Thanks to their existing customer relationship, telecommunication companies, which provide internet connections and other services to households, will likely have a share of growing sales in the trending smart home market.
The smart home market will generate US$11.2 billion in revenues for telecom companies by 2022, according to a recent report published by ABI Research. “Though it will not be an easy journey,” the research firm also says in an announcement.
From voice-controlled smart speakers to security solutions, tech giants such as Google and Amazon are developing a range of products and services for the smart home market. They are competing with telecoms for the profit share.
“But things are changing and CSPs (communication service providers) are accelerating their strategies for the smart home,” says ABI Research.
The report cites examples of how telecoms develop voice assistants to support their smart home strategies. Companies mentioned include Telefonica with Aura, Orange with Djingo, and SK Telecom with Nugu. It suggests that telecoms should adopt approaches similar to those of Deutsche Telekom or Comcast.
“A platform strategy must be supported by the creation of a wide partner ecosystem and must be underpinned by an innovative monetization approach favoring freemium services over traditional bundles,” says ABI Research.
Telecommunication service providers already provide consumers with connectivity at home, allowing them to access online contents and videos. In addition to packages like Internet with streaming service Hulu, products mixing essential services and value-added ones can also be offered by service providers. For example, broadband connectivity with monitored security service.
“The smart home is core to the CSPs’ future and it is a real test to assess how far CSPs have developed their business beyond their telco heritage and how they can adapt their bundling business to market condition, experiment with innovation, and compete head-to-head with webscale players,” says Pablo Tomasi, senior analyst at ABI Research, in a statement.
Consulting firm EY, in its research, suggests that consumers aren’t settled on where they should purchase their smart home devices from. Broadband providers were the most popular choice with 19% of the surveyed picking the vendor, followed by tech websites with 18% of support, specialist manufacturers with 17% and utility providers with 15%.