Each year more “smart” devices with internet connectivity are introduced in the residential and commercial real estate markets. From the now ubiquitous voice-enabled smart speakers to indoor air quality monitors to video-capable doorbells, consumers have a plethora of options when shopping for new devices. These devices are often released to market with great fanfare and promise to make life easier, more comfortable, and/or more affordable for building occupants. At Fluxus Ventures, we love the application of new technologies within the real estate industry. However, we believe it is important that smart home devices are designed in such a way that they keep consumers interested and happy over the long term. In this review, we aim to describe the type of functionality a smart home device should have so that consumer truly value the device over time and do not forget about the device move on with their lives.
Data dashboards are frequently forgotten
Over the past 3 years, we have surveyed several different types of smart home devices. Based on our research, we believe that devices that only provide a monitoring capability with a data dashboard are bound to fail in attracting consumers beyond early adopters. As an example, most non early adopter consumers quickly lose interest in data dashboards that show real-time building energy consumption or real-time indoor air quality measurements. This type of data is exciting to look at initially, but most people lose interest and stop checking the dashboard within a few months. This situation is similar to the trends seen with wearable fitness trackers. Fitness tracker users are initially very excited by their physical activity data, but 30-40% of users stop wearing the devices after only 6 months . Over time the excitement of reaching fitness goals fades away and many users simply lose interest and move on.
A smart home device that merely measures data and sends it to a dashboard is likely to be forgotten by the user and end up in a closet within a year. Examples of devices like this include many indoor air quality monitors, traditional wi-fi cameras (without smart software), and many energy consumption monitors. Indoor air quality monitors can provide very interesting data, but they typically do not integrate with other systems in a building (HVAC, windows, doors, etc.) and thus are not capable of autonomously fixing air quality problems. Their primary interaction with building occupants is via a data dashboard or through smartphone notifications, which are often just ignored after the first few months. Traditional wi-fi enabled cameras that stream video to a smartphone or web dashboard also have issues with retaining consumer interest. Lastly, many home/building energy consumption monitors fall into a similar trap. Consumers are often very excited to view real-time electricity consumption for a short period of time. During this initial phase, they are interested to identify minor fixes that reduce energy usage. However, once the quick fixes are completed, consumers are largely just left with a data dashboard that displays similar electricity usage every day. At this point many consumers lose interest and forget the energy monitor is even there.
Moving beyond the data dashboard to maintain interest over time
It is our belief that in order to keep consumers interested long-term, smart home devices must go beyond just a data dashboard. A great smart device must either automate a task or must uncover valuable and easily actionable insights. To reach the large market beyond early adopters, it is imperative that smart home devices fulfill one of these criterion. As an example, an indoor air quality monitor that can communicate with a building HVAC system (to adjust air flow rates when CO2 levels get high) or send commands to an automated window (to open/close windows depending on temperature or pollutant levels) is much more valuable than a monitor that simply logs and records data. Smart home devices that solve problems are truly valued by consumers and will be frequently used over time. The more often a consumer has a great interaction with their smart home device, the more often that consumer tell their friends and family about the device (driving more sales)!
We find that smart home devices that automate tasks are highly valued by consumers. Some examples of great devices in this category include the Google Home and Amazon Alexa smart speakers, FLAIR smart vents and pucks, and the AXIS Gear window system. Smart speakers are valuable for consumers because they have the ability to control other smart home devices (via Alexa skills or Google Actions) in addition to providing entertainment and answering queries. In fact, surveys have shown that smart speaker usage goes up the longer a consumer has owned the speaker, which shows that these devices keep users’ interest over time . Other smart home devices may not directly interact consumers on a daily basis, but can still keep consumers happy and interested by automating a common task. The FLAIR smart vent system automates the whole HVAC system in a home, from the thermostat set point to opening and closing the vents. This system makes the home more comfortable and allows the consumer to avoid temperature differences between rooms. As long as the FLAIR systems continues to work and do its job, it provides continuous value to the consumer in the form of increased home comfort. The AXIS Gear device keeps consumers happy in a similar way. The Gear device is used to automated window blinds/shades so that they automatically open or close at set times. This means consumers no longer need to worry about opening window blinds in the morning or closing blinds for privacy at night
Another type of great smart home device generates valuable and easily actionable insights that consumers can act upon to solve problems. Examples include Ring doorbells, smart security cameras with AI capability (e.g. Lighthouse or The Nest Cam), and advanced energy monitors (e.g. Sense). Consumers remain interested in these devices over time because the notifications lead directly to solving problems rather than simply reminding consumers to check a dashboard. Ring doorbells and security cameras with AI capability are useful because these products automatically alert consumers when something interesting or alarming happens in front of the camera. As a result, the consumer avoids needing to constantly watch the video stream and can simply check the video when someone is at the door, when a package arrives, or when an unknown activity is detected inside the house. Advanced energy monitors with disaggregation technology may also provide value to consumers over the long run. Currently, Sense (and Verdigris for commercial real estate) largely just provides real-time electricity consumption data for buildings, which we said above is not a good enough feature set to keep consumers interested over time. However, these companies are working hard to develop the ability to predict equipment failures and identify important performance issues with HVAC equipment, refrigerators, pumps, etc. If these devices can provide insights that prevent mechanical failures and/or extend equipment lifetimes, the devices will be highly valued by consumers.
Going forward, we are confident that entrepreneurs will continue to develop better and better smart home devices. We believe there will continued innovation in both the technical capabilities of smart home devices and in the way these devices interact with users. Overall we are excited to see which great devices come next!
 https://www.gartner.com/newsroom/id/3537117, https://www.forbes.com/sites/mattpowell/2015/01/12/sneakernomics-wearable-technology-and-sports-retail/