters and smart thermostat. This widespread is supported by governing policies and new regulations. Smart homes hold the potential for increasing energy efficiency, decreasing costs of energy, decreasing the carbon footprint by including renewable resources. It is projected that the combined revenue from smart meter, home automation and home energy management will be more than $44 billion in 2016. The most promising offering among all of these smart homes products over the next couple years will be security and smart locks. Smart security systems typically make use of sensors to monitor when doors or windows are opened and when there is a movement within the property. Personal and family security remains a key driver in smart home adoption for the majority of consumers. 90 percent of consumers say that security is one of the top reasons to purchase a smart home system. Entertainment, comfort and home living enhancement smart home products have the biggest potential for growth. According to a Juniper research report, 01

entertainment will account for 80% of total smart home service revenues. In addition, smart appliances only account for 1% of home automation segment with a lot of room for growth. This report will address the challenges and barriers facing each of the top segments of energy, security and home living enhancement. This report also provides a refined and recommended strategy venture capital firms should approach the smart home industry based on the research and analytics performed within this report.

introduction Home automation systems are increasingly popular as they enable an increase in comfort, futuristic feel and savings in energy through intelligent energy management, enhanced home security and entertainment products. Since the era of household appliances, inventors and science fiction authors have always teased consumers of a fully

automated home in which homeowners can control every facet of their dominion with a touch of a few buttons or with a shout of a phrase. These devices can vary in many functions, mainly in the segments of security, energy and lifestyle enhancement. Smart homes are no longer only existent in fiction; many of these concepts are technically feasible today due to the proliferation of sensors and connectivity in the products that collectively make up the Internet of Things. DEVELOPMENT OF SMART HOME PRODUCTS: A smart home is a residence equipped with lighting, heating, electronic devices, security systems, energy meters, and other home components that interact and integrate seamlessly with one another and can be controlled remotely.

The home automation system is a computer based control system that is installed in order to integrate, monitor and control electrical and mechanical devices (i.e., the connected devices) within these buildings via a computer network that can be accessed remotely through a mobile device or electronic device.

Much of this is still a bit in the future, but the smart-home revolution is already on our doorstep.

The development of smart home products started approximately in 1915, where an electric washing machine was introduced to the market and to date there are exists technologies where consumers can control their washing machines with a push of a button. 02

smart home evolution

1915 - 1920 THE FIRST HOME COMPUTER

1966

ECHO IV (home automation machine) was built to compute shopping lists, control a home's temperature and turn appliances on/off

PLANTING THE SEED

1984

National Association of Home Builders formed a special interest group called "Smart House" to advocate for the inclusion of technology in home design

SMARTTHINGS LAUNCHES

2012

App promises to link to most gadgets in the home. App allowed user to communicate with their home remotely.

Electrically-powered mechanisms introduced into the household. First instance of domestic technology, the foreground for the connected home

1970

THE GRANDFATHER OF AUTOMATION

X10 was a simple system that utilized home power lines to foster communication between multiple appliances

2010

NEST ENTERS THE PICTURE

Nest developed wifi connected thermosats and smoke alarms.

EV ERYTH ING IS .C ONNEC T E d.

2013 CONSUMER ELECTRONICS SHOW LAB OF THINGS

2013

Microsoft launched Lab of Things (LOT). Provides a virtual dashboard for monitoring and controlling different connected devices. Owner could view footage from a home security camera or get notified. CONSUMER ELECTRONICS SHOW

2014

LG launched a line of smart appliances equipped with HomeChat, allowing people to communicate with devices through a mobile messages app. CONSUMER ELECTRONICS SHOW

2015

Smart home innovation deemed one of the top tech trends at this years CES.

First year home automation and tangible smart home products dominated the forefront of CES. Belkin launched its WeMo home automation brand with multiple Wi-Fi devices

2014

PARTNERSHIPS GALORE

Samsung, Dell and Intel partnered to create an industry standard named the Open Interconnect Consortium to define connectivity requirements for the billions of devices making up the IOT

2014

INVESTING IN THE FUTURE OF HOMES

Samsung Smart Home app enables users to connect with other Samsung home devices. Google purchased Nest Labs representing Google始s confidence in the significance of the Internet of Things (IOT). 04

market overview The smart home industry is already of the largest segments of the internet of things (IoT), accounting for about 25% of the market in 2014, according to Business Insider Intelligence. Due to the falling prices of wireless hardware, expansion of mobile networks, and increased utility of mobile apps, users will be able to use their mobile devices as a control hub that connects and communicates with digital devices throughout the household creating a runway for smart home products to walk down. There has been a significant growth in the market lead by an increasing demand for energy efficiency solutions, enhanced home security, smart entertainment products and services, and home automation. This existing niche home-automation market is being transformed by the mass-market availability of connected smart devices that enables a wide variety of new smart home services and products globally. 05

The global Smart Homes Market was valued at $20.38 Billion in 2014 and is expected to reach $58.68 Billion by 2020; the market is projected to grow at an estimated compound annual growth rate (CAGR) of 17% between 2015 and 2020. . (Subscript 2: markets and markets smart home market report 2015) A strong impetus from smart home product manufacturers, and concerns related to security and energy savings have gained primary importance in the Smart Homes Market. Smart home device manufacturers are also coming up with innovative wireless technologies across different sectors, which include security control & access control, entertainment control, energy management systems, and HVAC control. Although there is global growth in the smart home market, smart home capabilities are not as accessible in regions where technology is not as advanced. As a result, the majority of smart home market growth occurs in the continents North America, Europe and APAC. Amongst these continents, North America is currently leading and currently has the greatest adoption rate amongst continents. It is also the birthplace for various industry majors, primarily due to large high-tech-hub areas such as the Silicon Valley in California. The North American market is driven by an increasing desire for safety, peace of mind, awareness and better product offerings.

c onsumers wan t to stay .C ONNEC T E d. Which area(s) of the house would you be most excited to connect in a smart home

50%

OF CONSUMERS SAY THEY PLAN TO BUY AT LEAST ONE SMART HOME PRODUCT IN THE NEXT YEAR - ICONTROL

U.S. 43%

Entertainment room

CANADA 43%

Kitchen 41%

TOP AREAS OF THE HOUSE CONSUMERS ARE MOST LIKELY TO INVEST IN SMART

1 ENTERTAINMENT 2 KITCHEN 3 BEDROOM

36%

Bedrooms

39%

27%

Yard or garden 19%

16%

Garage 18%

13%

Office Spaces 13%

Dining room

51%

12%

OF CONSUMERS ARE WILLING TO PAY FOR BEING ABLE TO CONTROL DEVICES REMOTELY SOURCE: GIK SURVEYED 1,000 UK CONSUMERS ONLINE IN AUGUST 2014

11% 12%

Bathrooms 8% 5%

Not sure 23%

31%

68 million homes in Europe and North America will be smart by 2019 EUROPE

APAC NORTH AMERICA

NORTH AMERICA is the current leader in the global market followed closely by Europe and Asia-Pacific. North America has also recorded a strong growth in the smart home market during 2014. There are many North American tech giants who have entered the smart home market who have begun to create new, innovative smart home products available to consumers. Most of these companies have entered the industry through acquisitions of smaller startups such as Google始s acquisition of Nest Labs. The installed base (number of smart home systems in use) of smart home systems in the region increased by 75 percent to reach 10.2 million at the end of the year. An estimated 1.8 million of these were multifunction or whole-home systems whereas 8.3 million were point solutions designed for one specific function. As some homes have more than one 07

smart system in use, the installed base totaled an estimated 7.9 million smart homes at year-end. This growth is likely to continue, between 2014 and 2019, as the number of households that will adopt smart home systems is forecasted to grow at a compound annual growth rate (CAGR) of 37 percent, resulting in 39.2 million smart homes. Market revenue is also expected to grow quickly, at an expected CAGR of 34 percent from 2014-2019, reaching US$18.2 billion in yearly revenues at the end of the forecast period.

EUROPE

ASIA PACIFIC ASSOCIATED COUNTRIES

The European market for smart home systems is still in an early stage and 2â&#x20AC;&#x201C;3 years behind North America in terms of penetration and market maturity. However, due to recent European energy regulations and incentives there has been increasing interest in smart home systems, focusing on connected energy solutions such as smart meters, thermostats or lighting systems. At the end of 2014, there were a total of 3.3 million smart home systems in use in the EU28+2 countries, up from 1.75 million in the previous year. Around 0.34 million of these systems were multifunction or whole-home systems whereas 2.93 million were point solutions. This corresponds to around 2.7 million smart homes when overlaps are taken into account, meaning that 1.2 percent of all households in the region were smart at the end of the year.

A report by marketsandmarkets.com predicted that Asia-Pacific Associated Countries (APAC) smart homes markets would be worth $9.28 billion by 2020. Smart homes have been introduced with a view to save energy, and at the same time, make life easier and luxurious. The growth of the APAC smart homes market in the coming years is expected to have a stable growth, with the revenue growth estimated to reach $9.23 billion by 2020, at an estimated CAGR of 16.73% from 2013 to 2020. The APAC region accounted for 19% of the global smarty homes market revenue in 2012.

The number of European households that have adopted smart home systems is forecasted to grow at a compound annual growth rate (CAGR) of 61 percent during the next five years, resulting in 29.7 million smart homes by 2019. Market revenues grew by 60 percent to â&#x201A;Ź 0.77 billion (US$ 1.0 billion) in 2014. The market is forecasted to grow at a CAGR of 58 percent between 2014 and 2019 to reach â&#x201A;Ź 7.6 billion (US$ 10.2 billion) at the end of the forecast period. In Europe, numerous service providers that plan to launch or expand their smart home initiatives with support from large marketing campaigns in the coming year will fuel the market.

The major drivers for the smart homes market include energy saving, increasing ageing population, regulatory initiatives by governments, and more. The introduction of smart meters to conserve energy is another growth opportunity for the smart homes market. Also, the smart electronic devices such as a washing machine, refrigerators, air-conditioner, vacuum cleaner, smart TV are going to drive the market. China, currently, leads the market share as this region has the greatest adoption. South East Asia countries from Others market are the emerging market for smart homes and are poised for the highest growth rate amongst all the countries followed by China growing at a CAGR of 17.50% from 2013-2020. It is estimated that the others market will increase at a CAGR of 19.13% from 2013 to 2020.

The U.S. will remain the major market to smart homes throughout the forecast period, due to its high adoption rate and continuous development. High investments in building infrastructure and the need to lower power consumption are further expected to drive the demand for smart homes systems, especially in Asia-Pacific and Europe 08

Current Smart Home Market Landscape Several candidates are vying for the role of a leader introducing smart home services/products to the mass market. Historically, connected home services were led by home automation system manufacturers and installation companies, but new contenders are emerging among the utilities companies, telcos, home energy management providers, and even gaming companies.

HOME AUTOMATION SEGMENT IN 2014 – STATISTA In North America, advertising in mass media has increased significantly in the past year and major retail chains such as Target and Wal-Mart have recently started to sell home automation products in many of their stores. *North America market is mainly focused on entertainment, lighting, security, and HVAC.

Consumer electronics – 38% Lighting – 23 % Security – 14% Environmental controls (HVAC) – 14% Safety – 5% Smart appliances – 1% Others – 5%

Several candidates are vying for the role of a leader introducing smart home services/products to the mass market. Historically, connected home services were led by home automation system manufacturers and installation companies, but new contenders are emerging among the utilities companies, telcos, home energy management providers, and even gaming companies. 09

CURRENT SMART HOME MARKET LANDSCAPE

Home automation systems are Smart meter technology has been the most supported contestant to break in the mass-market due to the regulatory mandates in North America and Europe. A quarter of all homes globally will have smart meters by 2016, according to IDC. For example, US-based Opower is currently one of the biggest providers of home energy management tools in terms of reach, working with 54 utilities and providing energy reports to 2 million homes.

The telecommunications sector has also begun to compete on the smart homes opportunity through various approaches. Some are taking advantage of its existing base of home broadband gateways and IPTV set top boxes to add home control and monitoring tools. While, other telcos are leveraging femtocells from mobile broadband connectivity to provide a home gateway to control smart home devices. Below is a table that summarizes the different approaches being taken by telecoms companies:

CURRENT SMART HOME MARKET LANDSCAPE

In Canada, communication companies such as Rogers, Bell and TELUS and home security companies such as ADT and AlarmForce, can provide products and services for the smart home and home automation. They hold an inherent advantage due to their existing connectivity and writing infrastructure in the home. Energy utilities can become involved if they wish to recapture some market share from the new players entering into what was traditionally a utility market. Smart thermostats, in-home displays, mobile phones and other

networked devices are the tools customers can use to increase energy savings and comfort enhancing tools which tend to be purchased for entertainment, comfort and home security reasons. The ability of the current providers to lead the introduction of smart home services/products will also depend on the existing market regulation, which varies according to location. Home automation and home energy management services are largely unregulated, which could simplify their adoption to consumers. Regulatory requirements are likely to slow down the introduction of smart metering and health monitoring services and complicate the connection of smart meters and remote health care gateways to other consumers controlled devices. Despite all these promising statistics, smart home technologies currently only represent a niche market largely limited to tech-savvy early adopters. Most consumers view these products as luxury items, so companies in this industry will need to demonstrate that their products can deliver tangible value to drive adoption.

Top Market Segm e nt s ENERGY According to a KRC research, smart meters is one of the leading adopted connected device after computers, game consoles, smarts and tablets. There is a clear benefit related to energy efficiency that comes out of the smart home for cost saving purposes. Similarly, the potential convenience of programming home settings and the ability to help the environment are also factors that drive excitement among nearly half of consumers. The combined revenue from the smart metering, home automation and home energy management (HEM) segments will be worth more than $44 billion in 2016, according to the combined forecasts from market analyst companies ABI and Berg Insight.

OUT OF 2000 TECHNOLOGY ENTHUSIASTS: 28% utility meter 23% connected security system 23% connected lightning system 24% connected washing machine 24% connected thermostat 23% connected health monitor

TOP MARKET SEGMENTS

SECURITY

ENTERTAINMENT

Security will be the main Trojan horse that gets smart home adopted followed by HVAC (heating, ventilation, and air conditioning). A smart home security system alerts the householder if something abnormal happens. Smart security systems typically make use of sensors to monitor when doors or windows are opened and when there is a movement within the property.

Entertainment has also emerged as a new and powerful driver to smart home adoption. Nearly half of consumers (45%) list the ability to remotely control and/or monitor their TV and sound systems as one of the top reasons to purchase a smart home system in the icontrol network survey. The survey also shows interest in entertainment has surged by 55% since last yearʼs survey when only 29% listed this as a top benefit of the smart home.

The KRC research found that 26% of technology enthusiasts in Germany, 24% in the US, 23% in the UK and 21% in Japan already own a connected security system. Of the respondents who own a connected security system, 57% said it has “significantly increased their sense of security”, while a further 42% said it had “somewhat increased their sense of security”.

Stakeholders are keen for developing versatile and widely accepted standards in smart homes. Regardless of the technology and cost of ownership, the operating & maintenance cost, complex installation, user awareness, ability to link disparate systems, Internet security, and demand for housing are some of the challenges in front of players in the smart home market. However, this market is expected to grow at a decent pace in the coming years.

ENERGY MANAGEMENT ENCOURAGES SMART HOME ADOPTION

70%

SAY THEY ARE EXCITED ABOUT POTENTIAL COST SAVINGS FROM ENERGY EFFICIENCY THAT COMES OUT OF THE SMART HOME - ICONTROL

48%

SAY THEY ARE EXCITED ABOUT POTENTIAL CONVENIENCE IN PROGRAMMING HOME SETTINGS AND MAINTENANCE - ICONTROL

47%

SAY THEY ARE EXCITED ABOUT GIVING A HELPING HANG TO THE ENVIRONMENT WITH GREATER ENERGY EFFICIENCY - ICONTROL

72%

OF PEOPLE USING CONNECTED ENERGY SOLUTIONS SAVE MONEY ON UTILITY BILLS -

Smart Homes and Energy INTRODUCTION Living in a world where internet connectivity and smart phone ownership is almost ubiquitous. Underlying and complementing these factors is the Internet of Things. The cloud, mobile computing and social technologies make the â&#x20AC;&#x153;smart homeâ&#x20AC;? concept possible. However, at the basis of any connected/smart device is energy. Not only energy to interconnect these devices, but more importantly, the energy that can be measured, controlled, and managed. Many homes are currently using their energy inefficiently. This has led to energy crises around the globe, especially in Europe. Currently, heating, ventilation, air conditioning, and hot water systems are programmed to be activated at certain times each day even if these utilities are not in use. Numerous amounts of households can conserve energy and money by only heating or cooling rooms that are being occupied. An investment in smart home energy solutions can result in not only a high return on investment, but also reduce waste emission and shift towards a more eco-friendly future.

devices) within buildings via a home area network (HAN) that can be accessed remotely using a smartphone or any mobile device. AHEM systems enable users to reduce energy consumption and increase comfort through intelligent energy management and enhanced home security.

Schematic diagram of a centrally controlled smart home. Photo sourced from Photo sourced from National Renewable Energy Laboratory (NREL) database.

HOW TECHNOLOGY WORKS The addressed concerns lead to the introduction of the automated home energy management (AHEM) system. AHEM is a subset of the home automation system, a computer-based control system that is installed in order to integrate, monitor, and control electrical and mechanical devices (i.e. connected 17

The following table discusses general AHEM product trends and classes with the highest potential for wide-scale deployment. All types of AHEM products available on the market can be devised into three basic categories: control devices, user interfaces (UI), and enabling technologies.

SMART HOMES AND ENERGY

CATEGORY Control Devices allow the consumer or utility to actively control energy use.

User Interfaces (UI) provide energy feedback to consumers and can display both raw and processed data. Raw data provide basic information such as real-time data on energy consumption (kWh, $/hr, watts/hr, etc.). Processed data give users the personal significance of raw usage data and how to act upon that information (budgets, historical comparisons, tips, goal setting, etc.).

DESCRIPTION

EXAMPLES

CENTRALIZED CONTROL

Communicates with multiple control devices in the home and allows the user to manage them from a single location

Home automation systems, whole-home lighting control systems, may build on security systems

DEVICE-LEVEL CONTROL

User controls a single device or function, standalone control

Lighting control with motion sensors and remotes, scheduling; thermostats; smart plugs; smart power strips

ON-BOARD CONTTROL

Control functionality integrated in the device

Smart appliances, e.g., that respond to grid instability; office equipment power management; smart light bulbs

HOME ENERGY DISPLAY (HED)

Stand-alone in-home display; often portable

WEB DASHBOARD/ PORTAL

Online interface accessible from any Internet-enabled device

Many HEDs on the market have compatible web dashboards or are able to connect to third party freeware. Utilities implementing smart meters often provide their customers with web dashboards.

SMARTPHONE APPLICATION

Device-specific interfaces for iPhones, Android phones, and others.

OTHER (E.G., TV)

Current products typically pull information from an HED and generate processed data (but may also provide raw data) Multimedia approaches include combinations of display/web/phone feedback.

SMART HOMES AND ENERGY

DRIVERS AND TRENDS AHEM products that have dominated the market in recent years include home energy displays (HEDs) that provide raw consumption data. However, research to date suggests that HEDs may not be able to maintain user interest and achieve persistent energy savings. Innovations in connected energy solutions are now leading towards devices that connect to HEDs and transform its raw data to data that are more processed and relevant for its users. To go beyond, the processed data are delivered to consumers via email or SMS alert for their convenience whereas conventional HEDs only provide options where raw data is accessible to end-users. Multimedia data access trend will push to create an upgraded smartphone applications within the user interface AHEM technology that may remotely control and monitor energy usage. This approach is extremely viable for mass markets, but initial smart meter deployment is essential. Currently, AHEM system is one of the smaller emerging markets. For any AHEM system to reach its peak of their market penetration, the industry must overcome challenges as to provide a solution for their customers to easily access, buy, install, manage, and secure AHEM solutions. Major companies are introduced to the market through various methods such as mergers and acquisitions (Google Inc.始s recent acquisition of private company Nest Labs) or creation of software (Apple Inc.始s release of

software HomeKit). These new software and products continue to spark consumer始s interest. However, more research needs to be focused on consumer preference and market acceptance/adoption. The main reason for the general success of AHEM products largely relies on how consumers respond to the energy feedback itself and more importantly, by how much. The greater the response, the greater the savings on monthly utility bills. Considering user preference on providing relevant, reliable, and actionable information should be the focus as well as maintaining customer engagement and satisfaction. RESTRAINT AND REGULATIONS The biggest barrier to greater implementation of AHEM system is that consumers currently need to invest in additional tools such as the home energy display, software, sensors, and other technological innovations in order to receive real time information. Other challenges include lack of consumer awareness, complicated installation process, consumer concerns for data security, and consumer confusion (i.e. too many products with similar features and not enough product differentiation, complex or cumbersome user interfaces). These challenges make consumers feel that the energy costs saving are comparatively small for all the hassle they must go through hence consumer始s motivation is low for residential AHEM system adoption.

SMART HOMES AND ENERGY

MARKET OPPORTUNITIES Several market and technological trends are expected to accelerate the development of cost-effective automated home energy management systems that enable smart homes. Continued growth in home offices will increase market penetration of secure wireless home area networks. Growth in cloud computing applications will also enable low-cost home energy data storage, data display, and data analysis for automated home energy management trend analysis. Advancements in mobile device technologies such as longer battery life and enhanced user interface are expected to aid the adoption of automated home energy management systems. Currently, manufacturers of residential equipment and appliances continue to embed additional sensors and control capabilities that are internet ready and can be accessed wirelessly. These factors increase the likelihood of widespread adoption and economic feasibility.

According to KRC surveys of 2,000 technology enthusiasts in Germany, Japan, the UK and the US, almost one in four said that they already own a connected energy solution device of some sort.

SMART ENERGY SOLUTIONS Smart Meter Connected Lighting Connected Thermostat

% OWNERSHIP 28% 23% 24%

SMART ENERGY SOLUTIONS

% INTERESTED IN OWNERSHIP 78% 78% 79%

Smart Meter Connected Lighting Connected Thermostat

SMART HOMES AND ENERGY

A mixture of factors is driving this interest. When asked to identify the biggest potential benefit of having their devices connected to the internet, 24% of the respondents in the KRC survey chose money savings, while 19% chose convenience and 16% security. The KRC research also shows that 72% of the respondents who own connected energy solution said they are saving money on their utility bill. The average monthly estimated savings in the US was $80, in the UK 77$, in Japan $31, and in Germany 95$. Market research firm, Frost & Sullivan predicts that the connected homes and cities have a market potential of $111.03 billion. While Navigant Research predicts that global revenue from AHEM systems will grow from $512 million in 2013 to $2.8 billion in 2020. Research also points to the trend which the market will follow; from traditional paper bills to web portal services, to networked HEM services which allow auto pricing response between utility provider and the client, thermal/light load control, and home automation control, all yielding the consumer greater energy and financial savings. There are greater opportunities for energy providers across regions. But generating sufficient volume and acceptable returns will require significant

effort to design and implement the right product and service offering and to distribute it through effective sales channels. Because market conditions influence a provider始s ability to enter and play, executives thinking about competing in energy management or broader connected home services should consider how the market is already meeting those needs in their region, what services are gaining traction and the regulatory environment. With more and more consumers investing in smart home technology, utility providers actually gain a market opportunity. Market research firm, Gartner reports that utilities can leverage consumer investment in smart home technology to better engage with their customers. Utility companies can create bundles that are proven cost-effective AHEM technologies with energy efficient service plans. This connection to the customer goes beyond the issue of customer retention rate; it also fulfills the utilities始 business objectives. This could potentially levitate the AHEM market to achieve greater scale, lowering overall production costs, and increase customer satisfaction. Utility companies can also access the customer始s home (with permission) as part of a demand management strategy, and later coordinate renewables and other distributed resource integrations.

SMART HOMES AND ENERGY

months of a billing period. The benefits of this device are that it is easy to install, and users are easily able to identify the greatest energy consuming appliances. The EMU-2 is a home energy display (HED) product that falls under the category of user interface AHEM.

COMPANY PROFILE Rainforest Automation is an industry leader in energy feedback products. The company produces products that enable utilities and their customers to manage real-time energy use. Its home area network (HAN) devices, software products and services enable energy efficiency and demand response programs for utilities, and provide automated convenience and reduce energy cost for residential and commercial consumers. Rainforest始s EMU-2, an energy monitoring unit that provides comprehensive review of current kilwatt-hour, and accumulate the information to compare daily totals, and hour usages between dates and

The RAVEn is a USB that allows users to view their energy consumption information on the computer. Once the USB is registered with the utility company, it will automatically display real time consumption information allowing the user to have a better grasp of his energy usage. RAVEn始s targeted customers are divided into two primary segments. The first segment being residential home owners, the other segment targets small commercial, such as coffee shops, small grocery stores, and convenience stores. This product is especially beneficial to small commercial companies, since small businesses have to pay at commercial rates for utilities which are substantially higher than residential rates. It is difficult for the business to distinctively manage or track consumption due to the cost of monitoring equipment and services.

SMART HOMES AND ENERGY

M&A TRANSACTION (GOOGLE AND NEST)

COMPANY PROFILE Eyedroʼs goal is to help customers track their electricity usage and costs in real time. Their product, Eyedro Business/Home Electricity Monitor can be installed in different places. In factories, it can be installed on a machine, landlords can install it for their tenants, and home owners can put it in their home. Their products connect to the internet, to which users can track their consumption real-time at MyEyedro.com by cloud service solution.

Nest Labs, Inc. designs and develops smart thermostats, a solution to schedule, programs itself, and can be controlled from userʼs smartphone. It also offers smoke and CO2 alarms. The companyʼs products are available online; through distributors; and other custom electronics and security trade retailers across the country. Its products are sold in the United States, the United Kingdom, and Canada; and installed in internationally. The company was founded in 2010 and is based in Palo Alto, California. On Feb 7th 2014, Google Inc. acquired Nest labs for approximately $3.2 billion. According to Business Insider, Googleʼs objective of the acquisition is to leverage Nestʼs technical prowess and manpower to develop the next generation of Internet-enabled home gadgets and speed up the development process. Furthermore, by expediting the development process, Google can have first mover advantage and leapfrog competition in the IoT market. A platform for internet connected home devices powered by Google will help both companies capture a bigger share of the IoT and connected energy solutions market specifically.

SMART HOMES AND ENERGY

PRODUCTS SMART THERMOSTAT Advanced thermostat like Nest is an AHEM enabled technology that learns the temperature preference of its users and builds a personalized schedule within the first week of activation. The smart thermostat will track and analyze how users adjust the temperature during certain time periods, which automates the adjustment based on the user始s habits. Consistency in temperature changes build routines, but one-off adjustments will not be embedded into the schedule. Auto-away options in learning thermostats turns itself down automatically when it senses that certain area is unoccupied. Conversely it returns to the regular schedule upon its user始s arrival. An added bonus is that users can use their smartphone to control over their settings, energy, and safety record even in their absence.

SMART METERS A smart meter looks similar to a conventional meter, but their display is a digital screen and contains no dials. Unlike conventional meters that only measure the total amount of energy consumed over a certain billing period, smart meters record can track when and how much energy is used typically on an hour-to-hour basis and sends the information automatically to the service provider through a wireless network. This eliminates the need for utility providers to periodically collect meter reading while giving them a greater insight into each household始s consumption patterns and how they vary with time. Smart meter is a unique AHEM because it shares a bidirectional relationship with both the service providers and end-consumers.

SECURITY KEY DRIVER IN SMART HOME ADOPTION

90%

CONSUMERS SAY SECURITY IS ONE OF THE TOP REASONS TO PURCHASE A SMART HOME SYSTEM - ICONTROL

SMART HOMES AND SECURITY INTRODUCTION Smart home technology can extend home security to include features that track children, pets and household employees. From cameras that watch over entrances and driveways to motion sensors that activate lighting, these security features can make life easier for your family, lighting the path to the bathroom or kitchen at night. However, they can thwart attempts to gain unauthorized access. Radio-frequency Identification (RFID) tags in key fobs can identify individual members of the household as they enter the house. If a would-be burglar tries to break in, sensors note the attempt and the home control system notifies the authorities. Connected security systems can typically be configured to send a message to the consumerʼs smartphone via the mobile network even if the user is in a different location far away from the house. Connected security systems could also incorporate video cameras that can be

“Security is the one application that it has been proven people will pay for” – Matt Hatton, Machina

remotely monitored and controlled, enabling the householder to check on individual rooms or surrounding outside areas of the house. The early smart lock market is populated by a number of players including Kevo, August, and Danalock. Traditional lock leader Schlage also has a keypad lock that integrates aspects of smartphone tech but still relies on older punch code technology. Kevo and August are the uprising companies to focus on as both are well funded with solid retail distribution plans at Home Depot and Loweʼs, in addition to ecommerce strategies. August is also now in the Apple store with in-store displays, however this market is still quite new. If the market does take off, traditional lock makers will jump in and other start-ups could secure funding to push their development and enter the mass-market productions.

SECURITY

TYPES OF TECHNOLOGIES

KEY DIFFERENTIATING TECHNOLOGIES: WHOLE LOCK REPLACEMENT VERSUS ADD-ON SMART LOCK Add-on smart lock is a simple, at-home installable device that fit over the thumb turn of a deadbolt contained on the inside of the door. The benefit here is DIY installation process which reduces installation cost. Kevo始s whole replacement requires an actual replacement of the deadbolt itself and this poses as barrier due to increase in installation cost and time. The whole replacement method opens the company to the consumers as a customized, complete and reliable system replacement since every door is slightly different and the add-on system only works for a generic type of doors. WIRELESS UNLOCKING AND CONSUMER EXPERIENCE A critical factor is that any smart lock must know at all times whether someone始s phone is inside or outside of the home. If

it gets confused, it could mistakenly unlock or refuse to unlock the door. There are various strategies available to avoid this risk. August employs a two-stage geofencing technology. During the first stage the system automatically locks the premise when the mobile device is out of a certain range. The second stage is when the sensors inside the structure detect no movement and it will automatically lock the premises. Kevo employs directional antennas on both sides of the door. Kevo notes that its first design in 2010 was an interior-only replacement that relied on GPS that was ultimately too unstable for its purposes. One reviewer of the August smart lock noted that if he entered the home via his garage and walked by his front door, it unlocked. Other reviews expressed concern over lag time in Bluetooth communications. The barriers within this segment are not very high, the companies that can provide the most stable and consistent wireless experiences will prevail. 28

SECURITY

MARKETING AND DESIGN

Comfortable

One major reason for Nestʼs success with the thermostat the design of the product, particularly for early-adopter market. The average price of a smart lock is approximately $200, it is consider a luxury product for the average residential customer. August co- founder Yves Bears designed a number of high-profile consumer products including the JAMBOX before tackling smart locks. Many of the smart-lock designs available are much more attractive than your average lock, including the Danalock and the Goji. Companies with great design will have an edge to increase the overall smart-lock awareness to the public. Firms who are able to catch the attention of the early adopters will most likely to cause other interested consumers to favour the start-ups and follow through.

There is an undeniable convenience of being able to walk up to a door and have it automatically unlock without having to reach for oneʼs keys. Consumers are also able to exit their homes freely, without worrying about the safety of their home.

DRIVERS AND TRENDS The smart-lock market is at an inflection point, largely due to the introduction of broader technological trends that have enabled the entire smart-home market. The most important factor is smartphone penetration, which is expected to reach domestic saturation points in the next 2-3 years. Declining costs of cloud infrastructure and ubiquitous mobile broadband have also aided in allowing users to easily remotely monitor and control any devices that are connected such as a smart lock or a smart thermostat. Both locally and in the cloud are reaching a point of market acceptance. In evaluating the potential value proposition of a smart lock for a consumer, the following factors come into play:

E-Keys Smart locks allow users to grant others access to their locks, directly from their phones. This has an obvious advantage in terms of allowing service repairmen, houseguests, dog walkers, and friends to easily access oneʼs home without having to make an extra set of keys, which could potentially compromise home security. Most smart locks allow for one-time access or scheduled access. This also has special value for individuals who are Airbnb hosts, due to the need of frequently giving access to different people to their home during different allotted times. Locksmith Avoidance In the world of smartphone-controlled smart locks, the equivalent of losing oneʼs keys is losing oneʼs phone (or having the battery die). Many smart-lock providers allow users to log into their account by downloading the app on anotherʼs phone and authenticating that phone. Borrowing a phone from a friend or neighbour when one has lost their keys should prove to be a simpler and cheaper solution than calling a locksmith. It also eliminates the need to replace locks or rekey to block access, a typical scenario that occurs with lost keys.

SECURITY

RESTRAINT AND REGULATIONS Market perceptions around the phone One of the key challenges for smart-lock providers is the issue of misplacing the phone, which can provide unauthorized personnel security access to oneʼs home. In addition to authenticating another phone, almost all smart locks allow for analog key access, so in the event of the phone running out of power or malfunction, a physical key still works. Kevo, made by Unikey and Kwikset, is an example of such a product. This issue will take time, as it requires consumers to be more aware of smart locks and eventually begin to trust technology more. Market perceptions around security.

risks of having their smart-lock accounts hacked and their homes broken into. To put it another way, the public still uses ecommerce and Appleʼs iCloud despite evidence that they arenʼt always secure, mostly because they are now accustomed to using them. Batteries required &Power Usage Smart locks require batteries — typically 4 AA batteries — to power Bluetooth low-energy chips that passively communicate with phones. These batteries last 6 to 12 months and most smart-lock developers have been diligent in having their apps send notifications prior to battery failure. However, it is still a small layer of complexity that did not previously exist with traditional locks.

As phones and back end clouds can be hacked, there remains real and perceived security risks related to smart locks. In the early stages of the market, it will be critical for start-ups to invest heavily in security since the headline and publicity risk is largest in the early market. One negative story could set back the market significantly. Once the market is more established, however, the public will likely be much more reasonable in assessing the

SECURITY

MARKET OPPORTUNITIES & POSSIBILITIES The current price point for smart locks is in the $179 to $249 range, a significant price premium considering the fact that some smart lock manufacturers, like Lockitron and August are do not actually create locks but devices that fit over locks. However, there are still potential savings in the long terms as it reduces the need to rekey or change locks. Jason Johnson, the founder of August, announced that he had met with multiple traditional lock makers who advised him on the market. It was revealed that while half the market for new deadbolt/lock sales consists of new homes and remodels, the other half is made up of homeowners replacing locks for cosmetic reasons or because itʼs cheaper than rekeying a lock. This data suggests more frequent lock turnover than one might expect, which provides an additional cost avoidance incentive for employing a smart lock. As for market opportunities, the initial direct-to-consumer model favors the residential market. Similar to other smart-home products, start-ups have used Kickstarter and company websites to generate sales as an initial step before launching fully into retail outlets like Loweʼs, Best Buy, and Home Depot. Other start-ups such as Unikey have partnered with Kwikset in order to more quickly push into the retail channel. In terms of the residential apartment market, there

may be appeal for property managers in order to rekey apartments less frequently. Property managers can also use smart locks as a tool for handling access to apartments during evictions. Outside of the consumer market, the hospitality industry is the most promising market. There is a decreasing desire for interaction with service employees when checking into hotels. Smart locks allow travelers, especially business travelers, to skip check-in and authenticate a key on their smart phone. Airbnb is another prime example: Property managers can allow guests access into their homes without having to physically meet them. In Airbnbʼs case, there is also peace of mind for the homeowner. They are no longer required to hand over a key to their home and can instead grant clearly defined and temporary access. In the long run, the automotive sector is a potential market for companies with broader smart-lock visions. However, an automakerʼs product timetable runs for a lengthy period of time — as long as 10 years in some cases. If smart locks are able to break into the automotive industry, they will likely be seen first in high-technology vehicles like electric vehicles, which have company cultures more attuned to integrating new technology in the vehicle. system adoption.

SECURITY

Role of Mobile

COMPANY PROFILE FOR SCOUT

The mobile industry has an important role to play in several aspects. Firstly, mobile devices are the most readily-accepted connected consumer devices in the world; most consumers are familiar with mobile devices and their sophisticated, yet intuitive, user interface functions.

Scout's mission is to create a home security system that is smart, simple and affordable; deciding what devices should go in your home is complicated.

Furthermore, the mobile industry is experienced in managing and masking technology complexity. Many of the new smart home services will depend on managed service capabilities encompassing connectivity, data integrity, remote device management or security.

Team Scout is a hard-working group of engineers, designers and business folks based in Chicago. Scout was born when one of the founders went to buy a home security system for his new house in Chicago. He quickly found that, not only is home security 20 years behind the times, it's so expensive that 83% of homes in the USA go without. With that, the team went to work.

Companies in the utility sector will also want to partner with financially-viable counterparts from the communications and IT sectors. The mobile industry is not only financially robust, but has a long-term technology road-map that will accommodate the planning horizon and future smart grid service needs of the utilities industry.

In February of 2013, Scout launched an independent crowdfunding campaign to pre-sell its devices. Within 30 days, Scout exceeded its goal. Since then, over $500,000 worth of systems has been sold. Scout was possible because of consumers who shared a common problem and common vision.

In order to facilitate the emergence of the smart home, service providers need to address several market challenges, such as the need to design for interoperability and to consider how to best integrate existing standards from different application domains.

SCOUTS SERVICES

SECURITY

M&A CASE 1

COMPANY PROFILE iSmart Alarm, Inc. was founded in Silicon Valley in 2012 on the principles of safety, beauty, and intelligence. They designed and developed the best smartphone-enabled home security and home control system, winning multiple App and design awards along the way, with high ratings from CNet, PC Mag, TechHome, SecurityGem, and others. The sleek, sophisticated system utilizes a free and simple smartphone and tablet app to put home security and home control in the palm of its users' hands. iSmartAlarm products are cool, simple to use, and affordable to everyone. iSmartAlarm protects your home intelligently.

In a somewhat unsurprising move, home security veteran iControl Networks announced that it has acquired Blacksumac Inc, maker of the all-in-one DIY home security system Piper. The acquisition will allow iControl to expand its range of connected home products, and do-it-yourself smart home tech. Piper is a connected device thatʼs equipped with a 180-degree HD security camera, an array of different environmental sensors, Wi-Fi and Z-wave radios. All this gear allows it to communicate with other devices on your home network. At just $239, itʼs a low-cost and effective security system for apartments and renters who have no real way to install a more traditional security setup. The acquisition is definitely a smart strategic play by iControl, but the move is also a fairly huge achievement for Blacksumac — a two-year old Canadian start-up that launched Piper through an IndieGoGo campaign just over a year ago. As a company that had an angel investor but no venture funding, the acquisition will allow them to keep up with venture-backed companies like Canary, who make similar products. Time will tell if iControlʼs purchase will prove to be a lucrative investment, but at this point, it definitely looks like itʼs a win for both companies.

SECURITY

Rogers said: Eventually, the plan is for us to work together to reinvent products that will help shape the future of the conscious home and bring our shared vision to more and more people around the world. For now though, not much will change. Dropcam products will still be sold online and in stores. And Dropcam customers will still continue to use their Dropcam accounts. M&A CASE 2 Nest's $555 million acquisition of Dropcam, a cloud-based home monitoring service, is about building a smart home stack as competition from established rivals looms. Google, which owns Nest, wants to play a big role in the automated home. There's a lot of data to mine and perhaps enough people opt-in to Google's plans to even surface advertising. Dropcam will operate under Nest's privacy policy, which doesn't allow data to be passed to its parent Google without a customer's permission. Nest reiterated that the company is about hardware not ads.

Nest needs ways to tie technologies together to automate, monitor and manage homes from many points. Thermostats and smoke alarms only go so far. Dropcam will fill a void. Google's role is ultimately to better connect those home tech tools to its devices, cloud and potentially robots---with customer permission of course. Ultimately, what company wins the smart home stack may be the one that garners the most trust. Nest is filling in a few blanks with Dropcam. Nest---and its well-heeled advertising giant parent---will likely go shopping again.

Matt Rogers, founder of Nest and head of engineering, said that customers were asking for Nest and Dropcam to be better integrated. Acquiring Dropcam was a quick way to integrate products.

HOME LIVING ENHANCEMENT EMERGES AS SMART HOME DRIVER

46% 29% 1% 5% LISTED “ENTERTAINMENT” AS ONE OF THE TOP REASONS TO PURCHASE A SMART HOME SYSTEM

LISTED “ENTERTAINMENT” AS THE #1 REASON TO PURCHASE A SMART HOME SYSTEM 2014

2015

On e thi n g was cl ea r ; we n eed to g r oun d the s ma r t hom e i n r ea l i ty . The 2015 s tate of the s ma r t Hom e i s d r i v en by s i m p l i ci ty a n d eas e-of-us e tr um p techn ol og i ca l i n n ovati on a n d today â&#x20AC;&#x2122; s con s um er s wa n t d evi ces that s ol v e r ea l , ev ery day p r obl em s

AU UD D IIOO

HOME LIVING ENHANCEMENT INTRODUCTION In the spring of 2015 Icontrol Networks surveyed 1,600 consumers (1,000 from the United States and 600 from Canada) to look at drivers and barriers to smart home adoption. This section of the report shows changes to these adoption indicators and examines consumersʼ attitudes towards the smart home, their levels of intent to purchase connected devices, and their desires and concerns about owning “smart” home living enhancement products. There are many smart home products already out in the market, from connected toothbrushes to appliances and HVAC, consumers can buy these products online, on shelves and from service providers that bring cable, internet and security systems to their homes. However, the recent excitement over the “Internet of things” means consumer preferences have taken a backseat to the wait for the entrance of new products. When considering a smart home purchase, consumers agree that user experience and ease of use is more important than technical innovation. As a result they gravitate more toward easy-to-use devices than complicated technology. Although consumers acknowledge the futuristic innovation of smart devices, the majority is not yet ready to adopt this new wave of technology.

It is evident there is a gap to bridge between the early adopters and mainstream consumers before the mass adoption. Home monitoring cameras, smart door locks and HVAC are currently among the most popular smart home devices, however there has been increasing consumer interest in other devices, such as Smart TVʼs, smart lighting, smart speakers and other smart appliances. As new technologies and innovations in home enhancement are introduced, mainstream consumers will

HOME LIVING ENHANCEMENT

CONSUMERS始 TOP LIST FOR MOST DESIRED SMART HOME DEVICES

Home living enhancement products or services fall under 2 different categories: Comfort and Convenience The main reasons users invest in smart home systems are cost savings and convenience. As new technologies emerge, home automation is becoming more popular and affordable. Being able to control household appliances through a single device has become possible through IoT and the evolution of the smartphone. Users of smart home systems may have access to many different home settings, such as pool and spa controls, fireplace sensors, window shades or even sprinklers. Also currently available are smart appliances such as smart washers and dryers, refrigerators, and smart vacuum cleaners, which can also be connected to the user始s mobile device in order to control the appliances remotely.

HOME LIVING ENHANCEMENT

DRIVERS AND TRENDS The main demand drivers for smart appliances include: An increasing desire by the consumers for convenience. Consumers are continuously seeking to simplify their daily life, and automate tedious tasks such as laundry, or doing the dishes. As humans continue to innovate, and create new technology, people are developing an increasing desire to use these technologies in order to finish tasks quicker and easier. Technological innovation in sensors, analytics and touch screens. With improved sensors and analytics, complete home automation could become a possibility. According to the 2015 iControl State of the Smart home survey, 60% of consumers want smart home devices that automate themselves. Consumers do not want to prompt their devices in order to complete an action, and would rather have their devices use data, analytics and sensors to operate on their own. The increasing connectivity amongst homes through broadband connection. Networks are constantly expanding in order to accommodate the growing need for internet and broadband connection. Broadband connections have also increased in speed, and reliability

providing people with the necessary infrastructure for a smart home. Additionally, new technologies such as cloud computing and IoT have allowed for an increasing interconnectivity amongst and within networks.

HOME LIVING ENHANCEMENT

RESTRAINT AND REGULATIONS

Mistrust in high tech solutions

Incompatibility across brands

A key factor to consumer acceptance is the ability to control home automation. Many consumers want the option to override smart operation, and are afraid that service on demand may not be readily available in the case of malfunction. Even in the case of automatic regulation, consumers want absolute control over the appliance and do not want the energy supplier to control it.

Most smart home appliance manufacturers have created smart devices compatible only with their line of products. Companies such as Samsung and LG have released their own brand of smart appliances in hopes that consumers will adopt a home entirely consisting of their brandʼs appliances, and in result create brand loyalty. Currently, platforms such as SmartThings and Loweʼs Iris can act as a gateway to connect a range of devices; however, there is no cross-platform compatibility, which may affect consumersʼ adoption rate to a certain brand. High cost for smart appliances Although smart appliances can provide energy savings resulting in decreased utility costs, many consumers fear that the cost of appliances outweigh the benefits. In order to achieve the optimal benefits, consumers must purchase several appliances so they can interact, and create the benefits of a smart home. Adoption rate is much higher in households with a higher income, where more spending money is available and cost savings can be better achieved through a combination of appliances.

OPPORTUNITIES Entertainment is the biggest growth driver According to Juniper Researchʼs study on Smart Home Ecosystems & the Internet of Things, entertainment will be the main driver for the smart home market, accounting for as much as 80% of total smart home service revenues. Although this figure includes service providers that supply products such as smart TVʼs with content, it is clear that the smart home market is changing from a security and energy fuelled market to an entertainment and convenience fuelled market. Full automation As new technologies emerge such as better sensors and analytics, full home automation becomes more conceivable. Most consumers want appliances that do not require prompts in order to complete tasks. According to the 2015 iControl State of the Smart home survey 60% of consumers want devices that do it on their own, and want devices to use data, 40

HOME LIVING ENHANCEMENT

COMPANY PROFILE LG Electronics continues to pursue its 21st century vision of becoming a worldwide leader in digital—ensuring customer satisfaction through innovative products and superior service while aiming to rank among the worldʼs top three electronics, information, and telecommunications firms by 2010. Through the technology ʻLG HomeChatʼ, consumers are able to communicate with smart appliances in the most effortless, conversational manner. Simply send an instant message to LG HomeChat via smart phone messenger app LINE to control and communicate with appliances remotely. Consumers could download recipes, turn on washer/update cycles, and even command robot vaccum to clean oneʼs living room. PRODUCTS Smart Refrigerator Built around the companyʼs signature Linear Compressor, LGʼs smart refrigerator is equipped with a full range 41

of smart technologies. First among them is Smart Manager, which transforms the refrigerator into a complete food management system. Customers can use the LCD panel or their smartphones to check whatʼs inside without opening the door. With the Smart Manager's Freshness Tracker, users can input various foods and check their expiration dates. Additionally, the Smart Manager recommends dishes to cook based on which ingredients are available in the refrigerator. The recommended recipe can then be sent to LGʼs smart oven. Smart Washing Machine Using Wi-Fi, washing machine alerts the user to technical issues, while the Smart Adapt feature makes it possible to download new washing cycle via smartphone or directly from the washing machineʼs LCD panel. Using their smartphone, customers can monitor the status of LGʼs smart washing machine and remotely control it with voice commands. Smart Hom-Bot With a smartphone and Wi-Fi connection, users can remotely schedule the HOM-BOT to clean their home at any time of the day or night. Advanced features mean the HOM-BOT can be controlled with a smartphone using either on-screen controls or voice. HOM-BOTʼs camera eye allows for remote home surveillance via a smartphone and even allows owners to speak to family members at home via the HOM-BOT. Like its smart appliance counterparts, the HOM-BOT can also be operated from an LG Smart TV.

HOME LIVING ENHANCEMENT

LG COMPANY TRANSACTIONS

2013 Active-Semi Inc (LG Korea):

2015 Decawave Limited (LG Korea):

Active-Semi, Inc. designs, develops, produces, and sells digital and programmable power management and digital motor drive integrated circuits. It offers high power DC to DC converters, AC to DC converters, PMU, and LED drivers. The company also provides Power Application Controller, a micro application controller solution for controlling and powering next generation smart energy appliances, devices, and equipment. Its products are used in portable equipment, including smart phones, portable navigation devices, and personal media players. The company始s products also offer various features for battery safety and management applications, including pre-conditioning, safety timers, thermal regulation, battery series resistance compensation, and voltage and current adjustability features.

A fabless semiconductor company engages in the architecture and design of integrated circuits for communications equipment markets. The company specializes in ultra wideband technology for real time location systems and wireless sensor networks. It offers ScenSor1, a single chip wireless transceiver that uses ultra wideband radio technology for use in applications, such as manufacturing, healthcare, smart housing, security, transport, and inventory and supply chain management, as well as applications in wireless gateways, mobile handsets, and automotive companies.

2013 HP webOS technology assets (LG USA): WebOS is a Linux-based, smart TV operating system that is set up to allow control and access of Smart TVs始 more advanced features and connected devices through a graphical user interface (GUI). WebOS Technology Assets comprises the webOS operating system technology, which includes source code, associated documentation, engineering talent, and related websites associated with webOS.

HOME LIVING ENHANCEMENT

Samsung Company Transactions SmartThings develops mobile application that can turn a userʼs smartphone into a remote control for all smart devices in the userʼs home.

COMPANY PROFILE Samsung Electronics Co. Ltd. is the chief subsidiary of South Koreaʼs giant Samsung Group and the largest electronics producer in Asia. It operates in three business divisions: 1. Consumer electronics (CE) division, which involves in the color televisions, monitors, printers, air conditioners, refrigerators, laundry machines and others. 2. Information technology & mobile communications (IM) division, which involves in the production of computers, handhold phones, network systems, digital cameras and others. 3. Device solutions division, which is divided into semiconductor and display business parts, providing dynamic random access memories, flashes, thin film transistor-liquid crystal displays and others. The company distributes its products within domestic markets and to overseas markets. 43

In 2014, for $200 million, Samsung Electronics acquired Smart Things, an IoT company that turns your smartphone into a remote to control all of the connected devices in a userʼs home. Boxee, Inc. develops internet based video-streaming applications for phones and tablets. The company offers set top box devices for live TV broadcasts, DVR, and more. The companyʼs devices allow users to watch TV shows from the Internet, movies/videos from services, and music from the Internet on TVs; and to add the recording of TV shows and watch them anywhere. The company's solutions automatically deliver video recommendations from clientsʼ friends on Facebook and Twitter to their television. The company was founded in 2007 and is based in New York, New York. On July 3, 2013, Boxee, Inc. was acquired by Samsung Electronics Co. Ltd for an estimate of $30 million.

HOME LIVING ENHANCEMENT

PRODUCTS Smart TV Samsung始s Smart TV collects together features including voice, gesture and smartphone, apps, web browsing, and universal search via voice, remote control or a wireless keyboard. Samsung始s new smart TV connects with your mobile to share content between the two devices effortlessly. Smart Washing/Drying Machine Once the smart washer is connected to the home area network, and the mobile application is installed onto the user始s smartphone, the user has full access over the machine. Moreover, the machine informs the householder when a cycle is complete.

conclusion

The smart home industry will not advance by simply throwing sensors into a device or creating a robot controlled by voice commands. Similarly, the industry is not waiting for a technological advancement breakthrough to finally achieve its potential. Different types of smart meters have existed and been implemented in people始s homes throughout the past decade, however most consumers are not aware of its benefits. Utility companies have primarily utilized smart meters to effectively collect data and form better analysis. However, recent developments on the Internet of Things have allowed smart home devices to provide enhanced features that assist users with everyday tasks. As the smart device market moves from the business side to the consumer side, large tech players have also begun to show interest, and made moves into the market. While the smart home market grows on the consumer side, utility companies will also be provided with new market opportunities. Analytics and big data through connected smart home devices may allow utility companies to better connect with customers and create cost-saving bundles specific to each customer. Many consumers are not well informed about home energy management products causing many to believe the costs outweigh the benefits. However, recent government regulations and incentives have pushed the implementation resulting in a higher adoption rate in places of energy crisis, such as Europe. There has already been significant investment by large tech com45

panies into smart home thermostats and meters, such as Nest labs, acquired by Google for over $3.2 billion. These giants have already developed well-established business plans in order to penetrate the market further and increase market share. Similar to the smart energy solutions market, the smart home security market has many competitors. Tech giants have acquired several start-ups within this industry in order to further improve product differentiation amongst existing products in the market. Google is also active within the smart home security market, and through Nest Labs it acquired Flutter and Dropcam. The home living enhancement market is the youngest segment of the smart home market. Although tech manufacturing giants such as Samsung and LG have already begun development and marketing its始 products. The market is still fairly untouched. It is predicted that entertainment will be the major future growth driver for the smart homes market, Juniper Research predicts that 80% of future smart home service revenues will be accounted by entertainment related services. Like the other two segments, there is a large amount of M&A activity in the entertainment sector. Samsung is leading the pack with their acquisition of SmartThings, one of the leading smart-home platform developers.

In order to establish market dominance in the smart home industry, companies must develop ecosystems or a unified platform to enable the convergence of the full range of smart devices. Smart home companies that have emphasized user experience and features that deliver tangible value to customers will capture the market. Based on market research and numerous surveys, the correct approach recognizes that smart home products are not just about technology; they are about what technology can do for users and how easily can they be implemented.

Companies such as SmartThings and Zigbee are on the right track because they were able to create languages, capable of cross platform interaction. By creating these languages, they have achieved a competitive advantage, and will force smart home devices to rely on these technologies in order to tackle the challenges that currently face the smart home industry. The main focus on investment in the smart home industry should be on the software or application development that drives product innovation. Many smart home appliance manufacturers such as Samsung and LG already have manufacturing infrastructure that gives them an absolute advantage in production and manufacturing, allowing them to easily mass-produce smart home appliances. Therefore, the optimal entry into the smart home market would be through software or application developments that will greatly assist these giants to tremendously improve their existing products. Software and application development is the key piece in this niche market to break the existing barriers within this industry to make a market revolution.

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