Pushing buttons

With smart home technology being touted as the ‘next big thing’ in the consumer electronics industry, fierce competition has broken out among the industry’s biggest players keen to stake their claim in the market. Aaron Greenwood reports.

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By  Published  October 31, 2006

After promising so much but delivering so little for much of the past decade, the home networking market has grown dramatically in the past 12 months, with a raft of vendors and application developers pitching their fortunes in the sector.

Much of this growth has been attributed to the rapid spread of wireless broadband networks in developed markets, which has had a corresponding effect on consumer demand for Wi-Fi-enabled consumer electronics devices and appliances. This has in turn piqued consumer interest in both wired and wireless networked applications in the home, linking previously ‘dumb’ household appliances via a server to provide access to a range of automated functionalities.

The rapid rise in consumer demand for smart home solutions recently led market analyst In-Stat to predict that the market would more than double in value over the next three years to US$17 billion.

“The emergence of media networking continues to be the most exciting part of the home networking market,” says Mike Wolf, principal consumer connectivity and content analyst with In-Stat. “Many vendors have announced or released media networking products to connect entertainment devices to networks in order to share audio and video content around the home.”

Indeed, rival analyst ABI Research claims that the consumer electronics industry is “being transformed” by networking technologies. The company claims a “major shift” is impacting the development of new devices and appliances, as a result of consumer demand for networked applications in the home.

It predicts that annual shipments of Wi-Fi-enabled products will rise to 249 million in 2011, up from just 40 million this year.

“From the enormous interest in online gaming, to the rapid emergence of new internet distribution channels for top-tier movie and TV content, the need for connectivity in mainstream consumer electronics is growing rapidly,” says ABI research director Michael Wolf.

The inclusion of Wi-Fi in mainstream consumer electronics products is gaining momentum among the industry’s biggest players and blurring the lines between traditional IT and consumer electronics applications.

In fact, much of the development is being driven by some of the IT industry’s biggest names keen to expand their presence in the consumer sector.

HP, Microsoft, Intel and Apple are each committing significant resources to developing applications designed to enable the wireless distribution of media content to multiple devices in the home.

HP recently debuted its first wireless high definition LCD TV, which is capable of receiving content wirelessly from a PC, while Apple is set to unveil its iTV wireless media content server in the first quarter of 2007.

Microsoft is developing similar technology with its next-generation Digital Media Centre, while Intel has created a processing backbone it hopes will be universally adopted by home networking application developers in the form of its Viiv technology.

Consumer electronics vendors are matching these initiatives with the development of ‘smart’ appliances and proprietary home networks.

One of the pioneers in this field is South Korean industry giant LG Electronics.

The company has invested more than US$100 million in developing its ‘Homnet’ home networking solution, and is currently conducting a mass trial of the technology involving more than 50,000 homes in more than a dozen countries worldwide.

Each home involved in the trial is equipped with a Homnet server linked to a large-screen touch panel, which supports a controller interface. The server supports wired and wireless transmission protocol technologies, and provides for a range of automated applications, including home security, media content distribution, and environmental control. The Homnet automation control facility can also be accessed remotely via a mobile handset.

On a recent visit to Dubai, Hee-Gook Lee, president and CTO of LG Electronics, said the emirate’s property construction boom provided major commercial opportunities for smart home application developers.

“Our ambition is to become recognised as a smart home solutions provider, and Dubai offers some intrigu ing prospects,” he says. “Property development is a huge business in Dubai and many construction companies are looking to include home automation solutions in their developments.”

Lee claims the nature of the technology forces vendors such as LG to “really question what sort of value we can provide our customers and the people that live in these properties”.

“We must adapt our technology to suit the lifestyle demands of local consumers, while ensuring the technology is as cost-effective as possible,” he explains. “You cannot simply offer a single solution and expect consumers to embrace it in every market worldwide. A large number of companies are getting involved in this business, which is raising the stakes in terms of competition.

“We are currently negotiating with a number of potential partners in the UAE. In terms of existing homes, we are designed the technology to ensure it can be retrofitted to these properties. Admittedly, our technology is not as sophisticated for these properties as it is for those that are linked to a broadband network. As a result, we are mostly targeting new high-rise properties because they provide economies of scale.

“Given the nature of the business, we are slating 2008 as the year in which you will see a large number of developments coming on to the market in Dubai featuring our Homnet technology.”

Lee concedes that LG’s past experience in developing smart appliances has been something of a hit-and-miss affair, led most notably by its infamous Internet Refrigerator that was released in 2000.

“The Internet Refrigerator proved very expensive when it was released on the market,” he admits. “It was a novelty and a curiosity, but not many consumers could afford it and even fewer appreciated it.

But it certainly generated a lot of press coverage, and it helped promote the LG brand to consumers who had never heard of it previously.

“Most importantly, it represented one of our first forays into home networking, and it inspired us to begin applying networking technologies to other household appliances.”

Lee says LG soon decided to dump the refrigerator from its range “because it was not commercially viable”.

“We did however simplify the concept and develop a TV refrigerator, which was aesthetically similar to its predecessor, but proved far more successful,” he claims. “Not many people can afford this model either, but it has certainly helped our refrigerator sales overall because it draws consumers to our brand.

“The experience we are gaining from developing these kinds of products is helping us think laterally about the development of new networked products that are both intuitive and cost-effective.”

The increased availability of networked appliances and networking solutions is also creating a niche in the retail sector for companies offering smart home products and services, particularly in the UAE.

One of the first home networking solutions providers to establish operations in the region was Dubai-based E-Home Automation.

Company director Arch. Khalifa A. A. AlJaziri describes the emergence of home networking and automation technologies as “an inescapable new trend”.

“While the smart home market is still in its infancy in the Middle East, it is rapidly growing,” he says. “We are working with a number of property developers in Dubai, offering a range of specialised packages.

We also customise these packages at the request of individual clients.”

AlJaziri claims that smart home technology has proven very popular with the UAE’s growing band of conspicuous consumers.

“Controlling your multimedia devices, lights, air conditioning and household appliances from one remote shows that you are in touch with the times,” he says.

“We’re providing consumers with this technology now.”

Taking a unique approach to the smart home retail sector is online portal MeSmartHome.com, which recently introduced its Smart Home Starter Kit in the Middle East.

The Smart Home system is totally wireless and is based on ‘plug-and-play’ technology, explains Abhishek Bose, general manager of Universal Concepts, which is the parent company of MeSmartHome.

“The system works on x10 technology which uses the existing wiring in your house to communicate between components,” he says. “This makes installation simple; no hard wiring is required so installation can be completed in a few hours.

“Also, the investment is protected as the components can be easily removed and installed elsewhere if the client moves home,” Bose adds.

The starter kit includes an X10 receiver module, which can be connected to various types of appliances; a wireless controller; a transceiver, which converts the radio signals sent by the multimedia remote control; and a CM11 Activehome Computer interface.

You cannot simply offer a single solution and expect consumers to embrace it in every market worldwide. A large number of companies are getting involved in this business, which is raising the stakes in terms of competition. Hee-Gook Lee, president and CTO of LG Electronics.


The most recent high-profile addition to the smart home retail sector in the Middle East is EON Smart Home, a new venture established by Dubai-based IT and electronics retail industry identities Arun Nagar and Leon Beuyukian.

The company’s first store, which opened in Dubai’s Mall of the Emirates last month, boasts a comprehensive range of smart home devices, appliances and networked applications from the industry’s leading vendors.

Beuyukian claims that EOS Smart Home represents a unique retail proposition in the Middle East.

“While there is plenty of smart home technology available on the market, no retailer has previously packaged the various products together to provide a range of solutions to consumers,” he says.

“I have a home in Paris and travel extensively throughout Europe and have never come across another retailer on the continent that specialises in integrated solution packages.

“There are however a couple of companies establishing smart home retail operations in the US, which is encouraging in that it suggests we are on the right track with this business.”

Beuyukian believes there is major commercial potential for smart home technology in Dubai. “Current estimates suggest there’s 700,000 new apartments being constructed in the city at the moment, and there are many property developers keen to include smart home technology in their projects,” he says.

EOS offers a comprehensive range of home automation packages ranging in price from US$500 to US$27,000. According to Beuyukian, the company’s target market consists of consumers earning a salary of more than US$4000 per month.

“It is a less daunting prospect launching a retail concept such as EON in Dubai than other markets, due to the fact that a large number of consumers here are early adopters and disposable income is generally quite high. There is also a lot of foreign investment in the emirate,” he explains.

“However, we have found that property developers in Dubai aren’t that keen to increase the cost of their developments by including home automation technology, so we’re currently targeting individual end-users.”

Beuyukian says the EON home automation packages can be easily relocated to new premises if the homeowner moves, and can even be transported overseas in the case of expats leaving the Middle East.

“We recently received an order from a British expat customer who had purchased an apartment in Dubai and also owned a house in north London, who was looking to fit out both residences with home automation technology,” he says.

“This technology represents a long-term investment. We’re also providing customers with extended warranty packages of up to three years, which cover networked devices and infrastructure.

“Given that we’ve only been open for a short time the response has been tremendous. We’re negotiating deals with a number of customers and assessing various property locations across Dubai. Being a multi-vendor retailer, our main goal is to provide our customers with the right solution to meet their requirements.”

Beuyukian says he and Nagar plan to pursue an aggressive retail expansion strategy in the GCC.

“We’re opening a new store in Abu Dhabi in January, which will boast 1500 sq metres of floorspace,” he explains. “We’re planning to establish stores in Bahrain and Qatar before June, 2007. We are currently assessing various locations in Kuwait, and finally, we expect to enter the Saudi market before the end of next year.

“We will initially target the GCC markets but we are hoping to expand into other countries across the region in the near future.”

Beuyukian and Nagar have split their Mall of the Emirates showroom into two specific areas showcasing low-end wired and high-end wireless home automation technologies and products respectively.

The partners sought advice from some of the biggest names in the business when developing the EOS retail concept, including Intel.

Beuyukian says this particular relationship has extended to the retailer offering smart home solutions based on Intel’s Viiv technology.

“We are currently the only retailer in the Middle East to offer two Viiv-based home entertainment products, which are essentially both PCs featuring integrated HDTV, 5.1-integrated Dolby surround sound, and a satellite connection for digital radio,” he claims. “They’re products that are perfect for multi-tasking and the quality of the picture is very impressive.

“There’s no doubting that Viiv is an ideal home automation solution, particularly in the AV realm, because it provides a common platform on which vendors can develop products.”

Beuyukian questions the long-term commercial viability of the trend towards proprietary home networking solutions, claiming that an open platform would provide the industry with greater commercial opportunities.

“LG, Samsung, HP, Apple and Sony – to name but a few – are all developing their own smart home products and network solutions,” he says. “Samsung has its Home Vita platform, which it recently showcased in Abu Dhabi in conjunction with Etisalat, while LG is promoting its Homnet platform.

“However, the market is open and consumer demand will be too great for any one of these proprietary technologies to dominate the market. Innovative products and ease of use are key to captivating consumer attention, because consumers are generally afraid of technology and that’s what we have found with EON today.”

LG Electronics’ Lee confers with these sentiments, arguing that the key to drawing consumers to home networking technology is to make it as simple and easy to use as possible.

“As CTO of LG, you might think it ironic that I challenge our engineers to come up with new products that feature less technology. I ask them, ‘do we need this particular feature?’ Over the years, we have gotten used to adding new features to certain products,” he says.

“It is easier, conceptually, to add more features and claim that we are providing a better product as a result, whether it be a digital camera, an MP3 player, or a television receiver. However, in many cases, we have had complaints from customers who claim that they rarely use all of these features.

“Home networking applications can also fall victim to this scenario. There seems to be a tendency towards trying to include as many features as possible, rather than providing a simplified solution that consumers are more likely to embrace. It is fundamental that we address these issues to ensure we don’t give consumers more than they need and confuse the process. We must make it easier to use, simpler, and cost-effective to ensure they embrace the technology.”

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