Amazon’s New Smart Home Services is Good And Bad News For CSPs
The fight for the smart home
Analysts disagree about the estimated value of the smart home market over the next decade, but all agree on its exponential growth potential in the years to come. This opportunity has attracted a host of players from various industries looking to create new revenue streams and expand their footprint into consumer homes.
Telecommunication giants, consumer electronic manufacturers and utility companies have invested hundreds of millions of dollars over the past 18 months to bundle product and service offerings for the Smart Home. The real challenge for growth is designing a scalable business model that can be profitable using low cost yet complex technology that may require expensive labor to support it.
Amazon is known for entering into business categories with a proven demand, high growth potential, and short path to profitability. The question is: what advantage does Amazon think it has over other players with existing market access and consumer services operations?
With all those companies vying for a piece of the market it is no surprise that tech giants are making a run for it. In this article, we will focus on two primary contenders in the battle for smart home dominance ‒ CSPs and Tech companies.
Support of Things as the strategic weapon of choice
Smart home technology has advanced by leaps and bounds in recent years, but it has yet to be adopted by the mass market. Studies have shown that the average consumer finds it too complicated to install and service smart home technology on their own. Technical Support at scale (Support of Things or SoT) has been marked as the key to bringing smart home technology to consumers en masse.
Recently, Amazon unveiled a new suite of smart home consultation and support services, clearly indicating that the tech giant has pinpointed the SoT category as a key objective in its strategy to establish dominance in the smart home market.
Technical support has been an integral part of Communication Service Providers’ (CSPs) business for decades. Theoretically, CSPs have the infrastructure to dominate technical support for the smart home market. Amazon’s move is a harsh wake-up call to the CSPs.
To maintain their edge over Tech Giants led by Amazon, CSPs must engage in the race for better scalable support and complement their infrastructure and reach with efficient and innovative technology. They need to fight Amazon on its own turf and engage in technology fearlessly.
Smart home market ‒ crossing the chasm
The market still has a long way to go before it reaches its full potential. While, according to McKinsey & Co., in 2017 there were 29 million smart homes in the US, many consumers still do not fully understand the value of connected homes and early adopters have faced significant technical challenges in their quest to smarten their homes.
These challenges place smart home technology at the “chasm” ‒ from the principle of Moore’s Chasm ‒ which describes the gap between early adopters responding to a new technology and the mass market embracing it. A technology will only gain mass acceptance if there is a high value proposition and a low barrier to adoption.
For smart home technology to gain mass market adoption, consumers must first appreciate the value proposition that the complete connected home ecosystem provides. At the same time, smart home providers must focus on removing any technological challenges that may cause friction to customers while delivering smart home services at the right price point.
To support these efforts, SoT is emerging as the differentiator: ensuring that the smart home transition is seamless and reliable for the customer, yet scalable and affordable for the enterprise, thereby delivering the powerful value that will help smart home services make the leap into mass adoption.
The Amazon move toward smart home dominance
Within the smart home market, tech companies were known to rely on technology as a driver for new business. Each tech giant marketed their own voice-controlled AI-powered assistance platform as the centralized approach to control the smart home environment and its interaction with the outer world.
Amazon unveiled Echo and Alexa, with Apple, Google and Samsung all following suit with their own versions of the “brain” of the smart home. Tech companies utilized their technological edge to build powerful deep learning platforms to power the connected world.
On the other end of the market, CSPs have already started selling smart home services to their existing customers in multiple forms and models. They rely on their clear advantage ‒ their presence in 90% of US homes delivering the communication services that power the smart home. Their infrastructure, capabilities and existing relationships position them as the favorites to service and support every home in the US.
However, the latest Amazon move clearly shuffles the cards. Amazon has stepped into the CSP’s territory and is trying to close the gap in the SoT domain ‒ a move that forces service providers to fight back and engage with innovative technologies.
CSPs well-positioned to respond
This White Paper by Accenture entitled The Race to the Smart Home, contends that CSPs must defend and grow this critical market before the tech giants gain traction and scale. To do so they have to challenge tech companies in their own field ‒ Technology. They must identify and adopt technological solutions that will capitalize on their biggest advantage: existing customer base.
While taking the leap into technology is a challenging move, even here, CSPs have some advantage. A key ingredient for successful IoT support platforms is automation, which is achieved through AI (deep learning) and big data.
While Amazon may have the edge with AI, when it comes to customer assistance and technical support, CSPs own the data that drives the deep learning process and powers automated smart support solutions.
By properly utilizing their data resources to improve the support experience, the CSPs can gain an invaluable edge over Amazon and other tech giants and turn the tide in the race for SoT technologies.
Added Value Services for the Smart Connected Home is the new battleground ‒ and technology is the key weapon needed to win.
Everyone is vying for the smart home and IoT customer. The tech giants have the technological edge. The CSPs owns infrastructure and have a head start with the customer base. The battle lines have been drawn: The provider that can make the purchase, delivery, installation, activation and maintenance processes as seamless as possible, and at scale, will emerge victorious.
SoT has emerged as a primary differentiator and the initial battle field.
Amazon’s technological edge is a clear advantage, but the tech giant needs more time to perfect and scale its SoT offerings across all markets.
During this opportune window, CSPs must quickly respond by closing the technological gap.
Partnering with innovative SoT technology companies (visual support, chat bots, omnichannel) will help CSPs cash in on their greatest strength ‒ their existing customer base – and develop intelligent support solution to beat the tech giants.