The global connected living market will be worth $1tn by 2020, according to PwC, with the UK’s share around $20bn – making up five per cent of the total.
In a survey of 2,000 UK consumers, 30 per cent said they remained connected at all times, while 59 per cent said technology was a help in controlling their lives, but isn’t essential.
It also surveyed some 220 CEOs around the globe to see how connectedness enabled by technology was affecting them, with 85 per cent seeing more interaction with consumers as a result.
PwC said the $1tn figure would emerge if the trends explored in its analysis continued to disrupt traditional industry structures and the six connected sectors continue to grow at the rate projected. By 2020, the value of the connected home market could be around $149bn, representing 35 per cent average annual growth over the period. This would see the smart meter market worth $38bn, remote home control market $37bn and the remote home security market at $74bn.
While the research suggests this indicates huge opportunities for new entrants and more established firms alike, it also pointed to the biggest challenges that could hinder the connected living market’s potential.
A question mark remains over persuading consumers to embrace what technology can do, as experiments and trials to create the much hyped “connected home” have fallen far short of expectations so far.
The data also reflects an overriding sense of reluctance and uncertainty, with relatively few consumers prepared to use technologies such as smart meters, home security systems and environmental platforms – even if they are aware of them.
Of the respondents to PwC’s connected living survey, 28 per cent said they knew about platforms to monitor the security of their house, but chose not to use them and said they wouldn’t be persuaded otherwise in the future.
The challenge then, will be delivering value that makes the general public feel they can’t do without these technologies, or can see tangible results that would benefit them. Nearly half of the survey respondents who didn’t use any platforms to monitor their utilities usage said they would consider doing so in the future, on the condition that it saved them money.
In providing a connected living experience, consumers will also need to be won over when it comes to trusting providers. PwC pointed out that the trend to decentralise energy supply sees more people interested in choosing local when it comes to power used, which obviously impacts on the role of today’s utility providers. A fifth of respondents weren’t aware of utility sharing platforms, but would consider using them in the future.
To tap into this, many utility providers want to showcase themselves as more than just being suppliers, but to do so effectively, they need to understand consumers and be able to offer them tailored offerings that have clear appeal.
On a related note, trust can be established via a peer network. The single most important factor behind people installing solar in their home was peer influence. Some 69 per cent of consumers won’t trust sharing economy companies until they are recommended by someone they do trust.
Bob Moritz, PwC US senior partner, said: “As more and more people connect via digital platforms, trust is a key component of the success of new marketplaces and new business models in areas as diverse as education, entertainment, the home, health, transport and work.”
PwC predicts the connected home market will grow quickly over the next six years, driven by a rising presence of smart home devices allowing consumers to remotely monitor and control their home devices and security systems, as well as government initiatives to support the installation of smart meters.
The government has said gas and energy suppliers will be required to install smart meters in every home and business across the UK with its £11bn programme, though consumers can choose not to opt in. The aim is for all British homes and firms to have smart meters by 2020, providing consumers near real-time information on energy use, the ability to then manage their energy use, an end to estimated billing and easier switching between suppliers.
It hasn’t been without its problems so far, though. Energy regulator Ofgem recently ordered supplier E.On to pay £7m for failing to supply its business customers with energy-efficient smart meters. It found E.On supplied smart meters to fewer than 65 per cent of eligible electricity business customers by an April 2014 deadline. It now has a year to meet a new interim target and could pay a further £7m if it fails to do so.
Earlier in the year, the energy select committee warned the government’s programme risked becoming a “costly failure”, with a series of problems meaning the 2020 target looked unlikely.
Technical difficulties making the meters work in tall buildings and those arising when customers switch supplier needed to be resolved, otherwise “the programme runs the risk of falling far short of expectations” the committee said.
The other factor driving the connected home market will be the growth of households across the world with broadband internet connections.
Moritz added that with technological breakthroughs driving down costs and more intuitive platforms increasing convenience, “we could be at a tipping point for rapid adoption of connected living across key areas of our day-to-day lives”.
In order to make that step, businesses hoping to tap into connected living’s potential, will need to win over consumers convincingly – and soon.
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