Transcript A business model for the Smart Home

Business Foundations Capstone
A business model for Smart home
Using the openHAB technology as open source automation software for
home Automation Systems.
By : Jahed Habbak
Smart Home History
Smart Homes is not really a new thing. Home Automation is being marketed under different names for
many decades now. ‘Soon Homeowners Will Be Able To Control All Home Appliances Through A Central
System’ was the title of a Chicago Tribune article released in 1989. In fact the term ‘Smart House’ was
coined as early as 1984 by the American Association of House Builders. Prior to that, In 1966 Jim
Sutherland, an engineer working for Westinghouse Electric, developed a home automation system called
"ECHO IV"; this was a private project and never commercialized. There are several reasons why home
automation technology could not become a commercial success. The first and foremost reason is
technology adoption among the masses. Before the evolution of smart phones, it was unusual for the
masses to adopt the technology of the time. The human machine interfaces were complex and the system
design required technical know-how. The invention of touchscreen changed that overnight. It provided
simple and intuitive human machine interface and led the technology adoption through the development
of ‘apps’. The second reason was the machine to machine communication and information technology of
the time. The cost of technology was so high that it could not permeate the grass-root level appliances
used by the masses. This significantly reduced the utility of the automation systems. Another aspect was
standardization of communication technology. Prior to the adoption of Ethernet and IP protocol, the
communication technologies for machine to machine communication were being developed in silos. Even
today, the challenge of standard technology for home automation has not been resolved but we have still
covered a lot of distance. Having partially resolved the two major challenges of technology adoptions and
standardization, the industry should now be read to the third and most formidable challenge of home
automation – marketing it to the masses!
Smart Home Current Definition
Home automation is the residential extension of building automation and involves the control and
automation of lighting, heating, ventilation, air conditioning (HVAC), appliances, and security. Modern
systems generally consist of switches and sensors connected to a central hub from which the system is
controlled with a user interface that is interacted either with a wall-mounted terminal, mobile phone
software, tablet computer or a web interface.
Technological Trends
& Levels of Home Automation

Home Automation systems can be categorized into 5 different levels based on several factors. The
factors are primarily complexity and functionality. These factors determine the level of
sophistication, the type of hardware and the software used. The levels are:
1 – Remote Control : simple & inexpensive But it basically controlling “one” device at a time, for
example, simple remote control of lights and appliances using a transmitter and a receiver .
2 – Macros : A macro is the ability to use one command to actually control several devices. A single
touch could dim the lights, close the drapes, put on soft music and start the Hot Tub. One macro
can actually run another macro as well. Some type of programming is required to store the macros.
This programming can be done from another controller or from a computer. These devices are in
fact sophisticated controllers that do not require a computer to run normally .
This level units is a sophisticated transmitter but does not monitor actions or do conditional control
.
3-Conditional
Sensor system simplifies
programmable home
automation
It has the ability to do conditional logic. For example,
turn on a sound device if the time is night time and
the garage doors have been open for over 15 minutes.
Generally this device is computer controlled or is
based on a dedicated processor based controller.
Up to this point, the manual control of devices comes
from a controller consisting of buttons or switches.
While the controller may be a keypad, remote
control, touch panel, or a sensor, the interface is not
interactive.
4 – Interactive
modern and flexible
home automation
systems that include the ability to be controlled via a
web site, voice recognition, instant messenger, email,
telephone, or other system.
There are few systems available that can do any or
all of these. These are almost always computer
based.
And finally the most sophisticated level of control
systems .
5 – Self Learning
welcome to future
systems incorporates “learning” into the system. The
actions of the system might change automatically
based on living patterns, etc. This capability is
basically the ability for the system to reprogram
itself.
For example, if the system detects that someone
routinely turns a particular device on at about the
same time on weekdays, an event would be
automatically added to turn on this device.
Situational Analysis
External Environment A
technological trends
for homes to be smart they must also be simple and seamless – operating systems, appliances and devices
must talk to each other, This is a market where partnerships, collaboration and Cinergy are needed to
provide clarity. So the technological trends can be listed as below :

Security/Safety – Technology and tools that are changing how locks, doors, smoke alarms, and security
systems in the home are operated and managed. “90% of consumers say personal and family security
remains one of the top reasons to purchase a smart home system.”

Convenience – Technology and tools that are making it easier to manage and control the home from
anywhere (i.e. without having to actually be in the home). “48% of consumers say they are excited
about the potential convenience in programming home settings and maintenance.”

Productivity/Efficiency – Technology and tools that are helping homeowners spend less money and time
heating, cooling, and lighting their homes. “70% of consumers say they are excited about the potential
cost savings from energy efficiency and monitoring.”

Entertainment – Technology and tools that are adding new entertainment capabilities and opportunities
into the home. ”47% of consumers say they are excited about the potential to help the environment
with greater energy efficiency.”

Master Control – Technology and tools that are creating the opportunity to manage all aspects of the
home from one centralized location.
understanding these five main categories can help you become more effective at selling potential buyers on
the added value that such features will bring to them and their families.
External Environment A
technological trends
On the other hand, consumers expressed limited levels of excitement around the following smart home
benefits:

Greater productivity and ability to manage work-life balance: 23%

Helping to anticipate one’s needs: 18%

Ability to have more interactive features to help connect with people in their lives: 13%

While there are many competing vendors, there are very few world-wide accepted industry standards
and the smart home space is heavily fragmented. Popular suites of products include X10, Ethernet, RS485 and Z-Wave . Manufacturers often prevent independent implementations by withholding
documentation and by suing people, But

Open Hub, is a website which provides a web services suite and online community platform that aims
to index the open source software development community. It was founded by former Microsoft
managers Jason Allen and Scott Collison. As of 15 January 2016, the site lists 669,601 open source
projects, 681,345 source control repositories, 3,848,524 contributors and 31,688,426,179 lines of code .
External Environment B
Nature and extent of demand (demand elasticity & size of the market)

Revenue in the "Smart Home" market amounts to M.USD 11.4 in 2016.

Revenue is expected to show an annual growth rate (CAGR 2016-2020) of 46.03% resulting in a market
volume of M.USD 52.0 in 2020.

Household penetration is at 0.16% in 2016 and is expected to hit 0.82% in 2020.

The average revenue per Smart Home currently amounts to USD 1,513.67.

From a global comparison perspective it is shown that most revenue is generated in the United States
(M.USD 9,712.5 in 2016).

Global Comparison of Household in the "Smart Home" market Penetration in percent in 2016 is highest
in the United States With a rate of 5.82% while in Saudi Arabia it’s drops to 0.2% only.
Statistics and Studies
Revenue Absolute growth in the MUSD 11.4
in 2016.
number of active households is expected by
2020.
The average revenue per active household
is 1,513.67 USD in 2016.
Global Comparison
Revenue Household Penetration
With a market volume 9,712.5 M.USD, is
highest in the United States.
With a rate of 5.82%, is highest in the
United States.
External Environment C
Industry structure (entry/exit barriers)

List of barriers to market entry are as per the below

Connectivity: smart home services require high-speed wireless connectivity inside the home and ultrabroadband connectivity to the home for the exchange of data. Owning the connectivity enables
operators to partner with third party service providers as well as offer their own services.

Existing presence inside the home: customers would rather not add another device from a third party
when they already have a hub or CPE from their operator.

Credibility and trust: smart home services capture a lot of personal data. Customers already trust their
operators with personal information and billing.

Organized operations: customer service teams and technicians are already in place for fast
implementation of equipment and services, troubleshooting and customer peace of mind.

Competitor list
 BKAV Smart home
 FPT Smart home
 Lumi Việt Nam
 Honeywell (From america)
 Kocom (Korean)
 Ihome (Thailand)
 Cytech technology (Singapore)
Competitor/financial and experience
Finance 2012 (USD)
Finance 2013 (USD)
Experience
Brand Name
Original
Total
Profit before
Total
Profit before
Revenue
tax
Revenue
tax
(years)
Vietsmart
VietNam
2
0
0
750,000
112,500
VietNam
3
700,000
91,000
861,000
111,930
VietNam
3
653,000
58,770
803,190
72,287
America
5
350,000
42,000
413,000
49,560
Singapore
5
200,000
16,000
236,000
18,880
BKAV
Smarthome
FPT
Smarthome
Honeywell
Cytech
technology
Competitor/technical data
Main technical features
Management and mornitoring on
laptop/tablet
Auro detect changed status, and
switching devices to the most suitable
status
Remote control
Automatic send alarm to management
and monitoring system
Technology applied
Sensitivity temperature sensors
Sensitivity light sensors
Services
Consulting:
Design
Supplies
Implementation
Maintenance
Vietsmart
BKAV
Smarthome
x
x
x
FPT
Honeyw
Cytech
Smarthome
ell
technology
X
x
X
x
x
x
x
X
x
x
x
x
X
x
x
Zigbee
x
x
Zigbee
x
Wifi
Wifi
x
x
Zigbee
x
x
x
x
x
x
x
x
x
x
X
X
X
X
X
x
x
x
x
x
x
Segmenting, target and positioning

Positioning
Product Quality/ Service
Honeywell
OPENHAB
FPT
BKAV
iHome
Cytech
Lumi
Kocom
Price
Segmenting, target and positioning
Positioning
Honeywell
FPT
Product Quality/ Service

OPENHAB
BKAV
iHome
Cytech
Lumi
Kocom
Hi-technical
Competitve advantage and strategy focus

Strategy Canvas
80%
70%
60%
50%
Vietsmart
40%
BKAV Smarthome
FPT Smarthome
30%
Honeywell
Cytech technology
20%
10%
0%
Prices
Features
Qualtity of
product
Saving
operation
expense
service
External Environment D
Industry structure – Competition (nature of competition, profile of competitors (background, resources,
etc.), market shares, & stage of product life cycle)
Smart Home Patent Landscape & Commercial
Importance Assessment
stage of product life cycle
External Environment – Promotion Strategies
Marketing Channels

The first stage 2013-2014: Concentrate to the Media and advertising programs

The second stage: 2015-2017: Maintenance media programs and improve republic relations programs.
Media channels: implementation on first stage

The cost of marketing is low.

Focus to company’s segment: It focuses to the hi-tech people.

Social network are rapid developing.

Concentrate to build a brand of company.
There are some media channel marketing:

Social network such as facebook, twitter, youtube, Google advertising … Cost for that channel is low.

Company website: to build the brand of company
Advertising channels: implementation on first stage


Product advertising: the features and benefits of a product to customers and prospects.
Corporate advertising prospects about the firm’s capability to provide high quality services
There are some advertising channel marketing:

Advertising programs are concentrated television channel, on the science, newest technology channels.

In addition, company can take advertising program on newspapers, especially technical magazines
Promotion Strategies/Programs
Describe your plan for cost, quality, variety and responsiveness of the new line
Public Relations channels: implementation on second stage

Customers has already known products and services of Vietsmart.

Implement the public relation channels to maintenance the company’s image.
There are some Public Relations channels marketing:

Company will invite a famous family to present company images.

Take a customer workshop every year
Personal selling channels: implementation on second stage

Programs will supports for main programs, it use for maintenance customer, and build a image of brand name
Personal selling channels marketing

SMS marketing:

Individual email marketing.

Direct call.
Promotion Strategies/Programs
Describe your plan for cost, quality, variety and responsiveness of the new line
Promotion
Strategies
Media
channels
Advertising
channels
Personal
selling
channels
Public
Relations
channels
2013
2014
2015
2016
2017
Company website
Company website
Facebook/Youtube
Facebook/Youtube
Advertising on news websites
Other media channels
Advertising on google.com
Other media channels
Advertising on TV
channel
Advertising on building
Advertising on
SMS advertising
building
SMS advertising
Email to introduce strategy customer
Corporation business with real Estate companies to put smart home products to
apartment building, business buiding
Take a customer
workshop every year:
The customer are real
Estate companies
Keep a customer workshop every year: The customer are
real Estate companies
Invite a family of famous person to present of company
brand
Our System Overview
A system is capable of all levels of control, The wonderful aspect of our system is the ability to start out at
Level 1 and gradually move up to the more sophisticated levels, Or you can start out at our recommended
Level .
Applications and technologies

Smart Lighting : fully automated with Elegance & Ambiance .

Comfort & Convenience : Heating, ventilation and air conditioning .

Energy-Efficient : Smart home can save you money while you save the planet .

Safety & Security : Smoke Detectors, Security Cameras, Central Locking .

Entertainment : watching movies & streaming music .
Systems types
Several type of systems will be provided with different fees and features,
this will be explained in detailed later on .
Internal Environment – SWOT
Resources (Top management, Marketing, Production, Finance, research & development)
• Organization of
company is small:
the low expense
• Director board are
very active,
flexible, sensitive.
• Staff are young, and
active, control
technology
• Price is cheaper and
professional service
• This is new market in KSA
and Asian. OPENHAB is one
of companies going first in
KSA
• The economy over the
period of recession, to begin
growth stage.
• People more and more have
high income.
• Company is young ->
management
experience weakly.
• National company ,
is difficult to
compete in the
international
market
Strengths
Weaknesses
Opportunities
Threats
• Big international
competitors are accessing to
KSA
• competitors are traditional
software has a lot
experience in
implementation.
• This is high technology
product-> Price is high with
the income of KSA People
Internal Environment – Distribution Strategies
Brand diagnosis (current brand positioning, current pricing strategy, current distribution strategy, & current
promotions strategy)
Distribution strategy

Setup a exclusive distributor on a province in KSA or a country in Asian

Step by step expand the market and setup new distributor on new markets.
Distribution channels

Via distributor

Distribute to customer directly with the big project, and distributor can implementation services
Direct distribution

Focus on high income segment

Corporate with Real Estate companies
Segmentation, Targeting & Positioning
Vision, Mission and objectives
Vision

Provide to customer a freedom life.
Mission

Provide the best products, the best services to customers

Slogan “Auto freedom life”
Strategy

Individual communication

Corporate identify

Focus to the high income people

Focus to Real Estate companies

Content of program advertising must be followed the mission of company

The message send to customer “OPENHAB give you auto freedom life”
Market Analysis & Segmentation –
Who is/are the market?
Target Market

New Home Owners High income

Mostly between 20s –45s years old

Apartment building

Small and medium enterprise
Market types

Direct market Where: Saudi Arabia

Indirect market Where: other Arab Gulf area regions such as Kuwait, Bahrain, Iraq, Oman, Qatar, the
United Arab Emirates (UAE).

Asian country
Market Analysis & Segmentation – what & when
what consumers are likely to purchase within the
next 12 months
When Consumers are most willing to adopt smart
home technology
What does the market buy?
60%
When does the market buy?
50%
UPGRADES TO
YOUR HOUSE
45%
50%
HOME CAMERA
40%
THERMOSTAT
30%
LIGHTING
DOOR LOCK
20%
HOME HUB
10%
HOME SERVICES
APPLIANCE
0%
consumers
adults aged 2534
40%
35%
MOVE
TO A NEW HOUSE
30%
BUY A HOUSE
25%
GET A SECOND
HOME
20%
15%
HAVE YOUR FIRST
CHILD
10%
5%
ADOPT A PET
0%
USA
SAUDI ARABIA
Market Analysis & Segmentation – where & why
Companies & shopping places of those aged 45
and younger
Why would you most like to purchase your smart
home for?
Where does the market buy?
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
Why does the market buy?
30%
VACATION/AWAY
mode
25%
PRE-PROGRAMMED
20%
MOTION DETECTION
LIGHTING AND
ELECTRICITY
VOICE-CONTROLLED
SETTINGS
15%
10%
Companies
TECH
SECURITY
REPAIR
5%
GIVE INSTRUCTIONS
BY TEXT MESSAGE
0%
VIDEO SCREENS AND
REMOTE CAMERA
USA
KSA
Market Targeting
target audience is GEN Y
Customer segment is GEN Y
Gen Y “Most connected generation”

Born between 1980s‐1990s

Willing to pay for digital lifestyle

Enjoys using tech gadgets

Spends 1/3 of life on the internet

1st generation to grow up with computers at
home

Email, SMS and instant messaging as the
preferred communication

GEN Y WILL LIVE IN SMART HOME
Customer segment is GEN Y
5
4
3
2
Energy Management Services
x
Energy Saving Services
x
Eco‐friendly Products –Green Living
Entertainment “Fun Factor”
Social activities with friends
x
Internet activities (Video streaming, Gaming, e‐shopping etc)
x
Smart Technology
“Smart” Appliances
x
Connectivity –Information Accessibility
x
Home Monitoring
x
*5 is of most importance to the customer and 1 is of least importance to the customer
1
GEN Y Needs VS SG Smart Home
4
Eco‐friendly Products –Green Living
3
Entertainment “Fun Factor”
Social activities with friends
5
Internet activities (Video streaming, Gaming, e‐shopping etc)
5
Smart Technology
“Smart” Appliances
5
Connectivity –Information Accessibility
5
Home Monitoring
3
Smart
Controls
Energy Saving Services
Entertain
ment
EMS
IMPT
Energy Management Services
Competitive advantage and strategy focus
Products advantages

Products are innovations, applied newest technical in the world.

Superior features than competitors it make customer are saving operation expense.
Price advantages

organization is small, company operation effectively. We can saving the expense operation
Human Resources Advantages

With the young staffs, active, control technology, working effectively, and the director
board are sensitive with the markets
Strategy focus

Aggressive: We will apply all newest technology into the product, build a expert team in
provide services. Customize product as the customer demand.

Defensive: Improving the management experience to optimize cost of products.
Corporation with the big real estate companies to improves finances, and extension
markets.
Market Positioning –
Proposed brand positioning

For decades now, the smart connected homes were being developed by niche players and were being
targeted to the tech savvy upper echelons of the society and the companies soon realized that that
segment cannot offer a sustainable mainstream market. The commercialization of internet of things
technology has made smart homes affordable to middle class but the problem of marketing still
persists.

This articles offers segmentation, targeting and positioning (STP) methodology to the home automation
industry. I have used the VALS (Values, Attitudes and Lifestyles) framework for the STP analysis of smart
homes. VALS framework has been used because home means different things to different people
depending upon their values, attitudes, lifestyles, emotional drivers and resources and VALS framework
captures it beautifully. The picture below explains the motivational drivers for different segment of
people under VALS segmentation.

This framework also make the distinction between smart lifestyles and smart communities depending
upon whether the segments prefer exclusive or shared resources. Smart Homes in its colloquial meaning
refer to smart lifestyle solutions for high-income, high resources class of people. For the low-income,
low resources class, smart communities will be more appealing because of its lower total cost of
ownership. Based on this distinction, the smart home preferences for different segments are described
below.

Based on these smart home/community preferences, the home automation industry can develop smart
home concepts that appeal to the individual preferences and desires of different segment of people.
This approach will make smart homes not only more acceptable for the masses but also more
meaningful and relevant to their lives.
VALS Framework
Operations Plan
Operations Plans –
Describe your plan for cost, quality, variety and responsiveness of the new line
Hardware

Components control: Door lock, light …

Center control
Software

Software control installed in Smart phone of tablet:

Software: OS android

Control via 3G or wifi

Software features

Remote control: Software installed in tablet of Smartphone can remote control all equipment of house

Remote alarm: When any illegal operations, A alarm message will be send to tablet of smartphone.

Remote management: The Owner can remote manage operations of house.
Service:
Provide a turn key completely service:

Consulting:

Design

Implementation
Operations Plans –
Describe your plan for cost, quality, variety and responsiveness of the new line
Product features
1.
1.
Integrative Solution

Entertainment & Interactive gaming

Ease of access to content

Smart Home Control

Intelligent energy management

Home monitoring with One controller for all systems
Affordability

Infrastructure (IDA Open Net, HDB Eco‐town)

NEC in‐house Expertise

Dedicated electronics provider

Existing technology
Product lines

Smart home line: Introduce new version software with new functions.

Smart city line: 2014 will has trial for smart city, 2015 will put this products to market.
Services

Combine with Customer Solution. Product is a best solution for customer
Financial Plan – Price Strategies
Pricing

Price of hardware, software, service

Combine with Customer Cost. Product has cost perfect with value

Minimize cost of Products, expense of Implementation phase.

Training service for distributor to reduce cost of implementation

Always keep price less than the BKAV and FPT companies
Policies

Set a the same price of software and hardware for all Distributor

Set commission for distributor base on volume of distributor sales

Distributor can set the price of services
Promotion Strategies/budget
Describe your plan for cost, quality, variety and responsiveness of the new line
Budget Promotion
Strategies (USD)
2013
2014
2015
2016
2017
100,000
130,000
169,000
219,700
285,610
Media channels
25000
25000
32,500
42,250
54,925
Advertising channels
45000
30,000
50,700
65,910
Personal selling
channels
10000
10,000
16,900
21,970
Public Relations
channels
20,000
65,000
109,850
142,805
39,000
13,000
84,500
Marketing Mix Strategies/Plan
Description
Marketing budget
(USD)
Volume of Sales
Product strategies
Place (Distribution)
strategies
2013
100,000
750,000
2014
2015
2016
2017
130,000
169,000
219,700
285,610
975,000
1,267,500
1,647,750
2,142,075
- Smarthome
V1
- Smarthome V2 - Smarthome V3 - Smarthome V4 - Smarthome V5
- Smartcity V2
- Trial smartcity - Smartcity V1
- Smartcity V3
Big city in viet
Nam
- 100% Province - 100% Province
in KSA,
in KSA,
- 30% country of - 70% country of
Asian
Asian
- Medium
- Keep price
Price strategies
always less than
two BKAV and
FPT companies
- Media
channels
- Advertising
channels
Promotion Strategies
- Personal
selling
- Public
Relations
50% province in
Viet Nam
- Medium
- Medium
- Medium
- Keep price
- Keep price
- Keep price
always less than always less than always less than
two BKAV and
two BKAV and
two BKAV and
FPT companies FPT companies FPT companies
- Media
- Media channels - Media channels channels
- Advertising
- Advertising
- Advertising
channels
channels
channels
- Personal selling - Personal selling - Personal
- Public
- Public
selling
Relations
Relations
- Public
Relations
- 100% Province
in KSA,
- 100% country of
Asian
- Medium
- Keep price
always less than
two BKAV and
FPT companies
- Media
channels
- Advertising
channels
- Personal
selling
- Public
Relations
Integration & Evaluation
Evaluation



Objective
Become the top threes companies provide smart home products in KSA in 2017
Volume of sale in 2017 is 2.000.000 USD
Thanks