The nebulous idea of a connected home is slowly seeping into the consumer market in 2014, with years of advertising by security and service providers finally starting to pay off.

Energy concerns might not be the star player when it comes to the connected home, but 2014 has shown this issue may have more pull than some think. And it’s not just consumer devices that are moving the market along. Everyone from cable companies to solar installers is looking to get a piece of the burgeoning smart home market.

An ecosystem of things

When Google bought Nest in January, it was clear that Google was shelling out more than $3 billion for far more than a thermostat company.

Nest wants to be the gateway and platform in your smart home. This year, Apple made it known that it also wants to help users manage all of the connected stuff in the home with its HomeKit. Though it is still a little unclear how these offerings will work, both of these major players are signing up devices that (ideally) will be able to work together seamlessly.

While Apple and Nest generated some buzz with their HomeKit and developer program, respectively, they’re hardly alone. Icontrol, which is the platform provider for many of the biggest service providers and alarm companies, has been steadily building out its ecosystem, and now has about 100 devices and another 100 in the pipeline.

Nest, which could someday compete with Icontrol’s partners, such as Comcast, to be a smart home platform, is also playing both sides of the coin.

Companies like Nest, which also has its thermostat, and big-box stores like Best Buy and Lowe’s, which are in the business of selling stuff, are examples of how undefined the market was in 2014 and will continue to be in 2015.

Nest sells its thermostats through channels that could be considered competitors on the platform level, and Best Buy and Lowe’s sell devices that work on competitor’s platforms, even though they both offer their own platforms as well.

But no one quite knows how the mass market will embrace these technologies -- or at what speed. That means that overlapping allegiances and alliances will continue to abound until the market matures.

Standards alliances

Speaking of partners, nowhere is the muddled market of the connected home more apparent than in the proliferation of standards alliances.

At the end of last year, many of the leaders of home appliances and computing joined forces in the AllSeen Alliance, which claims to promote the adoption of the internet of things through an open-source framework.

In 2014, Samsung partnered with Intel to launch the Open Interconnect Consortium, with a very similar mission “to develop standards and certification for devices involved in the internet of things.”

Not to be left out in the cold, Nest partnered with Samsung to launch the Thread Group, which is building a new IPv6 networking protocol for connected home devices based on the IEEE 802.15.4 standard. A product certification program for Thread is expected in 2015.

For all the chatter about open standards and interoperability, at least one big-box player questions whether new standards are even needed to unlock the mass market. “Everyone needs to get real about this,” Kevin Meagher, VP and GM of Lowe’s smart home division, said in July. “They need to just open up their API and let manufacturers focus on just selling devices.”

Bundles

Do you want free HBO with your electricity plan? Or maybe you want high-speed internet with your solar panels?

Well, you’re in luck, because creative bundling is just getting started in 2014.

Comcast teamed up with NRG to launch Energy Rewards in Pennsylvania. Comcast customers who pick the electric supplier get an enrollment bonus and three free months of HBO or Showtime. If customers also sign up for Comcast’s smart home service, Xfinity Home, they get a smart thermostat.

For NRG, bundling and cross-selling are ripe opportunities as well. “Our home solar business is going to be about marrying up, cross-selling and seamless integration of solar-driven home energy solutions,” NRG CEO David Crane said on the company's third-quarter earnings call. It has a goal of selling solar to 3 million customers.

NRG is hardly the only solar installer with a suite of products it wants to sell customers. Vivint, which already has both a security and home automation service and a solar offering, is also getting into the business of wireless internet. As of its third-quarter earnings call, it had more than 5,200 subscribers for that service.  

Bundles will only expand in the years to come, especially in deregulated electricity markets where retailers will have to come up with creative offers to win, and keep, customers.

Disaggregation

Energy disaggregation isn’t new in 2014, but it is certainly picking up steam.

Various companies are offering disaggregation services, which use software or hardware to identify unique electric loads in a home -- such as a washing machine versus a television.

One of the most talked-about startups in this space, Bidgely, won its largest contract earlier this year with TXU Energy to provide its energy disaggregation to about 1.5 million homes.

The electric retailer will now be able to alert a customer if, for example, their pool pump is on the fritz, a service that doesn’t require any input from the customer. On the commercial side, PlotWatt is targeting chains such as KFC and Dunkin’ Donuts with subscription services that help them lower bills and detect broken appliances.

Disaggregation is also a focus of more established players, such as Opower, which enhanced its analytics capabilities with Opower 5.5 to help its utility customers target specific customer segments for efficiency.

Storage + solar

Earlier this year, Greentech Media’s Stephen Lacey wrote about how storage is the new solar. On the residential side, the market is just emerging, but 2014 could be the year that set the stage for solar-plus-storage, even if there is still a long way to go.

SunPower extended its agreement with KB Homes earlier this year to install energy storage in some homes. SunPower is also piloting residential storage and solar in Australia.

SolarCity, the nation’s largest residential solar installer, is coupling Tesla’s battery-based energy storage with its rooftop solar systems. However, CTO Peter Rive doesn’t see the average homeowner buying battery storage and unhooking from the grid, but rather paying for storage backup that is owned and operated by a utility or third party.

At Solar Power International in October, microinverter leader Enphase released its fifth-generation microinverter and introduced an energy management system along with a plug-and-play battery that will roll out in 2015.  

Although many still think that grid parity for residential storage remains many years away, Rocky Mountain Institute put out a study earlier this year that found it is only a few years away for some regions of the U.S. Shayle Kann of GTM Research discusses grid parity and the solar tipping point here. Keep an eye on Hawaii and California to lead the way.

 

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Stay tuned for upcoming GTM Research reports: Smart Energy in the Connected Home: Landscape, Distribution Channels, and Markets and The Future of Solar-Plus-Storage in the U.S.

Contact sales@gtmresearch.com for more information.