After his presentation at the Internet of Things Summit in London, we caught up with Jon Carter, UK Head, Connected Home at Deutsche Telekom.
Jon has worked in and around the market since the early 2000s, and has many strong views on what is needed for the industry to finally realize growth. He has previously consulted for P&G, Allianz, E.ON and RWE on their connected home strategies. Prior to joining DT, Jon spent 12 years at Orange, where he was Head of Home Strategy and Head of Home Propositions. Jon leads UK Business Development for Deutsche Telekom’s white label and open connected home platform. Jon’s focus is on establishing partnerships with major corporates, including telcos, utilities, insurers and retailers, and helping them to exploit innovative new models, based on IoT.
Innovation Enterprise: What are the most innovative ways you have seen the IoT being used given your experience working with several high-profile companies in the area?
Jon: The most innovative way that I've seen consumer IoT brought to life over the last few months is what Amazon is doing both with ECHO and DASH. We see this as a wake up call to the smart home industry. Amazon is building a compelling 'ECHO-system'. The implications on any company - no matter what sector - that services consumers in there home is clearly being demonstrated, if you spend just a few minutes reflecting on what Amazon has enabled.
One of the important developments that the arrival of ECHO has brought about for the industry is a sudden realization that technology alone won't make this market, it will be the meshing of technology with innovative business models that will create it.
Further, whether you're a retailer, telco, insurer or utility, what has been ably demonstrated by Amazon is that the critical element in all this, is that you need to be the point of interaction with consumers. When you achieve that position, you not only 'own' their data (although at the end of the day, it's the customers' data, and they need to determine who and what happens with it), but you have significant influence over the devices and services that the customer then comes to adopt. In the case of Amazon, ECHO will enable Amazon to become the primary place where it's customers source all their connected commerce and associated services. Essentially, IoT then becomes a 'growth flywheel'. And there's no reason why any other provider that services customers in their home can't achieve similar success. But you've got to start with having a clear and coherent strategy, a focus on really getting under the skin of the customer and meeting their needs, etc, and then leveraging all the assets at your disposal to maximize your success.
You worked on Nest in a previous role, which has in many ways become the face of the connected home, why do you think it has been such a success?
Yes, that's correct, but to be honest I don't believe it has been such a success in Europe. There's no doubt that Nest is a bit of a poster child for consumer IoT, but perhaps it's not actually the best one, there are many others that have driven much greater consumer traction over here. Nest has been reasonably successful in the States, but in much of the EU, it simply doesn't resonate. I think it's taken time for Nest to realize that we're not the United States of Europe, and every country has different needs. Many markets are already one step ahead of Nest. For instance, Deutsche Telekom in Germany has already deployed TRVs (thermostatic radiator valves), which provide much greater control over a home's heating and provides a more effective means to reduce spend on heating. When you start to combine TRVs with geofencing and room based movement detection, whether that be through motion sensors or smart luminaries, the saving that can be generated on heating is significantly greater.
How do you see the perception of the connected home changing in the future?
We believe that consumers' perception of the smart home will change dramatically, when the capability that enables a smart home is built-in, as an inclusive feature within a broadband router. From this Fall, Deutsche Telekom will include smart home technology in all its mass market routers, what we call the 'Speedport Smart'. Over the coming few years, we are targeting over 2 million customers adopting smart home in Germany alone. Given today, and for the coming few years, we believe that most consumers will only see the benefit of smart home realized through 'point solutions', whether that be an IP camera, a Sonos sound bar, a smart light bulb, etc, then we believe our approach puts us in a very strong position. We don't envisage consumers will perceive the benefit of linking all these connected devices together on day one. However, once they've purchased a few individual devices, each one meeting a specific need, we believe they will start to understand the benefit of linking them. For instance, if when I leave home, my IP camera automatically starts recording when it sees movement, and the Sonos soundbar starts playing music, or making the sound of a dog barking, and smart lights turn on and off in a random way to simulate occupancy, one of the many benefits of a smart home can immediately be realized. We expect many consumers' perception will shift dramatically in the next few years, but first you need to put in place the necessary building blocks; and the IoT enabled broadband router is the key step.
What are the biggest challenges that the IoT faces in its spread?
A lack of focus on meeting the needs and pain points of consumers. The industry is still too wrapped up with the technology. Sadly, we still see many major industry players - major global brands - still placing too much focus on promoting all that IoT can enable, rather than focusing on applying the technology to meet a consumer need. One of the best examples of this is the ludicrous concept of the smart fridge, which despite being promoted in various ways for over 20 years, is still no closer to meeting any real consumer need! One has to ask: 'when will the industry learn!!'.
I'd also add to the above point is appreciating the very different needs across the many markets, not just between the US, the EU and Asia, but within those regions. For instance, if you look to the States, monitored security has pretty much driven the smart home market, and has captured the majority of the growth to date. Although we believe security will be a key use case in many countries across Europe, we don't believe that the market will reach the level of penetration that we've seen in the US, and hence the industry needs to think differently in terms of how it drives consumer engagement and captures growth.
We are just on the verge of the IoT revolution, where do you see the industry in 5 years time?
Our conservative view is that over a third of European homes will be smart within the next 5 years, in terms of having more than one connected device interconnecting with another connected device to effect a change, that could be lights dimming as the TV comes on, or heating or security automatically turning off or on when you leave or return home, etc. We also expect utilities - assuming they're in markets that are deploying smart meters - will have moved forward dramatically in the way that they support their customers in the visualization and management of their energy use. We also expect that many retailers will have adopted IoT as a means to create more frictionless ordering and payment of new products and services, which will drive increased home deliveries, etc. We also envisage insurers will have grasped the sizeable benefits that IoT can enable, in terms of moving from loss mitigation to prevention, employing smart sensors to upend their existing risk-based models. Change and disruption are on the immediate horizon.