Awareness of smart devices is increasing, due in large part to the major marketing efforts and budgets of telecom and cable service providers. Parks Associates research shows that between Q1 and Q4 2014 in U.S. broadband households, the intention to purchase one or more smart home devices increased from 21% to 37%.
While smart product and service adoption is gaining momentum, the value proposition for home services including extended product warranties, insurance policies, and service contracts could be enhanced by bundling those services with energy and product monitoring services. Data shows that consumer adoption of home services is much larger than adoption of smart devices. Half of U.S. broadband households already have one or more home services for the major appliances and electronics within their home.
Higher-income households are more likely to adopt these services, and those households likely to adopt a warranty for appliances are also likely to adopt warranties for electronics. The adoption of home warranties is also (unsurprisingly) much higher for those who recently moved into their home.
The appeal of home services is low—less than 10% of broadband households find them very appealing, but when bundled with smart product monitoring services, appeal increases significantly. For instance, in a Parks Associates survey, only 10% of U.S. broadband households found HVAC service contract very appealing as a stand-alone service offering. When bundled with 24/7 HVAC monitoring, the appeal increased to 15% of U.S. broadband households. The impact of bundling is even more dramatic for home warranty services.
Consumers show interest in bundling home services together. New partnerships that create cobranded and bundled solutions will continue to be introduced to sell additional services.
Alternative business models are critical to long-term success in the smart home market. Monetizing smart home products and services using multiple approaches is, by itself, a significant competitive advantage. The addition of a portfolio of energy-related services complement and differentiate smart home solutions, broadening the appeal of security based solutions.
For more information for utilities seeking to add smart home services to their offerings, see Parks Associates’ industry report Winning Smart Home Strategies for Energy Management.
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