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1 ICR Reports January 2015 The focal point of the IoT era shifts from cars to houses - Trends in smart homes at the Consumer Electronics Show - Yoshioka Sawako - Chief Consultant From January 6 9, 2015, the Consumer Electronics Show (CES), which presents the direction that the consumer electronics industry will take throughout the year, was held in Las Vegas, Nevada, in the U.S. The exact number of attendees had not been released at the time of this writing, but in addition to an estimated 170,000 attendees, the exhibition area was the largest ever, and the number of companies with exhibits exceeded 3,600. In addition, the number of companies at Eureka Park, a dedicated space for exhibits by startups, increased dramatically from 220 in the previous year to 375. This article introduces this year s trend in the IT industry shown at the CES. IoT was everywhere at the CES This year s CES could be summed up by a single phrase: the Internet of Things (IoT). The IoT refers to things equipped with sensors and communication equipment that connects to the Internet and exchanges information. Wearable products synonymous with IoT were one of the most popular products in this year s show, and various devices, including activity meters, smart watches, and sensor equipped clothing, were also on display. In addition, at last year s CES, the Muse device, which senses brainwaves and controls emotions, was extremely popular and similar devices were on display this year. For 1

2 instance, the Emotiv Systems held a demo of a toy car that runs on brainwaves, and mybrain Technologies displayed an emotional control training device worn on the head, which is intended to be easy enough for anyone to use (see Photo 1). [Photo 1] MyBrain s device that attaches to the head Various other products were on display as well, including a baby bottle that senses the feeding status of the baby using accelerometers and angular velocity sensors, a bowl and scale set that is used in cooking and tells the users the correct amount of ingredients so that they do not have to measure them, and fitness devices that are attached directly to the body and sense the users exercise activity (see Photo 2). In the assembly hall and session rooms, the letters IoT were displayed, and the concept was discussed everywhere. [Photo 2] Hocoma s fitness device Valedo 2

3 Cars made a big impact Cars, the favorite topic in the discussions about the IoT, continued to have a strong presence this year, with many automobile and automobile parts manufacturers such as Toyota, BMW, Ford, and Denso exhibiting cars. Like the previous year, their exhibits resembled a car show. Ford has even begun regularly revealing new models prior to its motor show in Detroit, which is held the week following the CES. The top automobile manufacturers view the CES as an important venue, and IHS Inc., which specializes in automotive research, states that the CES is an important way (for automobile manufacturers) to stand on the global stage in terms of technology. Many manufacturers also displayed solutions related to cars, and like the previous year, cars were everywhere in the venue. Previously, when announcing a new system on a chip (SoC), American semiconductor manufacturer NVIDIA would demonstrate the capabilities of the system mainly through games. However, since it targeted cars this year, its press conference and its booth featured only cars (see Photo 3). [Photo 3] NVIDIA s booth However, the author got the impression that cars had matured somewhat at the CES. More people were talking about autonomous cars than connected cars that are constantly connected to the Internet and were the hot topic at last year s 3

4 event. An autonomous car is essentially a collection of technologies that aim for peace of mind and safety, such as automatic cruise control and self-braking. Audi drove an autonomous car from San Francisco to Las Vegas for the CES, and in its first appearance at the CES, Volkswagen held a demo of a car that parks itself without human assistance. Mercedes-Benz made quite an impact at the keynote speech by placing Gary Shapiro of the Consumer Electronics Association (CEA), which hosts the CES, onstage in the driverless concept car F 015 Luxury in Motion (see Photo 4). After seeing a driverless car with their own eyes, many people got the impression that autonomous cars will soon become part of our daily lives. [Photo 4] F015 Luxury in Motion It seems that this was the reason why discussions on cars at the CES focused on the possibility of realizing autonomous cars, including other issues such as privacy, the legal system, and the psychology of consumers. At the CES, an event that reveals new technologies and thrills attendees, it will be difficult for cars to make a greater impact next year than they did this year. A focus on smart homes The concept that would become the archetype of connected and autonomous cars can be traced back to a 1956 U.S. television commercial. Since that time, automobile manufacturers have focused their energy on developing 4

5 technologies that will make autonomous cars a reality, and these efforts have finally produced results in the last few years. In other words, it took more than 50 years for the concept to become a reality. There is another development that was likewise proposed as a concept at least as early as the 1960s, and it has only recently begun to transform into reality: the smart home. Efforts to create smart homes are absolutely not new. In fact, manufacturers began to seriously work toward commercializing home automation in the 1980s. Around 1984, the National Association of Home Builders in the U.S. assembled a special team to bring IT into homes, thus invigorating the efforts to make the smart home a reality. Unfortunately, due to multiple reasons, such as later attempts by different manufacturers to create independent platforms, the presence of multiple wireless technologies used in smart homes (including Zigbee and Z-Wave) and lack of compatibility between these technologies, the field is still disorganized. However, it was Nest, acquired by Google in January 2014 and HomeKit, announced by Apple in June 2014, that finally breathed new life into these attempts. Nest aims to be the home s hub Nest Labs, which Google acquired for $3.2 billion, is a thermostat and fire alarm startup launched by the former director of Apple s ipod project and an ipod software developer. A thermostat is a device that regulates a home s temperature and features functions that constantly maintain comfortable heating and cooling temperatures set for the users through air-conditioning equipment. Unlike Japan, where individual air conditioners are installed in each room, it is common in the U.S. and Europe for the temperature of an entire home to be controlled by a thermostat, and similar devices are produced by multiple manufacturers. Then why has Nest Labs received so much attention? The reason is that Nest s thermostat is equipped with artificial intelligence and is capable of automatically adjusting the temperature of heating and cooling devices by learning the user s 5

6 activity patterns. In other words, by learning the user s daily patterns, such as when the user wakes up, what temperature the user sets, when the user leaves home, and when the user returns, heating and cooling devices can be controlled so that the home reaches a comfortable temperature by the time the user returns home even without the need to set a timer. Moreover, since the thermostat connects to the network, it can be controlled through a PC or a smartphone. [Photo 5] The Nest thermostat [Figure 1] Changes in power usage with remote control of thermostats 6

7 However, artificial intelligence is not the only valuable feature of the Nest thermostat. Before the company was acquired by Google in May 2013, the electric company Austin Energy, based in the U.S. state of Texas, implemented a power-saving plan during peak electrical usage times, thus allowing remote control of home air-conditioning (using Nest thermostats) during the hottest times of the summer. The plan used a cashback service called Rush Hour Rewards, offered by Nest Labs to thermostat users beginning in April Rush Hour Rewards provides refunds from the electric company when the user consents to using remote control for heating and cooling devices provided by the electric company. To implement this program, Austin Energy pays a yearly fee to Nest Labs in addition to the cash back paid to the users. However, considering that sale price of electric power increases during peak times of an extremely hot day to approximately 25 times the normal price, the program more than pays for itself. In June 2014, Nest acquired Dropcam, a home security camera company as well as Revolve, which provides smart home hubs, in October of the same year. Then, the company announced Works with Nest, a program that allows for the development of products and services related to the company s thermostat, thus opening its API for developers. Thanks to this, it is possible for participating companies to develop services using the information collected by Nest. For instance, by collecting information on the time the user [Photo 7] Whirlpool left the home from Nest, a washing machine by the appliance manufacturer Whirlpool would be able to begin washing at the optimal time so that the clothes would go into the dryer and not be wrinkled by the time the user returned home. In ways such as this, Google is making moves to build a smart home platform through Nest and focusing efforts on building a new business model for the smart grid field. 7

8 High expectations for Apple HomeKit The HomeKit specification announced by Apple allows for household electricity to be controlled by an ios terminal. Thus, in addition to enabling connections to various HomeKit-compatible products, such as household appliances and home security systems, and allowing for uniform management from the ios terminal, it will also be possible for a home s electricity to be controlled using voice commands through Siri. In addition, since it is not necessary to install specialized devices such as Nest to allow the ios terminal to serve as a hub, the system has high merit for the user. At the CES, there were particularly high expectations for the startup HomeKit. In an interview with the author, the director of security camera company Butterfleye stated excitedly, While Works with Nest requires a connection with the Nest thermostat, there are also many advantages to HomeKit being compatible with this specification. In the U.S., a very large number of people use ios. HomeKit will be a game changer in the smart home field (see Photo 8). [Photo 8 Butterfleye] icontrol demonstrates growth icontrol, which is well-known in the home automation field, is currently conducting a project to standardize smart home specifications. icontrol is a company that originally provided home security-related devices and solutions 8

9 that allowed users to check information related to their homes through the Internet and mobile terminals. Since it also produced thermostats, it used this as a foothold to advance into the home energy management field. At the CES, the company held a private exhibition of its open platform for smartphones: the icontrol OpenHome Software Platform. A total of 59 companies, including Philips and Samsung, participated in creating this platform, and each company s lighting, door locks, cameras, and thermostats can be uniformly managed through this application. The platform also connects to Jawbone activity meters, which turns on lights when the activity meter s button is pressed at the time the user wakes up. Negotiations with other companies are currently in progress, and it appears that the number of companies participating in creating the platform will soon reach 75. The company s platform has also been adopted by the U.S. cable television company Comcast, the Canadian telecommunications company Rogers Communications, and the Japanese company itscom (see Photo 9). [Photo 9] OpenHome- compatible icontrol devices Bosch officially enters the smart home field On December 1, 2014, the major German automobile parts manufacturer Bosch announced that it would establish a joint venture with the American company 9

10 Cisco and the Swiss engineering company ABB to develop and operate an open software platform for smart homes as well as call for the participation of home appliance manufacturers, companies involved in home automation systems, and service providers. The company also provided a glimpse of its strategy of laying the groundwork for smart homes. For instance, it mentioned the release of the Z-wave Home Control Gateway, which will allow for home automation and remote monitoring in combination with Z-Wave compatible devices from the end of January At the CES press conference, the company announced that it would be focusing its energy on connected car/self-driving car projects. In addition to speaking passionately about its future projects in both the first and second half of the conference, the company indicated plans to devote significant efforts to presenting exhibits (as the sponsor company) in both areas (see Photo 10). [Photo 10] Bosch s presentation 10

11 Qualcomm, making homes a selling point This year, Qualcomm continued the effort it began the previous year of making houses a selling point. In addition to leading an industry group called AllSeen Alliance, which is working to enhance IoT standards, Qualcomm has also developed the inter-device communications technology AllJoyn, which provides on an open-source basis. As of January 5, 2015, there were 112 companies in the AllSeen Alliance, including Panasonic, Sony, LG, and Microsoft. Qualcomm set up a smart home showroom to display the products from this alliance, take visitors on a roughly 20-minute tour, and show them what was possible through scenes using the features of each room, including a kitchen and a living room. However, the reality is that few devices are compatible, and it will take time before scenes such as those displayed in the showroom are part of the real world (see Photo 11). Another group promoting the IoT was the Open Interconnect Consortium (OIC) established in July 2014 by six companies, including Intel, Samsung, and Dell. Although this group is working to develop open source code for smart home and office solutions, the status of these projects was not on display at this year s CES. [Photo 11] Qualcomm booth 11

12 The future of smart homes At this year s CES, not only the previously mentioned major companies but also many other companies, including startups, exhibited smart home-related products. Moreover, the fact that the show featured a space devoted only to smart homes for the first time this year indicates that interest in smart homes in other countries can be expected to increase further in the future. How will smart homes specifically develop in the future? The author believes that the current trend is heading toward open platforms in which anyone can participate, and construction of such platforms will further invigorate the field in the future. This will have merits both for startups supplying individual products (enabling them to become involved in smart homes) and for companies who provide platforms, thus eliminating the need for them to create hardware. In fact, not only do most of the companies discussed above provide services at multi-vendors through open platforms, but companies like the U.S. firm Belkin that develops both hardware and software have also adopted IFTTT, which enables communication with other devices and services. At this point, since there is no leader in the smart home field, in the last year in particular, a significantly large number of companies have created platforms and closely watched the actions of other companies with the goal of taking the lead position. The competition surrounding smart homes has finally begun. [Photo 12] Belkin booth 12

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