Michael Wolf on the Smart Home

I recently caught up with my old friend Michael Wolf, who is the person who first hired me for some work at Gigaom Research, years ago. We remained in close contact, and Michael was one of the first I approached when I started rebooting Gigaom Research a few months back.

About Michael Wolf

From the Smart Kitchen Summit website:

Michael Wolf is the founder and chief analyst of NextMarket Insights, host of the Smart Home Show podcast and loves both food and technology. He decided to put this conference together because he is fascinated by how technology will change the way we cook, eat and live. Mike has been advising companies large and small in the connected home, consumer technology and Internet of Things market verticals for over 15 years, and today he helps clients have used his advisory services to assist with product development, go-to-market strategy, marketing and advertising, and mergers and acquisition.


Stowe Boyd: There’s been a growing murmuring in the popular press taking the tack that the ‘connected home’ is a sort of conspiracy by companies that are trying to sell us technology we don’t even think we need. Is that groundless?
Michael Wolf: I think we’re in the phase of the market right now where smart home and IoT technology is doing well in focused verticals, but the consumer-adopted mass market for retail smart home is still lagging.
Regarding verticals, we’ve already seen smart home tech disrupt and start to reinvent a few markets. Home security is one, where service providers like Comcast and AT&T are creating entirely new billion dollar business lines around security-centric smart home. New-generation security providers like Vivint and Frontpoint are growing very rapidly with security offerings built around IoT/smart home tech.
Home energy utilities are another vertical industry seeing rapid change due to smart home. British Gas has over 200 thousand in the UK utilizing their connected home offering, and Nest is working with a number of utilities to deploy its learning thermostat as an option that ultimately will enable more granular control of energy usage by both consumers and the utilities themselves.
SB:  But do homeowners need a thermostat that scolds them? Do we need to erect a security system in every home?
MW: I think greater understanding of our energy consumption, increased ability to control through modern user interfaces such as smartphones, and greater intelligence built into the system the enables it to self-manage and be more efficient, are all things some folks (but certainly not all) would want.
The reality is we live in a more connected time and service providers can now put tools in the hands of consumers that give them much better control of their consumption. At the same time, there’s a darker side to this progress in that connected, intelligent devices present a higher security threat and, as you say, a “scolding effect”.  In the end, consumers will be given the choice as I believe service providers will have offerings for both sets of consumers, depending on whether they opt-in or opt-out to newer, more connected product offerings.
SB: The proliferation of contending standards for the smart home is both worrisome and a barrier to adoption. Do you see a way through to the other side? And what will the other side look like?
MW: I think we’re moving into a market there is settling-in around certain physical layer standards, and we’ll likely see the market choose a few software frameworks in the next two years that become de facto standards.
On the physical layer/radio front, Z-Wave and Zigbee are fairly entrenched in service-provider managed smart homes, while Bluetooth and Wi-Fi are becoming fairly popular choices for retail consumer smart home offerings.  The jury is still out on Thread, but Google is pushing this technology heavily within its own products such as Nest and the OnHub uber-router.
On the software framework/standard side, Alljoyn is considered a frontrunner by many as an industry open-source standard, as companies like Microsoft embrace it. HomeKit is moving slowly, but I believe Apple’s slow-but-steady rollout out is likely going to pay dividends as security becomes an ever-bigger issue.  
SB: Considering that Apple has turned iPhone into the single most profitable product in human history, I would lay odds on them winning the war for the home, starting with the living room and the kitchen. Are you a betting man?
MW: I think Apple’s going to be a big player here, but the reality is Apple is presenting a closed ecosystem. You have to use an iOS device to control a HomeKit home, which means it automatically is self-limiting to homes that are Apple-centric. Google’s approach is a both wider ranging with OnHub, Thread and Weave/Brillo as well as more open. Brillo/Weave also requires less commitment on the part of product manufacturers (HomeKit requires new silicon in the box to be compliant).  But make no mistake, in 5 years both Apple and Google (or should I say Alphabet) will play a big role in potentially tens of millions of smart homes.
SB: Your event, the Smart Kitchen Summit, is coming up soon. Who should be attending? Tell us about some of the major trends you’re focused on.
MW:  We see a number of indicators of growing interest in adopting new technology across the different activity centers of food and kitchen. On the shopping/commerce side, we see lots of experimentation in creating connected ordering and replenishment systems. One example is Amazon’s investment in its own smart home replenishment platform, Dash.  Another interesting area within food and kitchen is the growing interest in subscription delivery and how that could be tied directly to connected cooking systems such as robotic cooking systems.
We are also seeing significant innovation in core cooking and food technologies, whether that’s efforts such as Freescale to push RF/radio technology as a replacement for microwave cooking technology or efforts to recreate the stove such as June’s Intelligent Oven.
Lastly, there are efforts to democratize complex cooking and food preparation through application of new technologies. Sous Vide, previously only a high-end cooking technique used by chefs is now becoming a popular new consumer method of cooking everything from meat to pudding using sub-$300 connected sous vide cookers from the likes of Anova and Nomiku.  
SB: I think the June Intelligent Oven represents a great example of the promise of smart devices. Let’s be honest, most people are not gifted cooks. So the premise of a truly intelligent oven — one that doesn’t overcook the steak and makes perfect cookies — makes a lot of sense. And the design is awesome: Apple grade awesome. So, if Apple is planning on making cars, how long before they are making refrigerators and washing machines?
MW: I’m not sure Apple will expand into appliances. The car example is interesting, but it is an outlier to their typical behavior. In the past, Apple has chosen to stick largely to media creation/consumption devices and, more recently, have tried to pioneer in a nascent categories like wearables or streaming TV boxes. That said, they’re running out of new greenfield opportunities that can drive their 20-30% revenue growth year over year, and it does appear they are  looking beyond computing, mobile and media for new business lines.  Cars make lots of sense as it’s a category that will completely reinvented in next 5-10 years and one that has a relatively fast buying cycle in their demographic of higher-income, upwardly mobile consumers.
With regards to appliances, they don’t fit your typical Apple profile for a product category. They have slow turnover (buying cycles for white good are closer to 10 years as compared to computer or phones (2-3 years) and even cars (4-5 years).  Bottom line, my feeling is they will first try to be a partner through products like HomeKit and in within the next 5 years, if they decide there’s a significant opportunity for revenue growth, they could surprise me depart from their typical behavior and pursue one of these categories.
SB: Thanks, Michael. I’m looking forward to the Smart Kitchen Summit, and I’m glad that we can offer a discount to Gigaom readers, who can use this link for 15% off ticket prices.
MW: Thanks for the opportunity, Stowe.