Home automation opens up IoT market for telcos: Ovum

Summary:Home security will be the top area of expansion in the fast-growing 'connected home' IoT market for internet service providers and telecommunications companies alike, according to a new report by Ovum.

Home security is set to become single largest growth sector for internet service providers and telcos in the burgeoning internet of things (IoT) 'connected home' market, according to a new report by analyst and consultancy firm, Ovum.

"Home security provides the biggest medium term opportunity for service providers, but this opportunity requires a cohesive strategy in order to expand beyond the 5-10 percent of the market that buys traditional security and home automation services," said the report, Home Automation: Overseas Successes & Australian Opportunities, which was produced in conjunction with NBN Co.

According to Ovum, the Australian Security Industry Association estimates that around one million households in the country have remote security monitoring systems, out of more than eight million households nationally, leaving "significant room" for growth in the domestic security market.

David Kennedy, research director at Ovum, said home security will be one of the "big ticket" market sectors that will help shape the nation's connected landscape in the future.

"There is no single killer app in the future but rather big ticket categories such as security and energy control," he said.

Another significant market that has been identified in Australia, according to the report, is household energy management services and hardware. In 2012, Connection Research estimated that this market in Australia was worth approximately AU$13 billion annually.

"Given the ongoing focus on energy efficiency as energy costs become a larger share of household budgets, this market too is sure to grow," said the report.

For Ovum, home automation services present ISPs and telcos with an opportunity to "grow incremental revenue and encourage customer attraction and retention".

While these markets are highly competitive, the report said the revenue opportunities are significant, citing figures by Telsyte estimating that device sales alone in the home automation market would be AU$160 million in 2014 and rise to AU$917 million by 2017.

However, the report added that unless the tech industry as a whole developed compelling IP-based automated home devices, the full potential of the IoT market may not be reached.

"The biggest challenge to growth is the nascent state of the ecosystem for connected home devices and applications. To grow this market the ICT industry must create innovative products that widen the appeal of connected home technology to the mass market," the report said.

The report follows multi-billion dollar investments by the likes of Google and Apple into expanding IoT device portfolios.

In June, Apple unveiled a new network protocol called HomeKit, allowing developers to integrate connected, automated home devices such as lights, smoke detectors, and security systems. Also in June, Google allowed its recently acquired smart home device company, Nest, to pay over half a billion dollars (US$555 million) to purchase cloud-based home monitoring service company, Dropcam. The internet giant paid US$3.2 billion for Nest itself in January.

IT research agency IDC said it expected the global Internet of Things IoT market is expected to grow by more than AU$5 trillion over the next six years, reaching a valuation of US$7.1 trillion by 2020.

Topics: Telcos, Cloud, Emerging Tech

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Leon covers enterprise technology and start-ups from ZDNet's Sydney newsroom.

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