Smart Homes

The market potential forSmart Homes

Mark Pragnell, Lorna Spence and Roger Moore

The Joseph Rowntree Foundation has supported this project as part of its programme ofresearch and innovative development projects, which it hopes will be of value to policymakers and practitioners. The facts presented and views expressed in this report are,however, those of the authors and not necessarily those of the Foundation.

© Joseph Rowntree Foundation 2000

All rights reserved.

Published for the Joseph Rowntree Foundation by YPS

ISBN 1 84263 010 5

Prepared and printed by:York Publishing Services Ltd64 Hallfield RoadLayerthorpeYork YO31 7ZQTel: 01904 430033; Fax: 01904 430868; E-mail: orders@yps,ymn.co.uk

Contents

PageExecutive summary v

1 Introduction 1What are Smart Homes? 1Research context 1Report outline 1

2 Market context 3Speed of take-up of new technology 3Key supply-side drivers for change in Smart Home technology 5Evidence from the United States 6Market in the UK 7Technology developments 8

3 Consumer attitudes 10Introduction 10Methodology 10New technology 11Views about the Smart Home concept 12Interest in living in a Smart Home 14Who wants to live in a Smart Home? 15Conclusions 18

4 Views of the industry experts 19Introduction 19Architects 19Building contractors 20Property agents and developers 21Specialist contractors and service providers 22Equipment manufacturers 23Academics and researchers 23

5 Conclusions 25Supply 25Demand 25Opportunity 26

6 Research notes 27Introduction 27Desk research 27Consumer survey 27Expert interviews 29

Notes 31

The Joseph Rowntree Foundation commissionedthe Consumers’ Association to research andreport on whether there is a potential massmarket for Smart Home technology. Althoughthere are currently few Smart Homes in the UK,this preliminary research suggests that SmartHome technology (or variants of it) could have amass consumer market.

Background

Smart Homes use electronic networkingtechnology to integrate the various devices andappliances found in almost all homes, plusbuilding environment systems more common infactories and offices, so that an entire home can becontrolled centrally – or remotely – as a singlemachine. This technology offers the prospect ofsignificant improvements in the living standardsof the elderly, infirm and disabled who, withoutautomated domestic activities, may otherwise betotally reliant on home care.

However, these benefits can only be realisedif the technology becomes affordable andaccessible to those who most need it. This isonly likely if a broader consumer marketdevelops – thus pushing down prices andincreasing availability.

The research conducted by the Consumers’Association helps identify whether a massconsumer market for Smart Homes could exist.

The research comprised:

• desk research to provide backgroundcontext to the potential development of amass Smart Homes market

• a survey of over 1,000 households whichexamined consumers’ attitudes andinterest in the Smart Home concept

• interviews with relevant experts toidentify their views on the prospects forSmart Homes, and their reactions tosurvey results.

Supply

In recent years, there has been a modest increasein the building and conversion of propertiesthat have embedded Smart Home technology.Moreover, there has been increasing – albeit, toooften costly – access to the technology for‘expert home improvers’ and ‘DIYers’.

There remains, however, a general lack ofenthusiasm on the part of construction andproperty industries, manufacturers andsuppliers to push – or even properly promote –this technology. The lack of common standards,an inappropriately skilled workforce andconcerns that ‘it’s just a fad’ has meant theSmart Home market has yet to develop asustainable momentum.

There are, though, changes on the horizonthat could stimulate more activity frompotential suppliers:

• Scale economies from the American market.The growing use of Smart Hometechnology in the USA could deliver theeconomies of scale necessary to reduceaverage costs and, hence, prices.Although it may take time to feedthrough, this could reduce prices here inBritain.

• New technologies. There are up-comingtechnologies that will add to thefunctionality, ease of use and convenienceof Smart Home systems, while improvingtheir cost-effectiveness. Moreover, the

Executive summary

v

The market potential for Smart Homes

development of new communicationstechnologies – such as ‘Bluetooth’ and the‘XML’ language – offer the not-too-distantprospect of common standards forelectronic dialogue between Smart Homedevices (although it is still unclear howmany standards will exist!).

• Interest from the consumer electronics

industry. With an ever increasing range ofhome and personal electronic gadgetsavailable, many major corporations in theconsumer electronics industry considerthe user-friendly integration andcombined control of multiple devices ascrucial to their future success. As such,the addition of Smart Home devices andfunctionality to home entertainmentsystems is a realistic medium-termprospect.

Demand

The survey of consumers’ attitudes indicatesthat there is underlying public interest in SmartHome technology that could be unleashed if themarket develops – and prices fall –appropriately.

While views are mixed, around half of thosesurveyed expressed interest in the Smart Homeconcept (although this may not translate fullyinto willingness to pay). As a generalisation, theresults suggest that people fall into one of threegroups:

• ‘The interested’ – those interested in livingin a Smart Home (45 per cent ofrespondents). Most likely to be: peopleaged 15–34; family households; thosewith pay TV and home entertainment

systems (i.e. DVDs and video gamesconsoles); those with PCs and/or Internetaccess; those on higher incomes; thosewho hold positive attitudes about newtechnology.

• ‘The ambivalent’ – those who were neitherinterested nor uninterested in the idea (19per cent). These respondents were wellrepresented across all groups in thepopulation, though marginally morelikely to be older and on medium/lowincomes.

• ‘The uninterested’ – those not interested inliving in a Smart Home (37 per cent).Most likely to be: aged 55 and over;households without children; householdswithout PCs, pay TV or homeentertainment systems; those who holdnegative attitudes towards newtechnology.

The results also indicate what characteristicsattract interest in Smart Homes.

Unsurprisingly, the Smart Home is mostattractive to more pro-technology consumers,including the so-called ‘early-adopters’ vital tothe early development of high-technologymarkets. Households that reported the mostpositive attitudes towards new technology –and have greater ownership of newertechnologies such as home entertainmentequipment and PCs – also demonstrated greaterinterest in living in a Smart Home.

But, in addition, the Smart Home appealedto a broader range of consumers because of itspotential safety and security benefits. The highlevel of interest in the safety and securityfeatures suggests this might be a powerful

vi

Executive summary

driver to attract less technology-literatepurchasers into the Smart Home market. Thebenefits of remote control also had wide appeal.

The survey also identified concerns amongconsumers about the apparent complexity of thesystem and the potential for ‘technical hitches’.Importantly, consumers across all three groups –interested, ambivalent and disinterested –voiced similar concerns, suggesting this is not aproblem that will limit interest in the technologybut is something that will have to be overcomeif consumers’ confidence in Smart Homes is tobe nurtured.

Opportunity

With the infant Smart Home and otherassociated high-technology markets changing so

rapidly, any predictions for their future arehighly uncertain. Nevertheless, this researchdoes identify reasons to be optimistic that amass consumer market for Smart Home-typetechnology could develop.

There appears to be significant consumerinterest in the concept which could be unlockedat the right price.

But, if a market does develop, it seems lesslikely to come from impetus in the building,construction or property sectors. The greateropportunity for growth in the use of SmartHome technology appears to be from itsaddition to the burgeoning array of consumerelectronics – especially home entertainment andpersonal communication systems – and initialdemand from the more technology-literateearly-adopter households.

vii

1

The Joseph Rowntree Foundation hascommissioned the Consumers’ Association toresearch and report on whether there is apotential mass consumer market for SmartHome technology. This report describes theresearch that has been conducted and outlinesthe key findings.

What are Smart Homes?

Smart Homes use electronic networkingtechnology to integrate the various devices andappliances found in almost all homes, plusbuilding environment systems more common infactories and offices, so that an entire home canbe controlled centrally – or remotely – as asingle machine.

The recent report on Smart Homes for theJoseph Rowntree Foundation and the CharteredInstitute of Housing offers one of the bestdescriptions of the Smart Home concept:

Cars have central locking, electric windows,remote controlled mirrors, CD auto changers –and the rest! And factories, offices and shops areoften highly automated, giving staff control overtheir environments, and making buildings moreefficient. Automatic doors, blinds that close whenthe sun comes out, infra-red lighting controls –they are all becoming commonplace.

But you don’t find that sort of thing in people’shomes much … or do you?

We do have remote controls for our TVs, we dohave smoke detectors and passive infra-redburglar alarms, we do have timers on our centralheating. But all these devices are separateentities. Each affects only one activity or aspectof the home.

Smart Homes are about something much moreexciting. They are about using the latestinformation and communications technology tolink all the mechanical and digital devices availabletoday – and so create a truly interactive house.

(D. Gann, J. Barlow and T. Venables, DigitalFutures: Making Homes Smarter, Chartered

Institute of Housing/JRF, 1999, p. ix)

Research context

Smart Home technology offers the prospect ofsignificant improvements in the livingstandards of the elderly, infirm and disabledwho, without automated domestic activities,may otherwise be totally reliant on home care.

These benefits can only be realised if thetechnology becomes affordable and accessible tothose who most need it. However, this is onlylikely if a broader consumer market develops –thus pushing down prices and increasingavailability.

This report outlines research conducted bythe Consumers’ Association to identify whethersuch a mass consumer market for Smart Homescould exist.

Report outline

Chapter 2 provides some background context tothe potential development of a mass SmartHomes market. It examines the background tothe Smart Home market – both here in the UKand in the USA – and outlines some factors thatmay influence its potential future growth.

Chapter 3 reports the results of originalmarket research conducted as part of this study.A survey of over 1,000 households examined

1 Introduction

2


consumers’ attitudes to the Smart Homeconcept. This provides the basis of assessingunderlying public interest in the technology,and identifies which groups in society are mostlikely to acquire Smart Homes.

Chapter 4 describes the views of industry

experts. Interviews have been conducted with arange of experts to identify their views on theprospects for Smart Homes, and their reactionsto the results of the consumers’ attitudes survey.

Chapter 5 provides conclusions and Chapter6 gives detailed research notes.

3

This chapter examines the background to theSmart Home market – both here in the UK andin the USA – and outlines some factors that mayinfluence its potential future growth.

First, this chapter looks generically at theadoption of new technology by consumers.Second, it identifies some key underlyingsupply-side drivers for change in the SmartHome market. Third, it looks at the experiencefrom the USA. Fourth, it provides an overviewof the UK Smart Home market. And finally, itbriefly reviews some relevant technologydevelopments that may impact on future SmartHome provision.

Speed of take-up of new technology

Although every new innovation is unique andits adoption by consumers different, there arelessons that can be learnt from looking at howquickly other technologies managed to reach amass market, and what factors influenced thepace.

The ‘S-curve’ of new technology adoption

There is a standard pattern to the adoption ofnew consumer products – the so-called ‘S-curve’.

Figure 1 demonstrates how ownership ofdifferent consumer technologies has changedover time. The graph illustrates that mosttechnologies appear to follow an ‘S-curve’pattern of technology adoption. This ischaracterised by slow take-up in the early years,followed a more rapid increase in adoptionwhich moves the product into the mass marketarena. Finally, as the market matures and take-up slows, the gradient of the S-curve becomemore shallow as it approaches a maximum levelof market penetration (or ‘saturation’).

While most technologies follow the S-curvepattern of adoption, they do so at varying rates(i.e. the S-curve varies in steepness and shape).For example, the telephone took over 50 years toreach 80 per cent of households yet thetelevision took only 15 years. Similarly, thedishwasher has only reached 24 per cent market

2 Market context

Figure 1 Adoption of new technologies over time

% h

ou

seh

old

s (*

)

100

80

60

40

20

01930 20001940 1950 1960 1970 1980 1990

TelephoneMobile phoneTVColour TVSatellite and cableDishwasherMicrowaveCentral heating

CD playerVideo recorder

PC

Source: General Household Surveys 1972-98, BARB, BT, Oftel, ITC, BskyB, ONS.Note: Data refer to percentage of households for all goods except mobile phones; here data refer topercentage of population.

4


penetration after being in the marketplace forover 20 years, whereas the microwave hasreached almost 80 per cent penetration over asimilar period.

Factors that affect take-up

A range of factors influence the take-up of newtechnologies as follows:

1 Economic• price and availability• income levels• consumer spending levels

2 Social• patterns of work and leisure• gender roles

3 Consumer• attitudes towards new technology• needs and wants• confidence in new technology

4 Technological• degree of innovation• development of competing and

complementary technologies

5 Global/political• environmental concerns• world events• economic and social policies.

These factors work together to determine thefinal shape of the adoption curve. For instance,rising standards of living and the increasingparticipation of women in the workplace weretwo of the key drivers which led to the mass-market adoption of labour saving technologies(e.g. washing machines, microwaves, etc) in the1970s and 1980s. Rising levels of wealth havealso led to demand for more comfort in the

home; over 90 per cent of households now havecentral heating.

Consumer attitudes towards newtechnologies are also key to determining take-up. In general, consumers have become moreaccepting and less wary of new technology inrecent years and this has led to steeper adoptioncurves for newer technologies (e.g. CD players,video recorders and mobile phones).Nevertheless, the more familiar the technologyand its use, the quicker its likely take-up. Forexample, the rate of adoption of colour TV,which was an incremental improvement on thepopular black and white model, was much morerapid compared to that of the PC, where fewpredecessor technologies existed. It has taken 15years for PC ownership to rise from 9 per cent to45 per cent, whereas ownership of colour TVrose by a similar level (6 per cent to 44 per cent)in only five years.

This may bode well for the adoption ofSmart Home technology. Although SmartHomes are innovative, most of theircomponents – i.e. the household devices andappliances – are familiar. This should make theconcept easier for consumers to understandand, hence, could make them more willing topurchase.

The pace of adoption is also heavilydependent on the degree to which consumersfeel they need or want the technology inquestion – and this is something that changesrapidly over time. Microwaves were once seenas a luxury item but are now considered, bymany, to be a necessity. Dishwashers on theother hand are taking longer to become mass-market items. This may reflect in part the factthat consumers still regard them as a luxuryitem or perhaps that many consumers don’t

5

Market context

have room for a dishwasher in the kitchen!A survey of consumers’ attitudes to Smart

Home technology has been conducted as part ofthis research. This survey (see Chapter 3)provides some original insight to consumers’underlying motives for and against acquiringSmart Home technology.

The development of one new technology canalso affect take-up of others. For example, theintroduction of Internet access via digital TV islikely to initially have an adverse impact on thepace of adoption of home PCs. However, digitalTV may also act to increase adoption ofwidescreen televisions, DVD players andsurround sound systems. This illustrates hownew technologies can act as bothcomplementary and competitive forces. Thereare a number of technology developments thatcould impact on the future adoption of SmartHomes; these are discussed in the section ontechnology developments.

Key supply-side drivers for change in Smart

Home technology

Growth in a market depends both on demand-and supply-side factors. Looking specifically atthe supply of Smart Home technology, there doappear to be drivers for future change.

While at a less sophisticated level thantoday’s Smart Home technology, ‘automatic’home network facilities and functions became areal possibility over 20 years ago in 1979 withthe introduction of a technology called X-10.This was developed in the UK where it failed totake off, though was more successful in theUSA. Indeed, X-10 is still marketed extensivelyin the USA, primarily as a DIY product. Thesystem controlled home electronic devices by

sending and monitoring the results of commandsignals sent across the electrical wiring. Thismade the systems, previously restricted to theindustrial and commercial office building sector,available economically to builders forembodying in new homes and retrofitting intoexisting residential properties.

Currently, two of the more important systemcontrol and integration protocols are EuropeanInstallation Bus (EIB) and LonWorks. EIB isdesigned to operate in homes and largecommercial buildings, with applications thatinclude control of heat and ventilation, lighting,shutters, and monitoring and supervision.LonWorks is designed to providecommunications over a variety of physicalmedia for a wide range of products and systemsin building automation and other networked,distributed control applications.

Twenty years on from X-10, there are twonew technological drivers which could give newimpetus to the Smart Home concept.

• First, the advent of powerfulmicroprocessors now allows theelectronic control of almost all mechanicalappliances. Whereas washing machines,dishwashers and televisions were oncecontrolled using mechanical devices,nowadays the microchip facilitates theircontrol and operation by electronic meansincluding remote control.

• Second, the increasing pervasiveness ofnew digital communications protocols –such as the Internet and, maybe moreimportantly, new wireless protocols like‘Bluetooth’ – provide opportunities forstandardising communications betweenappliances and equipment, and for

6


making the interface between users andequipment more straightforward andeasy to use.

The upshot of this change is that the linebetween consumer electronics, householdappliances and computers is growingincreasingly blurred. In this context, appliancesin the home may become conceived more interms of integration than mere automation.Smart appliances and devices will increasinglyfunction not as remotely controlled stand-alonegadgets (e.g., television, telephone or garagedoor), but as components of an in-home hard-wired or radio driven network – which, in turn,will connect to the outside world via theInternet or telephony. In this context, it is alsoimportant to consider powerline signalling,which improved digital signal processors andnow offers a robust communications technologywhich is ‘plug and play’.

Evidence from the United States

Although there are Smart Home experiments –e.g. by Integer and, of course, the JosephRowntree Trust – in the UK, it is also relevant tolook at evidence from the USA as this may givesome indication of how the European marketfor this technology will develop.

Developments in the US market

The level of functional sophistication reached atthe top end of the US market can be gaugedfrom the recent opening of a Californian beachhouse with a ‘central network machine’ in thebasement. This integrates Ethernet hub, land-line and satellite telephone equipment withdigital lighting control units, satellite and cable

television master controllers, an intelligentvideo–audio system, and the fire and securitysystem control. The level of light entering thehouse from outside is controlled byphotosensitive window glass and the system isnetworked with the house air-conditioning andventilation system. In the main lounge a smalltelevision monitor displays a control interface,which the occupant can access using wirelesstechnology. The lighting control and powercables are concealed behind wall panels.

Even outside California, the Americanexperience demonstrates it is possible to link upkitchen appliances, intruder alarms and homeentertainment centres. This has been successfuleven in the absence of standard components ora common operating protocol. Moreover, somemodern home network solutions now have aconsistent and logical look and feel about them,and their use is becoming more intuitive.

Prices for new build or retrofit systems arefalling, both for builders and for hobbyists in theDIY market, and the latest systems areexpandable at only modest outlay. This is theresult of an enlarging market size, combined withthe availability of ‘design modified systems’formerly used in commercial office building.Moreover, the recent backing of the majorcomputer companies for home wireless local areanetworks (and also for Phonenet and high-speedpowerline LANs) has further helped to positivelystir the market. Another stimulus has come fromthe prevalence in America of software houses ableto lay the basis for standardisation regardinghome network protocols.

The growth in the market has, to a limitedextent, established a virtuous circle of increasingdemand leading to cost and designimprovements in the industry, which stimulates

7

Market context

further demand. For example, the increasingavailability of engineers – with relevant skillsand competencies – able to demonstrate thesystems to potential customers, and to supportexisting customers, has helped raise consumers’confidence in the USA and may have had apositive impact on demand.

Currently the high-technology companies inthe USA are anticipating that some of this SmartHome functionality will be demanded by agrowing number of less wealthy consumers. Asa result these corporations are struggling toestablish standards for operating in and acrossthe wide variety of communications media mosthome networks are expected to employ –namely, coaxial cables, phone and cable lines,and infrared and wireless signals.

On the software front, Sun Microsystems andMicrosoft are already engaged in a code war. Sunis pushing ‘Jini’, a ‘Java-like’ language that willautomatically configure components to‘announce’ themselves to networks. Thistechnology is derived from the ‘manufacturingautomated protocol’ developed for integrating USautomobile assembly plants. Meanwhile,Microsoft is developing its ‘Universal Plug andPlay’, which is based on its own ‘open standards’.

Take-up in the USA

Although the market for Smart Hometechnology is growing in the USA, one shouldbe wary of overstating the rate of growth.Despite the technological developments, theadoption of Smart Home technology has beenrelatively slow, especially given howtechnology-literate American consumers are.

With the industry still in its infancy, there areconflicting expert views about the potential formarket growth in Smart Home technology.

Some industry experts see computingeverywhere in the house, connecting anythingand everything. For example, optimisticestimates suggest 50 million homes will beinternally networked across the USA over thenext ten years.1 Forrester Research is forecastingsales of $1 billion in the home networkingmarket by 2002,2 though this refers toForrester’s simpler definition of a networkedhome rather than a Smart Home.

But not all industry observers see the marketgrowing in this way. Some are less sanguine.‘This is still technology looking for an audience’,according to Rob Enderle of the GigaInformation Group. In his view, ‘The appliancemakers are going to need to see real marketactivity before they start to build more than afew prototype refrigerators with browsers inthem. And consumers are going to have tocarefully balance novelty, utility and price’.

Notwithstanding this more sceptical view,experience from American DIY, luxury housingand condo markets demonstrates that demandfor Smart Home functionality is growing. SmartHome systems are also being built into USprefabricated and trailer homes, which providesadditional buoyancy in this nascent market.

Market in the UK

As things stand, there is currently no massmarket for Smart Home technology in the UKand consequently prices for both new build andretro-fitted integrated intelligent hometechnology are high.

At the low end, integrated systems tend tobe crude and sometimes unreliable, and thereare no common standards for components orsoftware. At the high end of the housing market,

8


meanwhile, there are high quality Smart Homesystems already in situ in expensive Londonriverside properties.3 However, these are costlyprojects and the volume they deliver is unlikelyto yield the economies of scale needed to reduceaverage costs.

Demand side

As with the United States, the UK consumers’interest in the Smart Home concept has beenmainly from the DIY or hobbyist segment of themarket. Indeed, many of the Smart Home websites, and to some extent the technical literature,are the preserve of these somewhat technicallyminded ‘incremental’ home improvers.

Full-blown Smart Home projects have untilnow been the preserve of the wealthy homeowner, located most commonly in the south eastof England and more specifically within theLondon area.4

Consumers who do buy into the technologyseem, at least from the press reports,5 relativelysatisfied with their partial systems, whichtypically conjoin security lighting, intruderalarms and fire and security sensors. Whilesome consumers may be willing to pay extra ona new or converted property to obtain limitedSmart Home functionality, there may be greaterreluctance to retro-fit such systems into theirexisting residences because of the anticipatedmess and disruption.

Supply side

Currently Smart Home technology is dominatedby US, Asian and European manufacturers andsuppliers of equipment, control, network andsoftware systems.

As in the USA, Smart Home equipmentsuppliers in the UK focus almost entirely on the

expert home-improver and DIY markets. Thereis also a limited spillover into the domesticmarket from commercial and industrial buildingsuppliers.

Implications of developments in the USA on

the UK market

Although there are significant differences6

between the US and European markets, onewould expect the growth of Smart Hometechnology in America to have an impact on theUK market.

Even if the American market fails to raceaway and there is only low percentage growth,given the absolute size of their market, theactual number of installations may still besufficient to generate economies of scale. Thisshould feed through to lower prices which, inthe longer-term, may be followed by reductionsin Smart Home costs here in the UK as morecost-effective technology arrives as a result ofimports or licensing deals with US firms.

Technology developments

There are new and emerging technologiescoming to the fore that could provide addedimpetus to the future expansion of the SmartHome market.

On the appliance front, home appliance andelectronics corporations such as Electrolux andLG are bringing intelligent kitchen systems tomarket. More generally, as with Sony intelligentintegrated home entertainment products, thesesystems are integrated within the home ratherthan being integrated into the home.

There are near-to-market technologiesemerging from the university researchlaboratories and corporate research centres that

9

Market context

could provide innovations that both speed upuniversal integration and possibly push downinstallation and maintenance costs.

‘Bluetooth’ – and other wireless protocols –could provide a common basis forcommunications between devices and,importantly, would eliminate the need forinstalling or using cables for data exchangebetween Smart Home devices.

Meanwhile, at Massachusetts Institute ofTechnology, computer hardware experts havecreated ‘match-head’ computers. These tinydevices have the potential to revolutioniseSmart Home technology as they could easily beembedded in all domestic appliances anddevices, from dishwashers to light sockets.

In addition, there are advances in how easilyusers can operate electronic/computer devices.For example, the latest voice recognitiontechnologies offer the opportunity of a more‘human’ and intuitive interface between manand machine.

Other developments that have Smart Homeimplications include the body temperaturesensor technology being developed by Daikin inJapan which would automatically regulate airconditioning and heating systems according tothe occupants’ changing needs. And, the lightcontrol software – called ‘Heliodon’ beingdeveloped at Bristol University – which, when itcomes to market, will simplify and cheapen thelight control software used in Smart Homeintegrated window, screen and lighting set-ups.

In combination, these – and other – up-coming technologies will add to thefunctionality, ease of use and convenience ofSmart Home systems, while potentiallyimproving their cost-effectiveness. Moreover,the development of new communicationstechnologies – such as ‘Bluetooth’ and the ‘XML’language – offer the not-too-distant prospect ofcommon standards for electronic dialoguebetween Smart Home devices (although it is stillunclear how many standards will exist!).

10

Introduction

This chapter summarises the findings of a surveyon consumer attitudes towards Smart Homes.

The aims of the survey and the methodologyused are explained in the next section. Theremaining sections summarise the key findingsand cover the following topics:

• attitudes to new technology in the home

• views about the key features of SmartHomes

• consumer concerns and worries aboutSmart Homes

• interest in the Smart Home concept

• the Smart Home consumer.

The last section concludes by taking a viewabout the future market potential of SmartHomes.

Methodology

The role of the survey

The survey was carried out by the Consumers’Association to establish, in broad terms,whether there is a potential mass market forSmart Homes. The survey explores whatconsumers think about the prospect of living ina Smart Home and provides some insight intothe likely pattern of future demand.

It can be difficult to assess future demand fora product which people have little awareness of,especially when the product specification andpricing is not yet developed. The approachtaken here minimises this problem by focusingon consumers’ underlying attitudes and interesttowards new technology in the home and then

relates this to how consumers view the SmartHome. This provides a more robust basis onwhich to take a view about market potential.

Survey objectives and methodology

The main objectives of the survey were:

• to assess views about the key features ofSmart Homes

• to identify concerns about living in aSmart Home

• to assess the level of interest in the SmartHome concept and ultimately to establishwhether people would want to live in one

• to identify what type of consumers arethe most and least likely to want a SmartHome in the future.

In addition, the survey assessed moregeneral attitudes towards new technology in thehome.

The survey was conducted by a reputablemarket research agency, Ipsos-RSL, as part oftheir weekly Capibus Survey and comprised1,044 in-home interviews. The results have beenweighted to be representative of the GreatBritain population. Full details of the surveymethodology are provided in the research notes(Chapter 6).

The interview

During the course of the interviews, 16statements about new technology and SmartHomes were read out to each respondent andthey were asked to say to what extent theyagreed or disagreed. The first five statementscovered the subject of attitudes towards newtechnology in the home. Then, the interviewer

3 Consumer attitudes

11

Consumer attitudes

introduced the idea of a Smart Home by givingthe respondent a script to read which describedthe concept (see research notes). The next sevenstatements explored views about the keyfeatures of Smart Homes and concerns peoplemight have about living in one. Then, the fourremaining statements were used to tease out towhat extent people were interested in the ideaand more importantly whether they wanted tolive in a Smart Home.

New technology

Attitudes to new technology in the home

In general, opinion was fairly mixed on theissue of whether new technology in the home isa good or bad thing (Figure 2). Over half (59 percent) of those surveyed agreed with thestatement ‘I welcome new technology in myhome because it saves me time and effort’ and

just under half (46 per cent) agreed with thestatement ‘Having more gadgets in the homemakes life fun’.

However, others felt fairly negative aboutthe prospect of more technology in their homeand almost two in five (38%) agreed with thestatement ‘I do not see the need for moretechnology in my home’.

Many voiced concerns about the prospect ofdealing with new technology. Almost half (46per cent) indicated that they were worried abouthow complicated new technology would be touse and the same proportion (46 per cent)agreed that they found it difficult to keep upwith the latest technology for the home.

Across all statements there were also asignificant number who said they ‘neitheragreed nor disagreed’, reflecting that, for some,new technology just isn’t an emotive issue oneway or the other.

Figure 2 Attitudes to new technology in the home

0% 100%50%

I welcome new technologyin my home because itsaves me time and effort

Having more gadgets inthe home makes life fun

I find it difficult to keep upwith the latest technologyfor the home

I am concerned about howcomplicated all the newtechnology will be to use

I do not see the need formore technology in myhome

18% 41% 17% 18% 6%

10% 36% 19% 27% 8%

14% 32% 14% 27% 14%

15% 31% 12% 28% 13%

12% 26% 16% 33% 12%

Strongly agree Agree Neither Disagree Strongly disagree

12


Who is most interested in new technology in

the home?

Young people were much more likely than olderpeople to be positive about the prospect of newtechnology in the home. Over three-quarters (76per cent) of those aged 15–24 agreed with thestatement ‘I welcome new technology in myhome because it saves me time and effort’compared to 41 per cent of those aged 55 andover (Figure 3).

Similarly, those with home entertainmentsystems (i.e. video game consoles, cable/satellite or digital TV, DVD players) and thosewho have a PC or Internet access via home orwork were also more likely to be positive abouttechnology in the home.

Older people were most likely to expressconcern about new technology. Almost two-thirds (64 per cent) of those aged 55 and overexpressed worries about how complex futuretechnology might be to use compared to less

than a third (28 per cent) of 15–24 year olds.Other groups who were more likely to expressconcern about coming to terms with newtechnology are women, those in social gradesC2 and DE and those on lower incomes.

Views about the Smart Home concept

When asked to comment on the issue of SmartHomes, views were again fairly mixed. Whilesome features of Smart Homes clearly had wideappeal, at the same time many respondentsexpressed concern and worries about living inone. Four key features of Smart Homes weretested out with respondents using the followingstatements:

• remote access – ‘Being able to controldevices in the home when I was outwould be really useful to me’

Figure 3 Agreement by age group with the statement ‘I welcome new technology in my home because it

saves me time and effort’

0% 100%50%

Age 55+

Age 45–54

Age 35–44

Age 25–34

Age 15–24

9% 32% 19% 27% 12%

14% 44% 18% 20% 4%

18% 43% 23% 12% 5%

28% 45% 12% 12% 2%

30% 46% 12% 10% 1%


13

Consumer attitudes

• safety and security – ‘I would really valuethe safety and security features a SmartHome could offer’

• centralised control – ‘I like the idea of oneremote control that could controleverything in the home’

• convenience – ‘A Smart Home appeals tome because it would save me time andeffort’.

Of the four features, security and safetyaspects were the most popular with over two-thirds (70 per cent) agreeing with the statement‘I would really value the safety and securityaspects a smart could offer’ (Figure 4). Thebenefits of remote access also had wide appeal.Opinion was more divided on the benefits ofconvenience and centralised control. In bothcases around half of those surveyed indicatedthese features would be of use to them.

Groups most likely to value the benefits ofSmart Homes were: those in work, men, peopleaged 15–34, households with children and those

who already have access to new technology inthe home (i.e. video games consoles, DVDs, payTV services and PCs).

Concerns about Smart Homes

The technical aspects of running a Smart Homecaused concern among many of those surveyed.Three specific areas of concern were tested outwith respondents:

• system failure – ‘I would be concernedabout technical hitches and things goingwrong’

• lack of control – ‘I would worry about thesystem being difficult to override’

• complexity – ‘I would worry that thesystem would be too complex’.

People were most concerned about thesystem failing and around two-thirds (65 percent) agreed with the statement ‘I would beconcerned about technical hitches and thingsgoing wrong’ (Figure 5). Around half (51 percent) were worried that the system would be too

Figure 4 Views about the Smart Home

0% 100%50%

Being able to controldevices in the home whenI was out would be reallyuseful to me

I would really value thesafety and securityfeatures a Smart Homecould offer

I like the idea of oneremote control that couldcontrol everything in thehome

A Smart Home appeals tome because it would saveme time and effort

19% 40% 13% 20% 8%

23% 47% 13% 13% 4%

18% 28% 13% 25% 16%

14% 36% 16% 22% 11%


14


complex and a similar number (55 per cent) saidthey would worry about the system beingdifficult to override.

Older people were one of the groups thatwere the most concerned about potentialtechnical problems. Two-thirds (67 per cent) ofthose aged over 55 agreed with the statement ‘Iwould worry that the system would be toocomplex’ compared to 38 per cent of the groupaged 15–24. Other groups with relatively highlevels of concern were: women, those on lowerincomes, and those in social grades DE. Thosehouseholds with home entertainment or PCequipment were less likely to be concernedabout technical problems as were those whohad Internet access at home or work.

Interest in living in a Smart Home

The last part of the survey was designed toestablish how interested people were in living ina Smart Home. Respondents were given fourstatements which assessed both their currentlevel of interest in the concept and their viewsabout the future.

• Interest in the concept– ‘If cost wasn’t an issue I would consider

buying Smart Home technology for myexisting home’

– ‘I am really interested in the Smart Homeconcept’

• Expectations/aspirations– ‘I could see myself living in a Smart

Home in ten years time’– ‘The next time I move I would like to

move into a home with Smart Hometechnology’.

Again opinions were fairly mixed in relationto each statement. Less than half (45 per cent) ofthose surveyed agreed with the statement ‘I amreally interested in having the sort of functions aSmart Home could offer’ while 37 per centdisagreed (Figure 6). The remainder (19 percent) of those surveyed were ambivalent aboutthe prospect of a Smart Home and said theyneither agreed nor disagreed.

Half (50 per cent) indicated that they wouldconsider buying Smart Home technology fortheir existing home (if ‘cost wasn’t an issue’).

Figure 5 Concerns about Smart Home technology

0% 100%50%

I would be concernedabout technical hitchesand things going wrong

I would worry about thesystem being difficult tooverride

I would worry that thesystem would be toocomplex

22% 43% 12% 18% 5%

15% 40% 15% 24% 6%

16% 35% 13% 27% 9%


15

Consumer attitudes

There was also support for the idea of movinginto a home with new technology although thiswas weaker (39 per cent agreement). In terms offuture expectations, two in five people (40 percent) said they could see themselves living in aSmart Home in ten years time.

Who wants to live in a Smart Home?

Across all four interest statements, respondentstend to fall consistently into one of three groups– ‘the interested’, ‘the ambivalent’ and ‘theuninterested’. Table 1 compares the level ofagreement with each statement betweendifferent groups within the population. Thestrength of agreement is measured using the‘mean agreement score’ which can rangebetween one and five; the higher the score, thehigher the level of agreement.

The data illustrate how the strength ofagreement varies between different groups inthe population and helps build a picture of thetype of person who is most likely to show

interest in acquiring Smart Home technology.Age emerges as one of the strongest

predictors of someone’s interest in living in aSmart Home. Generally, younger respondentsreported higher interest. People in the age group15–34 have high levels of agreement with allfour statements. For example, almost two-thirds(65 per cent) of 15–24 year olds agreed with thestatement ‘I am really interested in the sort offunctions a Smart Home could offer’ comparedto just over one fifth (21 per cent) of people aged55 and over. This is reflected by the higher meanagreement score of 3.65 for the younger agegroup compared with 2.45 for the older.

Those households who already own homeentertainment equipment or a PC were alsomore likely to be in favour of the idea of havinga Smart Home. Other groups with highagreement scores include: men, those withInternet access at home or work, those who owna mobile phone and households with children.

Those on higher incomes were more likely tobe interested in the Smart Home concept

Figure 6 Level of interest in the Smart Home concept

0% 100%50%

If cost wasn’t an issue Iwould consider buyingSmart Home technologyfor my existing home

I am really interested inhaving the sort of functionsa Smart Home could offer

I could see myself livingin a Smart Home in tenyears’ time

The next time I move Iwould like to move into ahome with Smart Hometechnology

18% 32% 13% 25% 13%

11% 34% 19% 24% 13%

13% 27% 12% 29% 18%

12% 27% 20% 25% 16%


16


Table 1 Interest in the Smart Home – mean agreement scores by group

Interest statements – mean agreement scores1

Groups If cost wasn’t anissue I would The next time I

I am really interested consider buying I could see move I would likein having the sort Smart Home myself living in to move into a

of functions a Smart technology for my a Smart Home home with SmartHome could offer existing home in 10 years time Home technology

All 3.06 3.16 2.88 2.94

GenderMale 3.20 3.34 3.06 3.10Female 2.92 2.99 2.70 2.78

Households with childrenYes 3.33 3.50 3.17 3.24No 2.93 3.00 2.75 2.80Age15–24 3.65 3.65 3.55 3.4625–34 3.46 3.66 3.33 3.3635–44 3.15 3.34 3.15 3.0345–54 3.13 3.25 2.93 3.1055+ 2.45 2.51 2.13 2.33

Social gradeAB 2.94 2.93 2.90 2.82C1 3.16 3.23 2.95 2.99C2 3.10 3.21 2.90 2.98DE 3.00 3.23 2.77 2.96

Technology ownershipCable/satellite 3.37 3.49 3.26 3.21Digital TV 3.44 3.41 3.30 3.25Video games console 3.46 3.56 3.24 3.24DVD2 3.74 3.60 3.70 3.43Video recorder 3.11 3.21 2.94 3.00Mobile phone 3.27 3.35 3.09 3.10PC 3.32 3.32 3.19 3.14Internet access 3.31 3.28 3.16 3.09

IncomeUnder £9,500 2.80 2.98 2.48 2.87£9,500–£17,499 3.08 3.26 2.96 2.99£17,500+ 3.22 3.28 3.25 3.09

Housing tenureOwner 3.03 3.09 2.86 2.89Rent/other 3.08 3.26 2.88 3.01

1 The mean score indicates the strength of agreement across the whole sample. Values are assigned to answercategories as follows: strongly agree (5), agree (4), neither (3), disagree (2), strongly disagree (1) and then themean score is calculated by taking the average score for the whole sample. Scores can range from 1 to 5. Amaximum score of 5 would mean that everyone in the sample had strongly agreed with the statement.2 Mean scores for DVDs are based on relatively low sample size of 48.

17

Consumer attitudes

although the relationship is not particularlystrong, especially compared to the others notedabove. Similarly, the relationship between socialgrade and interest is comparatively weak.

The degree of interest in Smart Homes is notstrongly related to housing tenure. People whoown and those who rent their homes wereequally likely to agree with the statement ‘Icould see myself living in a Smart Home in tenyears time’. Furthermore, there was nostatistically significant relationship betweenhousing tenure and the statement ‘I am reallyinterested in having the sort of functions aSmart Home could offer’. Moreover, peoplewho rent their home were marginally morelikely than home owners to say they would liketo move into a Smart Home or buy Smart Hometechnology for their existing home, though theserelationships were relatively weak compared tothose described earlier.

Attitudes to new technology and interest in

Smart Homes

The survey demonstrates a strong relationshipbetween general attitudes towards newtechnology in the home and the level of interestin Smart Homes. Those respondents who werepositive about the prospect of new technologywere much more likely than others to expressinterest in living in a Smart Home (see Figure 7).Conversely, those respondents who expressed afairly negative attitude towards technology inthe home (i.e. those who agreed with thestatement ‘I do not see the need for moretechnology in my home’) were less likely towant to live in Smart Home; for this group therewas only 25 per cent agreement.

Those who had concerns or worries aboutnew technology in the home were also less likelyto be interested in living in a Smart Home –though this relationship was weaker than the

0% 100%50%

I welcome new technologyin my home because itsaves me time and effort

Having more gadgets inthe home makes life fun

I find it difficult to keep upwith the latest technologyfor the home

I am concerned about howcomplicated all the newtechnology will be to use

I do not see the need formore technology in myhome

16% 45% 17% 16% 7%

19% 48% 16% 12% 6%

8% 27% 22% 26% 18%

6% 28% 21% 27% 18%

5% 20% 19% 33% 23%


Figure 7 Agreement with statement ‘I am really interested in having the sort of functions a Smart Home could

offer’ among those who agree with attitude statements

18


ones described above. As Figure 7 shows, of thosewho expressed worries or concerns, over a third(35 per cent and 34 per cent) still said they werereally interested in the idea of Smart Homes and afifth (22 per cent and 21 per cent) implied theywere neither for nor against the idea.

Market segmentation

Generalising, the survey suggests that peoplefall into one of three groups:

• ‘The interested’ – those interested in livingin a Smart Home (45 per cent ofrespondents1). Most likely to be: peopleaged 15–34; family households; thosewith pay TV and home entertainmentsystems (i.e. DVDs and video gamesconsoles); those with PCs and/or Internetaccess; those on higher incomes; thosewho hold positive attitudes about newtechnology.



Clearly, those who are ‘interested’ are mostlikely to acquire Smart Home technology in thefuture if an appropriate market – with realisticprices – develops. Those who are ‘ambivalent’are also potential Smart Home owners but areless likely to enter the market in the short term.

Conclusions

The survey of consumers’ attitudes suggests amass market for Smart Home technology coulddevelop. While views are undoubtedly mixed,around half of those surveyed are positive aboutthe role of new technology and are interested inthe Smart Home concept. Furthermore, it isencouraging that interest is higher among theunder 35s as this group will be the potentialpurchasers of the Smart Homes of tomorrow.

Those most interested in living in a SmartHome are those who have positive attitudestowards new technologies and those who havealready purchased new technologies for thehome. These early adopter groups are pivotal tothe uptake of high technology products.

The findings suggest that worries about thetechnical aspects of running a Smart Homecould constrain initial demand. However, it islikely that these concerns would diminish as theSmart Home product rolls out and awarenessgrows, or could be overcome with appropriatemarketing communications.

On the negative side, there is a segment ofthe population – the 37 per cent who are‘uninterested’ – who are likely to prove the mostdifficult to sell to. These are more likely to beolder people who have fairly negative attitudestowards technology.

19

Introduction

Although the main thrust of the researchfocused on consumer attitudes, as part of thestudy the project team also canvassed a smallnumber of industry experts in order to assesstheir views of potential future market growthand their reactions to the results of consumersurvey.

The survey covered experts in six relevantsectors:

• architects

• building contractors

• specialist contractors and serviceproviders

• property agents and developers

• equipment manufacturers

• academic and commercial researchers.

In addition to a general discussion of theinterviewee’s views on and experience of SmartHome technology, the interviews addressed thefollowing questions:

• What is your prediction for future growthin use of Smart Home technology?

• Where (or with whom) will that growth be?

• What is the basis for your prediction?

• What are the major inhibiting factors tothe growth in Smart Home technology?

• What could provide a significant spur togrowth?

• How do your views change in light of theresults of the survey of consumerattitudes to Smart Home technology?

This chapter looks at the responses fromexperts in each of the six sectors.

Architects

Architects are one of the many parts of thedesign–build process. They have (varyingdegrees of) influence on the type of services andsystems integrated into buildings. They do notnormally initiate or configure technicalstandards and protocols, but importantly theydo (along with control and electronic engineers)give approved systems ‘credence viarecommendation’. With this in mind, the viewsof the architecture profession regarding SmartHome technology need to be treated with somedegree of seriousness. It is however recognisedthat architects are less influential in the field ofsocial housing where guidelines for design arepretty much laid down by the housingassociations and the Housing Corporation.

However, the main impetus for Smart Homedevelopment is currently in the top end of theprivate market. Architects designing propertiesfor this market, more particularly in the Londonarea, think that demand for Smart Hometechnology will, within four to five years,become quite well established. The pattern ofdemand will, they hold, be for a basic ‘wiredhome’ with integrated information andcommunication technology (ICT) systems.Intruder and fire security systems will be linkedinto the overall control facility of a type that willbe common to many future high specificationproperties. They are not sure about the likelyeffectiveness of wireless frequency technologyas a means of creating ‘cableless’ local areanetworks (LANs) for domestic properties.

There was a strong feeling among

4 Views of the industry experts

20


respondents that the process of embodyingSmart Home technology is often incremental;they are unconcerned by the concept of ‘totalsolutions’. To begin with it will continue to bethe avant-garde high-value end of the propertymarket that gets the technology. But, even here,systems may often be partial or modularised(home entertainment and lighting linked, orheat–ventilation and window openings). Thus,apart from the most expensive developments,advanced total integrated home solutions willgenerally be completed through ‘add-ons’integrated over time. Moreover, proven systemswill only incrementally percolate down to mid-range properties: rather as Daimler-Benzadvanced auto-technology trickles down so asto eventually equip the standard family saloon.In short, the technology is advancing, and willbecome more commonplace, but the speed ofdissemination will depend on trends in theeconomic and construction cycle.

In this context, architects believe that risingincome and wealth will drive the market foradvanced Smart Home technology. Also, tasteswill, it is thought, be led to some degree byglossy design and lifestyle magazines. But thereis also a view abroad in the industry that thetechnology is not effectively marketed topotential property buyers. A major design andengineering group, for example, believes thatthe technology is not marketed forcefullyenough by builders and developers, and thatthe benefits require broadcasting to a muchwider audience than that of the coffee tabledesign magazines. In particular, they think thatefficiency and environmental net benefits needmore emphasis.

Architects also feel that to some extent latentconsumer demand for this sort of technology is

not being addressed because of the innateconservatism of the building industry. The lackof skilled contractors experienced in design–install–maintain programmes is also seen as areason for the relatively slow widespreadadoption of Smart Home technology, even at thetop end of the market.

Among the architects interviewed there wasa consensus that the main factors driving SmartHome technology will be manifold: for example,the adoption of common system operation andintegration standards; an improvement in skillstraining in the relevant electronic specialisms(particularly in respect of fault-finding andmaintenance); as well as a fall in the price ofcomponents. Architects also feel that SmartHome electro-mechanical equipment requiresenhanced design features that are in harmonywith the home environment, rather than beingborrowed from the industrial building sector.

There was no fundamental disagreement onthe part of architects with the survey findings.Interestingly, Ballast Wilshire, the Anglo-Dutchconstruction specialists, said that the resultspretty much matched those of a recent studythey had undertaken into Smart Hometechnology in conjunction with The BartlettSchool of Architecture and Planning atUniversity College, London.

Building contractors

Generally, the view of building contractors isthat advanced Smart Homes will remain a rarityat the lower and middle end of the housingmarket. But even the sceptics feel that the futuredemand for the integration of communications,entertainment and security systems will see asteady increase in the next decade at the higher

21

Views of the industry experts

end of the market. As with other respondents,the builders interviewed believe thataffordability is partly the key to a greater levelof demand for this technology.

Some building contractors see the SmartHome as a ‘fad’, and in some cases regard it as adistraction where they are building for the topend of the housing and apartment market.Others have marketed the technology but havebeen dissuaded from carrying it forward due tothe rather mixed responses that they receivedfrom their clients. A major builder, for example,had somewhat mixed client responses to theSmart Home technology used to equip recentThameside luxury flat developments. On asubsequent development they dropped thetechnology. The main problem identified by thisbuilder was that the electro-mechanical systemsand security equipment manufacturers fail toeffectively market their technology. The builderalso opined that these companies need to followthe exemplary marketing strategies instigatedby the home entertainment systems integrators.

Builders believe that retro-fit of Smart Hometechnology will remain a very narrow marketniche, although they think that it could expand,as it has in the United States, as a DIY market.Moreover, they consider that while some newhome buyers are prepared to bear the cost oflimited embedded advanced technology, currentoccupiers are far less willing to stand thefinancial and disruption costs of retro-fit.

Builders also mention the problem that skillshortages pose for the faster development ofSmart Home technology. Many of the bestspecialist electrical–mechanical and electronicscontractors, it is held, are totally committed tocommercial and industrial construction, leavinga shortfall of expertise in the residential new

build sector. Some respondents in the buildingindustry think that householders fear beingsaddled with Smart Home technology that isboth difficult and expensive to maintain. Inparticular, householders fear that there may beproblems finding adequately experiencedmaintenance contractors able to provideaftercare back-up.

Respondents from the construction industryshowed perhaps the greatest surprise regardingthe generally optimistic tone of the surveyfindings. Although the results did not radicallyalter their less than sanguine view, they believethe survey results demonstrate interest and ageneral intention on the part of the consumer tolook harder at the concept. However, andcharacteristically, they caution that even stronginterest is not a purchase intention.

Property agents and developers

Property agents – particularly the Londonagents dealing with the top end of the Londonproperty market, e.g. Docklands, Hampsteadand the City – believe that computerisedintelligent homes will come to represent agrowing segment of the over £500,000 propertymarket in the next few years. Agents anddevelopers maintain that show-homes set up sothat the technology can be demonstratedeffectively provide the best hope of stimulatingan interest in the Smart Home concept.

Property agents do tend to view the propertyworld in terms of affordability. Hence, in aworld of rising income and asset wealth, theybelieve that an increasing number of theirclients will be prepared to stand the extra cost ofpurchasing a home with quite sophisticatedembedded Smart Home systems.

22


The main barrier that developers see to theadvance in Smart Home technology is the lackof powerful marketing on the part of thesystems integrators and some builders. On theother hand, they do see the publicity beingachieved by the durable goods manufactures(such as AEG, Bosch, Electrolux and Toshiba)for linked intelligent appliances as a step in theright direction.

Property agents and developers generallyagreed with the survey findings. In particularthey concur with the finding that the main salespotential is associated with high earning youngtechnophile couples. Nevertheless, they alsotend to feel that it will be some time beforeanything but the basic form of smart homesystems (e.g. sound and vision, computing andsecurity systems) become more widelyavailable, even at the middle market level.

Specialist contractors and service providers

The specialist contractors and service providersare at the sharp end of the Smart Homeindustry. It is they who design and specifyelectronically integrated service, appliance andICT systems for the home. They implement andnetwork the technology and are responsible forproviding ‘aftercare’ maintenance services forhouseholders. These specialist contractors arealso the technical experts that can best convincearchitects vis-à-vis the integrity, robustness andreliability of Smart Home technology.

Because most of these contractors have beenparty to the rapid growth of smart intelligentsystems in the commercial office and industrialbuilding sector they are generally veryoptimistic about the growth of similar smartsolutions in the domestic home. They believe

that as far as discrete part-integrated systems –such as security, home entertainment and ICTbecome more commonplace – are concerned,then it will only be a matter of time before thesort of total integration currently found in onlythe most up-market properties becomes morewidely designed into new houses andapartments. They base their confidence on thegradual emergence of common standards (EIBEuropean standard) and protocols covering theintegration, operation and control functions ofSmart Home technology. There is also a beliefamong integration and control engineers that‘Bluetooth’ wireless technology will acceleratethe expansion of Smart Home technology. In themain this is because it is non-intrusive whencompared with cable runs around a property.

Some systems designers think that tax reliefon Smart Home technology capital expenditurethat has provable efficiency and/orenvironmental benefits would provide adistinctly valuable fillip in the market.

On the downside contractors with SmartHome installation experience cite the recent lackof standards and common protocols as a majorinhibitor of market development. Technical‘commonality’ – such as prevails in mainselectrical power, heating and ventilation, andwater and sanitation – is regarded by engineersas being critically important in helping thistechnology market to grow.

Furthermore, skill shortages were once againhighlighted as an underlying reason for inertiain some areas of the Smart Home market.Likewise, poor inter-trade co-operation onbuilding projects is seen as a major factorundermining the intelligent technologyinstallation process, particularly on largerresidential new build projects. This manifests

23

Views of the industry experts

itself negatively in terms of both cost overrunsand poor installation quality. Added to which,the poor quality of cheaper components has, it issaid, undermined the reliability of some recentmid-market Smart Home installations.Outcomes that if not remedied by the industrycould, according to some respondents, seriouslydamage the reputation of Smart Hometechnology.

Respondents also think training is failing tokeep pace with the growing complexity of smartservices and systems installations. Ashortcoming that may, it is thought, lead to ashortage of specialists who are capable andcompetent in either installation or maintenancesupport. This view is shared to some degree bythe industry’s representative bodies.

The technical experts mostly agreed with thesurvey summary findings. The market potentialis seen by them to be strong, but affordability isregarded as being the key to achieving fastergrowth in the residential middle-market.According to the technical experts most growthwill occur in residential new build, rather thanwithin the refurbishment or renovationsegments of the market.

Equipment manufacturers

The equipment manufacturers, which weresurveyed, offered strong support for SmartHome technology. The Smart Home concept isnot too far from the intelligent digital homevision of many multinational manufacturers.For example, Siemens and Sony are, along withthe domestic appliance manufactures and ICTconglomerates, at the forefront in developingthe common protocols and standards needed tospeed up market development in this home

technology (e.g., iLINK (IEEE1394) and HAVi).The appliance equipment players regard the

forward march of the intelligent home as almostinevitable. Once the standards issues are fullyresolved they believe that only the innateconservatism of some builders and architectsstands in the way of dramatic market growth.Again, they also feel that the innovation processwill be an incremental one. Accordingly, theyfeel that the totally integrated intelligent digitalhouse will in the short-run remain something ofa rarity.

Siemens made the point that in Germany theSmart Home technological revolution has beeneffectively linked with the notion of the eco-friendly home. The environmental perspectivehas consequently provided impetus to marketgrowth. Generally they felt that this positiveassociation has not been made to the sameextent in the UK.

Overall, however, the appliance andequipment manufacturers tend to see thepositive message of the survey as an echo oftheir own findings. They also concede that itwill be mostly middle to upper income housepurchasers who will buy into the technologyinitially.

Academics and researchers

The experts from academic institutions andresearch organisations took the most positivestance towards the concept of the Smart Home.Many of these respondents are directly involvedin the technology and as such have somethingof an affinity with the concept.

However, even the strongest advocates ofSmart Homes realise that affordability is ofcritical relevance in respect of take-up and

24


adoption of Smart Home technology. Theresearchers agree that the advent ofstandardisation and common protocols iscritical to the future broader adoption of SmartHome technology. Also, the research communityrealises that to no small degree the selling of theSmart Home idea is a ‘hearts and minds’publicity and marketing exercise that willmainly have to be undertaken by architects,builders and developers.

In spite of their enthusiasm for thetechnology, academic researchers, such as TimVenables at the University of Brighton SciencePolicy Research Unit clearly recognise that thereare a number of other impediments that arecurrently preventing Smart Home technologyfrom becoming more commonly and speedilyadopted. One is the lack of one-stop-shopcontractors willing and able to take on largecomplex high technology installation contracts.Another is the fact that there is little reliable

evidence hitherto that capital expenditure onwhat remain high-cost total technologysolutions can be meaningfully offset byhousehold operational efficiency gains and costsavings (particularly energy saving). Safety isanother issue that has to be addressed. TheConsumers’ Association Research and TestingLaboratory cautions that the overall safety ofintegrated intelligent control systems in thehome requires long-term monitoring in order toensure such systems meet fail-safe standards.

Academic and industry researchers acceptthe finding of significant consumer enthusiasmfor Smart Home technology. But again, the realpotential for the adoption of Smart Hometechnology is viewed by them as beingessentially driven by consumers’ willingness topay. An intention that is seen quite correctly tobe limited both by purchaser income, and therange of barriers to adoption discussed above.

25

Although there are currently few Smart Homesin the UK, the research suggests this technology(or variants of it) could have a mass market.

Supply

In recent years, there has been a modest increasein the building and conversion of propertiesthat have embedded Smart Home technology.Moreover, there has been increasing – albeit, toooften costly – access to the technology for‘expert home improvers’ and ‘DIYers’.

There remains, however, a general lack ofenthusiasm on the part of construction andproperty industries, manufacturers andsuppliers to push – or even properly promote –this technology. The lack of common standards,an inappropriately skilled workforce andconcerns that ‘it’s just a fad’ has meant theSmart Home market has yet to develop asustainable momentum.

There are, though, changes on the horizonthat could stimulate more activity frompotential suppliers:

• Scale economies from the American market.The growing use of Smart Hometechnology in the USA could deliver theeconomies of scale necessary to reduceaverage costs and, hence, prices.Although it may take time to feedthrough, this could reduce prices here inBritain.

• New technologies. There are up-comingtechnologies which will add to thefunctionality, ease of use and convenienceof Smart Home systems, while improvingtheir cost-effectiveness. Moreover, thedevelopment of new communications

technologies – such as ‘Bluetooth’ and the‘XML’ language – offer the not-too-distantprospect of common standards forelectronic dialogue between Smart Homedevices (although it is still unclear howmany standards will exist!).

• Interest from the consumer electronics

industry. With an ever increasing range ofhome and personal electronic gadgetsavailable, many major corporations in theconsumer electronics industry considerthe user-friendly integration andcombined control of multiple devices ascrucial to their future success. As such,the addition of Smart Home devices andfunctionality to home entertainmentsystems is a realistic medium-termprospect.

Demand

The survey of consumers’ attitudes indicatesthat there is underlying public interest in SmartHome technology that could be unleashed if themarket develops – and prices fall –appropriately.

While views are mixed, around half of thosesurveyed report interest in the Smart Homeconcept (although this may not translate fullyinto willingness to pay). As a generalisation, theresults suggest that people fall into one of threegroups:

• ‘The interested’ – those interested in livingin a Smart Home (45 per cent ofrespondents). Most likely to be: peopleaged 15–34; family households; thosewith pay TV and home entertainmentsystems (i.e. DVDs and video games

5 Conclusions

26


consoles); those with PCs and/or Internetaccess; those on higher incomes; thosewho hold positive attitudes about newtechnology.



The results also indicate what characteristicsattract interest in Smart Homes.

Unsurprisingly, the Smart Home is mostattractive to more pro-technology consumers,including the so-called ‘early-adopters’ vital tothe early development of high-technologymarkets. Households that reported the mostpositive attitudes towards new technology –and have greater ownership of newertechnologies such as home entertainmentequipment and PCs – also demonstrated greaterinterest in living in a Smart Home.

But, in addition, the Smart Home appealedto a broader range of consumers because of itspotential safety and security benefits. The highlevel of interest in the safety and securityfeatures suggests this might be a powerful

driver to attract less technology-literatepurchasers into the Smart Home market. Thebenefits of remote control also had wide appeal.

The survey also identified concerns amongconsumers about the apparent complexity of thesystem and the potential for ‘technical hitches’.Importantly, consumers across all three groups –interested, ambivalent and uninterested –voiced similar concerns, suggesting this is not aproblem that will limit interest in the technologybut is something that will have to be overcomeif consumers’ confidence in Smart Homes is tobe nurtured.

Opportunity

With the infant Smart Home industry and otherassociated high-technology markets changing sorapidly, any predictions for their future arehighly uncertain. Nevertheless, this researchdoes identify reasons to be optimistic that amass consumer market for Smart Home-typetechnology could develop.

There appears to be significant consumerinterest in the concept that could be unlocked atthe right price.

But, if a market does develop, it seems lesslikely to come from impetus in the building,construction or property sectors. The greateropportunity for growth in the use of SmartHome technology appears to be from itsaddition to the burgeoning array of consumerelectronics – especially home entertainment andpersonal communication systems – and initialdemand from the more technology-literateearly-adopter households.

27

Introduction

The research comprised three elements: deskresearch, a consumer survey and interviewswith experts. This chapter provides somebackground about how this research wasconducted.

Desk research

The programme of desk research involved aliterature survey and judicious use of the WorldWide Web. The main sources of information thatadded significantly to our understanding of theSmart Home concept, from both the buildingand technology perspective, included:

• Automated Home

• Construction News

• Electronic House

• Financial Times Information Technology

• Home Automation

• New Scientist

• Scientific American

• Strategy Analytics

• The Home Automation Times

Consumer survey

Methodology

The survey was carried out by Ipsos-RSL andwas part of their weekly Capibus survey. Thefieldwork was undertaken during the week of28 April – 4 May 2000.

The sample size was 1044 and comprisedBritish adults aged 15+. The sample was based

on a random location design employing 180sampling points selected each week. ACORNdata were employed to set quota controlsspecific to each interviewer location. By usingthis proven sample design the survey representsall sub-sectors of the population – at a regionaland national level. The sample is representativeof the population of Great Britain.

In-home Ipsos interviewers using theadvanced ‘Top CAPI’ computer assistedpersonal interviewing system for data collectioncarry out all interviewing for Capibus. CAPIprovides more accurate data than conventionalinterviewing. All Capibus data is processed in-house by Ipsos-RSL. All interviewers are trainedto a recognised standard and one in teninterviews are back-checked by telephone.

Data availability

The results are summarised in Chapter 3. Fullresults are also available in the form of printedtables. These provide details of the 16 mainquestions cross-tabulated against a range ofsocio-demographic variables (i.e. gender, age,social grade, working status, terminal educationage, income, TV viewing, access/use of Internet,telephone banking, household durables/technologies, children in household andstandard region). Data are also available on diskin SPSS format. The SPSS file includesadditional socio-demographic variablesincluding housing tenure, Acorn categories,newspaper readership, credit cards owned, ITVstations received.

Description of a Smart Home used during the

interview

The following description was provided tointerviewees as a show card:

6 Research notes

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20 years ago – who would have expected cars tohave features like central locking or electricwindows. These days, from your driving seat youcan change a CD, alter the temperature or evenreceive the latest local traffic report. Now thesame concept is coming to our homes …

A Smart Home is one where you can have onebutton control of everything in your home. Manyhomes already have central heating, remotecontrolled TVs, telephones, burglar alarms,computers and the like. A smart home is onewhich integrates all these and many otherdevices into one, simple-to-operate systemcontrolled by a single remote control.

A Smart Home will be more convenient. With oneremote control you can turn on the TV, start thedishwasher, open an upstairs window or lock allthe doors. You could also do all your groceryshopping from your armchair by accessing theInternet on your TV.

A Smart Home will be more comfortable. In yourSmart Home sensors would make sure roomswere automatically lit and heated when you wereusing them. And in cold weather, sensors wouldensure heating was activated to protect againstfrost. The system would also use energy moreefficiently and save you money!

A Smart Home will be more secure. Videocameras which are linked to TV or computers willenable you to see who is at the door beforeanswering. When you are on holiday, the systemwould set lights or music to come on and off atdifferent times to deter burglars.

A Smart Home will be safer. Devices can beprogrammed to react in emergency situations. Inthe event of a gas leak, electrical systems would

be switched off, windows opened and thesystem would contact the emergency servicesand even phone you at work.

A Smart Home means someone is at home whenyou are away. For example if you forget tovideotape one of favourite programmes, youcould use your mobile phone to send a messageto switch on the video player. The system couldeven phone you if there are any problems athome – such as the security being breached.

In a Smart Home you will be able to automateand control your home. You will have integratedcontrol of every device in your home whichmeans they will be able to work together to suityou and your lifestyle.

Interview script and questions asked

The script for all interviews was as follows.

These days, technology is becoming more andmore common in our everyday lives ranging fromthings like the washing machine, through to thevideo or the latest computer. I would like to knowhow you feel about the prospect of newtechnology in the home. I am going to read outsome statements and would like you to say towhat extent you agree or disagree with them.

• I do not see the need for more technology inmy home.

• Having more gadgets in the home makes lifefun.

• I am concerned about how complicated all thenew technology will be to use.

• I welcome new technology in my homebecause it saves me time and effort.

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Research notes

• I find it difficult to keep up with the latesttechnology for the home.

I would now like you to take a moment to readthis description of a Smart Home. [Interviewerhands the explanation of Smart Homes to therespondent and allows them to read it fully.]

We would like to know what you think of the‘Smart Home’ concept – I am going to read outsome statements and would like to know to whatextent you agree or disagree with them.

• A Smart Home appeals to me because itwould save me time and effort.

• I would be concerned about technical hitchesand things going wrong.

• I like the idea of one remote control that couldcontrol everything in the home.

• I would worry that the system would be toocomplex.

• I would really value the safety and securityfeatures a Smart Home could offer.

• Being able to control devices in the homewhen I was out would be really useful to me.

• I would worry about the system being difficultto override.

• I am really interested in having the sort offunctions a Smart Home could offer.

• I could see myself living in a smart home inten years time.

• The next time I move I would like to moveinto a home with Smart Home technology.

• If cost wasn’t an issue I would considerbuying Smart Home technology for myexisting home.

For all statements a common scale ofresponses was permitted: strongly agree; agree;neither agree nor disagree; disagree; stronglydisagree (allow ‘don’t know’).

Expert interviews

The interview programme consisted of face-to-face and telephone interviews, with a fairlyrepresentative, but not necessarily exhaustive,sample of industry experts. The interviewsincluded discussions with appliancemanufacturers, estate agents, builders,contractors, electronic and electrical equipmentsuppliers, as well as with industry andacademic researchers. The main organisationscontacted are listed below.

Building and construction and property

industry

Ballast-Wilshire (Anglo-Dutch Corporation,Harmondsworth UK Headquarters) – BobHeathfield, 020 8759 3331Chestertons Estate Agents (York House) –Rowena Wild, 0207 495 7282Furlong Homes (Essex and London) – StuartBraddon, 01992 782222JRT Electrical Systems (York) – Colin Taylor,01347 868187Savills Estate Agents (Central London) –Richard Donnell, 020 7499 8644The Building Societies Association – Simon Rex,020 437 0655Norwich Union Property – Nick Mansley, 01603622 200Sir Mott-McDonald Consulting Engineers(Cambridge) – Charles Rickard, 01223 463500

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Appliance and equipment providers

Ambient Energy Systems (AES, Isle of WightLtd) – Alan Ridett, 01983 520571British Radio and Electronics ManufacturingAssociation (BREMA) – Gerald Harvey andNick Glover, 0207 930 3206Electrical Contractors Association (TechnicalDivision) – Phillip Buckle and DaveSteffanovich, 020 7313 4800Siemens Electronics (Consumer Electronics,Manchester) – Andy Barnes, 01908 328 427Sony (UK Headquarters) – Karen See, 01932816000Steve Moore Associates (SMC, London) – SteveMoore, 0171 3498050

Built environment research organisations and

higher education institutes

The Building Centre – Neil Martin, 020 76926205Integer (I and I Consultancy) – Alan Kell, 01923665960Ove Arup (Research) – Jim Read, 0207 465 2216University of Sussex, Science Policy ResearchUnit – Tim Venables, 01273 678135University of Cambridge, Martin Centre ofArchitecture and Urban Studies – Professor PaulRitchens 01223 331700

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Chapter 2

1 ‘Living in technology’ by Patrick Joseph,published in 1999 special edition of Scientific

American on ‘Your bionic future’ (pp. 84-7).

2 This is relatively modest given the size of theUSA market. Moreover, the figure includeshome entertainment, which is the rump ofthis embodied technology in US homes.

3 For example, Lincoln Radley’s Boardwalkdevelopment in Docklands, along withBarratt’s Virginia Quay property, at a nearbyThames-side location.

4 The exceptions are properties that have beenput together as demonstration homes or asresearch projects, e.g. Edinburgh,Portsmouth, York and Watford.

Notes

5 Mail on Sunday, 27 February 2000.

6 For example, the greater use of timber frameand prefabricated construction techniques inNorth America makes the financial anddisruption costs of fitting Smart Hometechnology lower in the USA than in Europe,where brick and concrete architecture is morecommon.

Chapter 3

1 Based on responses to the question ‘I amreally interested in having the sort offunctions a smart home could offer’.

Documents

Smart Homes