Bundling Services In IoT (part II)

I’ve previously discussed bundling of IoT services as part of a SHaaS model (Smart Home as a Service) and felt it was worth continuing.

With Apple introducing Apple Home over a month ago, this brings to light 3rd party aggregators in the Smart Home space. It also showcases deeper OS level integration with phone systems. This happens as Siri gains more steam, Alexa continues to grow skills, and Google Home… will hopefully work as well as the other two services. With deeper OS integration and stronger voice services, aggregation is becoming a natural part of a company’s multi-channel UX strategy. With continued aggregation models and applications on the rise, now the time is quickly emerging to officially bundle and sell the devices and services in a SHaaS model.

Full discussion on the weekly Raft podcast.

Smart Home product bundling can allow for a stronger potential of mass adoption by reducing several of the following concerns plaguing the Smart Home world.

  1. Security — IoT and Smart Home security is drastically under-served. Many consumers aren’t unaware of the lack of security or privacy of many connected devices. They don’t assess the idea of having anti-virus software for their home. Connected products are being purchased and used without proper security or encryption from major companies making them more susceptible to hacking and malware.
  2. Hardware price — A common issue with connected devices is the high price of hardware. For mass adoption of the Smart Home, this needs to be reduced for the broader middle class to afford, purchase, and install.
  3. Service offering — Most individual components and devices struggle to define a compelling service offering, especially one that is monetized.
  4. Billing & support — As service models are created and defined by companies, subscription fatigue will set in. Users won’t deal with handling 15 different subscription services to operate their house. Especially if the value is still marginal. Consumers will seek out the simplest solutions for billing and support. Most connectivity companies already offer triple or quad play services (Phone, TV, Internet, Mobile). Will the Smart Home become a 5th pillar of service offerings?
  5. User experience — One of the often championed areas of individual connected devices. Cross device user experience still heavily lacks substance. A company who intelligently bundles services could create an optimal user experience across devices to smooth out divots in the field of play.
  6. Installation & Set-up — These areas continue to be a struggle. Given non-connected devices are often just as good as connected devices in their dominant functions, and offer no friction for set-up, connected devices, offering non-dominant enhancement functionality, still struggle from users finding the value and overcoming the pain of usage. It’s important to always remember the connected aspects, for an individual device, often extend and enhance, but do not change the core functions.

A company who could provide a bundled set of services could solve most, if not all of these issues. A larger company will often have better security personnel on staff, and experience with protection of devices. They will need to for insurance reasons; at least over a smaller company who is just getting started. They will be able to create a broad service offering that can then offset hardware costs. They can provide set-up and installation. They can also offer a single point of billing.

User experience is the one issue I struggle with. Companies like Apple or Google may be able to offer a compelling cross product set of scenarios. They could sell a Smart Home package and for 4.99+/month provide themes / recipes / automated tasks that would them become a viable service models.

However companies like these are not often in a place to sell directly into infrastructure for users homes. They often take a consumer approach selling through stores or online touch-points. Companies like AT&T, Comcast, or Liberty Global may be best set up to deliver the solution, but often have experiences ranging from moderate to poor and downright harassing.

The solution may lie in a Microsoft style partner re-seller program. Companies like Google and Apple can bundle the services, manage the services and the experience, while companies like AT&T would become a reseller. This would create a stronger logistical sales supply chain and have each partner play an appropriate role ensuring a stronger customer experience.

Companies who bundle a set of devices, and offer a service that connects those devices as a whole, can partner with larger connectivity companies to re-sell services. This allows the aggregators to keep a strong watch over products, services, and most importantly the user experience while developing a more compelling revenue stream. Furthermore, this also provides a platform for smaller start-ups to sell into these ecosystems.

A model where everyone wins.