Integration: The smart home hub killer (Reality Check)

I am glad to report that the smart home market is in rude health. One recent research report from Parks Associates found that 17 percent of US broadband households own an Internet-connected entertainment device and a smart home device, with an additional 13 percent of consumers owning both a connected health device and a smart home device. 

The vast expansion and diversification of devices has driven adoption, but also raised a range of challenges as well as delivered some fascinating insights into the direction of the smart home market as a whole. 

One example, in particular, is the smart home hub, originally a single-protocol (Zigbee, Z Wave, or proprietary) device intended to introduce consumers to the benefits of smart home technology. It is rapidly becoming a victim of its own success. 

This situation can be attributed to a wide variety of market pressures, but many can be summed up in one word — integration. One driver of this trend is consumer expectations, where rising environmental awareness has made single-use, power-hungry hubs unpopular, as well as the purely practical barrier of having multiple wireless hubs to setup and manage.

Another key consumer driver is convergence, where the expectation for devices to be multiple-use is proliferating. From Google Home to Amazon Echo Plus, with its built-in ZigBee smart home hub, integration is accelerating. Meanwhile, the latest hub from Centrica-owned Hive (the Hive Hub 360) follows the same trend, incorporating 360-degree audio detection, thus contributing an extra security sensor to the consumer’s home — natively and right out of the box.

Another significant trend bridges consumers, service providers and manufacturers alike, and that is the rise of Artificial Intelligence (AI), and in this case voice-enabled AI, often in the format of a speaker. An impressive 14 percent of Britons already own a device powered by AI, a figure slightly ahead of global adoption rates that sit around 10 percent. Globally, however, a significant one in three plan to buy an AI device, according to the latest figures from PWC.

Corresponding stats from YouGov found that smart speakers make up three quarters (75 percent) of the market, but this figure is down from 88 percent in 2017. Notably, over a third (34 percent) say they interact with other smart devices using their speaker, while nearly a quarter (26 percent) said they bought their smart speaker specifically because it can integrate with other devices.

This extremely rapid adoption rate has driven manufacturers to improve on the first-generation smart speakers by integrating the same voice controls into other devices, as well as improving the standalone speakers to integrate other eye-catching products and services. The density of new product launches speaks for itself, from Samsung’s announcement that the next generation of smart TV’s will ship with integrated voice AI, through Amazon’s Echo Spot and View hybrid entertainment devices, to Sonos’ about-to-ship Beam, a smart soundbar designed to compete in this burgeoning entertainment AI niche. 

At Deutsche Telekom we have also been following the trend closely, and recently announced plans to speed up the transition to voice-enabled AI during 2018 with the launch of an own-brand assistant and AI-enabled consumer speaker product to control smart home devices and DT’s services such as EntertainTV.

Faced with this fierce level of competition and integration, it is easy to see why the plain old smart home hub is on the ropes, and will soon die out entirely. While this may sound like a mournful note, it is in fact incredibly positive — it means that the smart home market is evolving fast, and a device that was regarded as essential just a year or so ago is now integrated into a variety of more powerful devices. This evolution and integration is dynamic, trend-setting and powerful, and the challenge of following its rapid pace is a welcome one we embrace wholeheartedly!