Smarter than the average

With smart home technology now being touted as the ‘next big thing’ in the consumer electronics sector, fierce competition has broken out among the industry's biggest players keen to stake their claim. Aaron Greenwood reports on the smart home phenomenon as consumer electronics vendors show their wares at GITEX.

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By  Aaron Greenwood Published  November 18, 2006

Rising demand|~|jhpgtx200.jpg|~|Je Hyoung Park, president of Samsung Gulf Electronics|~|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 targeting 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 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. The inclusion of Wi-Fi functionality 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 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 and media content distribution. 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 intriguing prospects,” he says. Lee claims the nature of the technology forces vendors such as LG to “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 have 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 mainly targeting new high-rise properties because they provide economies of scale.” Lee concedes that LG’s past experience 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.”||**||Home networking|~|lggtx200.jpg|~|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|~|LG’s compatriot and archrival Samsung Electronics is also committed to developing smart home solutions based on its Home Vita home networking platform. The president of Samsung Gulf Electronics, Je Hyoung Park, says that the Home Vita home networking application portfolio has proven very popular among consumers in South Korea and certain countries in Europe. “The technology provides homeowners access to a range of functionalities, including remote control of appliances, wireless multimedia networking and home security applications,” he explains. “We’ve successfully conducted a ‘community trial’ of the technology involving 3,000 households in Seoul. We’re also involved in a similar initiative in Moscow.” Closer to home, Samsung combined with UAE telecommunications provider Etisalat earlier this year to showcase a working demonstration of the technology in Abu Dhabi. Park says the demonstration paid huge commercial dividends, with Samsung attracting interest from a host of property developers, culminating in the company securing a major deal with those involved in the US$3.3 billion development of Abu Dhabi’s Saadiyat Island. While reluctant to confirm details, Park did explain that the deal called for the development of a “working community” of properties entirely networked using Home Vita technology. He says the development should be ready for launch within three years. “Today, consumers can use their PCs to relay multimedia content remotely to monitors throughout their homes,” he says. “Smart home technology will change the way homeowners live and interact with technology. The vast majority of consumer electronics and household appliance products can be wirelessly connected and can be vastly improved as a result of this technology.” 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. The most recent high profile addition to the sector is EON Smart Home, which was established by Dubai-based IT and electronics retail industry identities Arun Nagar and Leon Beuyukian. The company’s first store, which recently opened in Dubai’s Mall of the Emirates, boasts a comprehensive range of smart home devices, appliances and networked applications from the industry’s leading vendors. Beuyukian claims that EON 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. 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. EON offers a comprehensive range of smart 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. “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 appropriate 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 EON Smart Home 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 intuitive 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 solutions,” he says. “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 technologies is to make them 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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