wipro.com

Smart Appliances Disruption, Proliferation and Challenges

1

ast decade was the age of

communication and internet.

The next would be that of

smart-everything, i.e, smart appliances,

smart homes, smart cities to name a

few. Home and Kitchen appliances

industry is on the cusp of digital

disruption driven by changing

consumption patterns – technology

utility and interaction, focus on

sustainability and environment,

and the need for evolving design,

functionality and usability. A smart

appliance would enable both

consumers and manufacturers to

interact with the product in ways that

was impossible before. According to

the Association of Home Appliance

Manufacturers, connectivity is not just

another feature, but an enabler of

multiple features. Connectivity will

bring convenience to consumers

allowing them to free up time

while managing appliances remotely.

Smart appliances would have major

impact on energy consumption and

optimization. US Energy Information

Administration projects a 48% increase

in World energy consumption by 2040.1

Smart appliances will allow users to

monitor energy consumption on their

appliances and control the appliances

for peak time energy saving.

Controlling the appliances remotely

will also propel the use of renewable

energy, for instance using the appliance

when the sun or winds are stronger.

Smart appliances also enable remote

diagnostic and repair, where the

appliance will notify any issue and

potential solutions to the users as

well as the manufacturer. Smart

appliances would even help the

manufacturer cut operational cost.

Additionally, the data generated from

smart appliances could be leveraged

by the manufacturer to strategize

design, segment markets and provide

after-sale service. The benefits are

widespread and not limited to the

consumer and the manufacturer. While

traditional giants such as Samsung, LG,

Whirlpool have a strong focus on Smart

appliances, companies such as Google,

Microsoft, Apple are marking their place

in the smart appliance ecosystem. The

later sections will explain how the

multiple parties and industries are

getting involved in the ecosystem.

Appliance manufacturers are finding new ways to

engage more with the customer

1http://www.eia.gov/todayinenergy/detail.php?id=26212

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The global smart appliances market is

expected to grow at a CAGR of 23.48%

during the period 2016-2020.2 Multiple

factors would enable such hyper

growth never seen before.

Technology advancements in the semiconductor industry are accelerating smart appliance momentum

Low cost, shrinking form factor and

ultra-low power chipsets are enabling

the proliferation of smart appliances.

Low power wide area networks (LPWAN) are promoting connectivity which isthe back bone of smart appliances revolution

There is a push for the implementation

of wireless networks to connect devices

such as smart appliances, electric

meters, wearables, that consume

minimal bandwidth but require

continuous connection. Networks such

as LoRaWan and Sigfox are being

implemented for long range, low cost

and low power connectivity promoting

the adoption of connected

devices. Countries such as Netherlands

and South Korea have already

implemented, while Australia and New

Zealand3 are implementing LPWAN

networks to cater to the numerous

connected devices expected.

Edge & Fog computing are fostering decentralised computing

Computing at the node or at the

gateway are emerging as faster and

more secure forms of data aggregation

and computing. With 44 ZB of data

expected through connected devices

by 2020,4 there is a strong need to

select data required to be stored and

computed. Computing closer to the

originating source of data helps in the

selection process and helps cut down

response time as compared to cloud

computing.

2http://www.sandlerresearch.org/global-smart-appliances-market-2016-2020.html

3https://www.mobileworldlive.com/featured-content/home-banner/sigfox-iot-network-heads-to-australia-new-zealand/

4https://www.emc.com/leadership/digital-universe/2014iview/executive-summary.htm

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The computing power per area of chip has been boosted due to the advent of advance chip architectures like SoC

Cost of embedded hardware has been decreasing exponentially

the refrigerator while at the grocery

store. Samsung’s Family hub

refrigerator has 3 built-in cameras

that gives users a complete view of

their refrigerator on their smart

phone.

Automation

Sensors can dynamically automate

device function. For instance, Bosch

heating system automatically

changes temperature if a window or

a door in the room is opened. An

oven can scan the directions

provided on food package to

automatically program and execute

cooking/heating style.

TechnologyApart from connectivity, Smart

appliances are now equipped with

Artificial intelligence, social

listening and e-commerce

capabilities among others. While

some features are already in the

market, others are at various stages

of market realization. Some of the

remarkable features in smart

appliances set to make a change in

the consumer’s lifestyle include:

Remote monitoring and control

Appliances are equipped with

sensors, cameras and connectivity to

enable remote monitoring and

control. For instance, the user can

check food supply level in

Value ChainOrganizational Industry

Internal External

Technology

Consumption

Business model

Markets

Ecosystem

Disruptors Incumbents

Future lens framework

Zinnov developed ‘Future Lens Framework’ to help companies identify future growth areas. The framework takes into

consideration key parameters such as Value chain, Disruptors, Incumbents and the Ecosystem. Identifying such

opportunities enables companies to strategize their future investment and focus.

The framework will help analyse trends across technology, consumption, business model, and markets and understand the

disruption in the smart appliances industry.

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Apart from connectivity, Smart

appliances are now equipped with

Artificial intelligence, social

listening and e-commerce

capabilities among others. While

some features are already in the

market, others are at various stages

of market realization. Some of the

remarkable features in smart

appliances set to make a change in

the consumer’s lifestyle include:

Remote monitoring and control

Appliances are equipped with

sensors, cameras and connectivity to

enable remote monitoring and

control. For instance, the user can

check food supply level in

E-commerce

Smart appliances can shop online

without any intervention from end

user. For example, a refrigerator can

automatically replenish supply.

Samsung’s smart refrigerators can

order food through its grocery

shopping partner Instacart. Similarly,

a washing machine could order

washing powder, fabric softener, etc.

Essentially, smart appliances can

capture the consumer needs at the

discovery stage.

Artificial Intelligence

Artificial Intelligence would give

the added convenience to the

consumer. A refrigerator could scan

for food supply level and based on

their quantities available it could

suggest the options of menu, their

recipes and cooking videos on the

smart screens attached.

Interoperability

Smart appliances can communicate

and control each other. For

example, Whirpool’s oven interacts

with Nest’s thermostat to ensure

home safety. If the thermostat is set

as ‘away’, the oven will know it

needs to be off and will notify the

user otherwise.

4

*Disclaimer: The logos are registered trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them

5https://www.cnet.com/news/amazon-alexas-new-skill-geneva-lets-you-voice-control-your-ge-appliances/

6https://www.electronichouse.com/smart-home/top-5-smart-home-trends-for-2016/

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Other features such as Smart

interactive screens and

multi-functional smart displays on

appliances, Smart glass top surfaces

that heat only where the pots and

pans are put, Sensors on smart beds

that track your sleep, are worth

mentioning as well.

Key Vendors of Smart Appliances*

Other prominent vendors include

Dacor, Friedrich, FUJITSU

GENERAL, Midea, Panasonic,

Robert Bosch, Videocon, Voltas

Voice commands

Most of the smart appliances are

expected to be voice controlled.

Additionally, they can also be

controlled using devices such as

Amazon Echo, Google Home, etc.

For instance, GE collaborated with

Amazon to develop Geneva, an

application that works along with

Alexa and allows users to

voice-control GE refrigerators,

ovens, washing machines.5

Appliance as Smart Hub

An appliance can function as a hub

in a connected home ecosystem.

Samsung announced that a smart

TV range will serve as smart hub that

can monitor and control devices

such as lights, air conditioner, etc.

that are compatible with

SmartThings technology.6

Integration technologies such as

IFTTT

Smart appliances can interact with

real world using ‘If This Then That’

(IFTTT) technology. For example,

smart lightings can adjust to

user moods basis inputs from

social media.

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Traditionally, appliance manufacturers’

revenue has been driven by the sale

of products. Smart appliances can

potentially drive multiple revenue

streams for end manufacturers.

Products to Services Model

Appliance manufacturers can

generate revenue by providing

services around their products. For

example, Samsung can charge a

monthly fee to provide e-commerce

services in partnership with Instacart,

as mentioned earlier. Such services

may also lead to the emergence of

pay-as-you-go models, where the

consumer pays for appliance usage

without any upfront cost.

Revenue from Predictive

Maintenance

Data from smart appliances is

collected by manufacturers to

proactively predict failure and

repair. Predictive maintenance can

minimize user inconvenience

caused by appliance failure. Smart

appliances can be remotely

diagnosed for any failure there by

reducing operational cost incurred

by sending field engineers. Smart

appliances can automatically

schedule field visits basis severity

of faults.

Revenue from Data led Services

Usage data from appliances would

help draw insights on the design,

market segmentation, after-sale

support for future products.

Appliance manufacturers can also

monetize the data collected. For

instance, dietary habits of consumers

can be shared with insurance

companies for customized medical

policies. Also, the data can also be

monetized by sharing with health

experts for customized diet plans and

predictive diagnostics.

Business model Emergence of

additional revenue

streams through newer

business models

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Smart appliances are now loaded with

latest features giving users a customized

and differentiated lifestyle. However,

the consensus in the market is the need

for a holistic home experience instead

of appliances working in silos. The

consumption pattern of appliances and

their related services have changed

over time as listed below.

Single app control

Smart appliances from multitude of

manufacturers running on disparate

technology/software platforms pose

major inconvenience to the end user

to manage multiple appliances from

each of the manufacturers. Hence

orchestration of appliances using

single app would drive successful

adoption of smart appliances.

On-demand economy

Integration of e-commerce into

the smart appliances will lead

to growth of on-demand shopping.

Traditionally retail influences

buying when a customer visits

a store irrespective of needs. Smart

appliances would limit shopping

to need based optimizing

spend behaviour.

Smart Home as a Service

Adoption of Smart Appliances would

accelerate under Smart Home as a

Service initiatives. A single

organization, the provider of home

services, will be responsible

for installation, management,

maintenance of the appliances

making the consumer’s life much

simpler, light on wallet and will allow

rapid adoption.

Consumption pattern

Need for a holistic

home experience

without technology

intricacies

Smart appliances regulations are

impacting the adoptions across various

geographic markets.

Universal Designs

Product design should cater to needs,

wants, and limitation of all end users

of a product. Hence certain countries

are creating regulations for Universal

Design. For example, Spain and

Norway among other countries

have written universal design into

their laws guaranteeing citizens

the right to access Information and

Communication Technology

products. One instance is the

inclusion of voice commands in

smart appliances. More geographic

markets are expected to adopt

universal designs.

Markets Push from regulatory

authorities to promote

energy saving smart

appliances

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Energy Management

Sustainability and environment

protection are critical to societies.

Many economic blocks such as EU

have stringent requirements on

performance levels of smart

appliances. Appliance manufacturers

are aggressively innovating to

meet such standards. Additionally,

smart appliances could enable

optimization of energy demand basis

consumption. Countries are expected

to bring regulations in the near-term

Design Production

After Sale

Service

Impact of smart, connected products on the consumer appliance value chain

to enable energy demand-response

for smart appliances, that could

help manage energy efficiently.

EPA revised the criteria for Energy

Star logo permitting a 5% allowance

for smart appliances. The

European Commission developed

Smart Appliances REFerence

Ontology (SAREF) to allow

information exchange with energy

management systems.

Research &

Development

Supply

Management

Distribution

Aggregator

Payment

Independent Service Providers

Maximum impact

Ecosystem

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While smart appliances market would

witness exponential growth in the

coming decade there are multiple

challenges to widespread proliferation

and adoption.

Cost of Smart Appliances

Initially product cost would hinder

market growth. However, technology

evolution and economies of scale

would drive the cost southwards.

Additionally, with the potential of

generating multiple revenue streams,

appliance manufacturers would

absorb cost for market adoption.

Design and Engineering

The expanding scope of use

and complexity along with the

unprecedented access to usage

and performance data will change

the way appliances are designed.

The data-centric product development

will shift from largely mechanical

engineering to interdisciplinary systems

engineering that would go beyond the

production of the physical object. The

assembly of the smart appliance will be

much more complex. The workforce

might require new skills, functions and

even organization structure.7

Interoperability

With multiple home and

kitchen appliances from disparate

brands, interoperability becomes a

Industry Challenges

key challenge for the successful

proliferation of smart appliances.

Regulations

Remote usage of appliances such as

microwave ovens may compromise

user safety. Stringent and standard

regulations for usage of smart

appliances, such as allowing only

lowering temperature of an oven

remotely, are required to limit the

appliance abuse. Several

manufacturers, independent bodies,

and geographies are looking at

imposing self-regulations on the kind

of usage of smart appliances.

Retail Ecosystem

There is a need of building an

ecosystem of retailers and payment

gateways. When an appliance

manufacturer moves from products

to services, it needs to ensure a strong

partnership within the ecosystem.

Grocery stores and aggregators will

be core to the ecosystem to allow

ordering items through appliances.

Companies with an existing payment

system will have an edge here,

for instance Samsung with its

Samsung Pay.

7http://www.assemblymag.com/articles/93427-the-connected-home-is-here

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Post-sale ecosystem

The existing technicians of traditional

appliances may not be able to service

the smart and connectivity

components attached to an

appliance. The technicians will need

to be educated to service, maintain

and replace those components.

Appliance manufacturers might

rather prefer an independent service

provider taking care of the warranty,

servicing and field upgrades for

the appliances. This creates the

need for a strong third party

post-sale ecosystem.

Security

The biggest Distributed Denial of

Service (DDos) attack of 2016

in October where websites such as

Twitter, Netflix, Reddit were taken

down temporarily was carried

out through several connected

security cameras, digital video

recorders, baby monitors.8 Many of

such devices are usually low-cost,

built offshore to be rebranded and

are not rebranded and are not patchable

for updates. Yet such devices stay around

in the homes for years. Similarly, smart

appliances are vulnerable to attacks that

can take down the entire network of

connected smart appliances.9 Smart

appliances need to be regulated by

governments through imposition of

security standards. As Bruce

Schneier, famous American security

expert, puts it, ‘The security

vulnerabilities in the Internet of

Things are deep and pervasive, and

they won't get fixed if the market is

left to sort it out for itself.10

11

Privacy

Smart appliances require a two-way

communication with an appliance

sending and receiving variety of

information about energy

consumption, components service,

warranty, software upgrade. The

appliance could also collect and

transfer private information without

the consumer’s consent. Security

researchers showed how a Samsung

smart refrigerator could leak Gmail

credentials.11 Although security and

privacy norms are on-going and

never-ending, but the greater sense

of belief that the appliance cannot

leak private information is missing.

Data collection and analysis

Appliance manufacturers are getting

ready to collect the huge amount of

data from round-the-clock

connected, multiple devices in

millions of homes. What data to

collect, at what time, how to store it

are some intriguing questions for

companies. Next is the challenge of

analysing data. Data from smart

appliances can provide

unprecedented insights about their

usage. Companies are hiring specific

talent of data analysts, data

statisticians who would help draw

actionable insights from raw data.

While the business challenges will

daze as the market evolves, the more

crucial technology challenges can be

overcome by partnering with a

system integrator providing

end-to-end Advisory, Product

Engineering, and Management

services. A clear road map of product

development, strong design skills,

robust verification and validation

processes, deep data expertise, and

core ecosystem linkages are required

to cater to the bigger challenges of

interoperability, privacy, security, and

data analysis. The partnership is vital

for manufacturers to survive in the

business transition from only

products selling to products led

services selling.

8https://hacked.com/biggest-ddos-attack-2016-caused-angry-gamer/

9http://iotworm.eyalro.net/

10https://www.schneier.com/blog/archives/2016/11/regulation_of_t.html

11http://www.theregister.co.uk/2015/08/24/smart_fridge_security_fubar/

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Consumer appliances ‘S’ curve

Traditional Appliances Smart Appliances

2015

Technology

Business Model

Ecosystem

Consumption

Core Product R&D

Product led

Product features led

Supply chain, Channel partners

Core Product R&D, Sensors, Communications, Security, Edge Computing, Artificial Intelligence, E-Commerce, Voice commands

Product led, data led, Service led

On-demand economy, Sharing economy, Smart home as-a-service

Supply Chain, Channel Partners, Retail/e-commerce, telecom service providers, System Integrators

In summary, smart appliances industry would witness exponential growth in the coming decade. Innovation in smart

appliances would create a whole new eco-system of manufacturers, after-sales support, retail and payment players as

well as engineering services partners. Collaboration between ecosystem partners would ensure success of smart

appliances industry.

Source: Zinnov Research & Analysis

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About the authors

Vijayakumar Kabbin

Vijayakumar Kabbin is the General Manager and head of

Embedded Products Design & Internet of Things (IOT)

practice at Wipro’s Product Engineering Services. Mr.

Kabbin has been instrumental in driving several IOT

initiatives for industrial and smart city customers. He is

responsible for building computer vision systems using deep learning and is

currently driving new technology initiatives around autonomous car, smart

drones and cobotics. Mr. Kabbin has more than 25 years of experience in the

industry. He has held various responsibilities in the R&D, engineering, business

management, sales, marketing, and customer support functions. Mr. Kabbin

holds a Bachelor degree in electronics and communications engineering from

University of Mysore and an EGMP from Indian Institute of Management,

Bangalore, India.

Ashwin Ballambettu Pai

Ashwin Ballambettu Pai is an Associate Director with

Zinnov. Having 5 years of rich experience in management

consulting, he has advised leadership teams of clients in

formulation of business and operations strategy. He has

spearheaded multiple client engagements in product R&D,

Globalization and GTM strategy for both MNCs and global product

engineering service providers. Ashwin has deep expertise in various hi-tech

industries such as semiconductors, consumer electronics and

telecommunications. Previously, Ashwin spent over a decade in

Semiconductor industry working for organizations such as Avago

Technologies, Solomon Systech. Ashwin has an MBA from Indian Institute of

Management, Bangalore, a Master’s degree in Consumer Electronics from

Nanyang Technological University, Singapore and a Bachelor’s degree from

MIT, Manipal.

Ketan Vaid

Ketan Vaid is Senior Consultant with Zinnov and has over 5

years of experience in multiple domains including

management consulting, private equity, and IT. Ketan has

helped global clients create value through formulation of

innovative and accelerated growth strategy. With keen

interest in upcoming technologies, Ketan has also fronted Zinnov’s IoT

technology services report rating service providers’ competency. Previously

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About WiproWipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO) is a leading information

technology, consulting and business process services company that delivers

solutions to enable its clients do business better. Wipro delivers winning

business outcomes through its deep industry experience and a 360 degree

view of “Business through Technology.” By combining digital strategy,

customer centric design, advanced analytics and product engineering

approach, Wipro helps its clients create successful and adaptive businesses. A

company recognized globally for its comprehensive portfolio of services,

strong commitment to sustainability and good corporate citizenship, Wipro

has a dedicated workforce of over 170,000, serving clients across 6 continents.

For more information, please visit wipro.com or write to us at info@wipro.com.

Ketan has worked with Charlson Capital Partners, a private equity search fund,

and with Cathay Pacific Airways, TCS, and IBM. He is very inquisitive about

technology disruptions molding existing businesses and creating newer avenues.

Ketan holds an MBA from Ross School of Business, University of Michigan and

from CUHK Business School. He has his Bachelor’s degree in Computer sciences

from JUIT, India.

About ZinnovWe at Zinnov assist our clients improve organization efficiency, innovation and

revenue by leveraging global resources and markets. We offer deep expertise

in Engineering, Digital, Market Expansion and Globalization. Zinnov has been

at the forefront of innovation and thought leadership. Our over a decade

experience in globalization helps us in understanding customer problems and

coming up with viable solutions. We assist our clients in addressing

globalization challenges by offering customers insights, data, and

implementation support to address their challenges. Our in-depth experience

is driven by our focus on engineering and digital practice areas. Zinnov serves

clients in Software, Automotive, Telecom & Networking, Semiconductor,

Consumer Electronics, Storage, Healthcare, Banking, Financial Services &

Retail Verticals in US, Europe, Japan &India. Zinnov was founded in 2002 and is

head quartered out of Bangalore. The company has locations in Houston,

Silicon Valley, Bangalore & Gurgaon.

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