E3: Redefining the Connected Home and IoT

Jake Moskowitz explores the internet of things in the connected home and beyond.

In this episode of FIVE, Jake and his guests look at the technical, consumer and marketing aspects of IoT in a 5G world. Peter Linder and Yory Wurmser discuss the ins and outs of 5G fixed wireless access — the new super-fast broadband internet service coming soon from mobile carriers. Michael Stich paints a vivid picture of tomorrow’s smart home, adds marketing highlights and frames it all in Maslow’s hierarchy of needs. Jake and Michael debate IoT opportunities for 5G-ready marketers. Allison Schiff talks Turkey about real time out-of-home advertising and OOH attribution in the 5G future.

The FIVE List:
Even though the market for home and IoT devices is already pretty warm, 5G is expected to light a fire under the whole industry — for good reason. Actually, five good reasons. And they’ll all have an impact on digital marketing and brands considering IoT strategies:

  1. 5G will broaden the market for IoT devices and services by increasing the number of users with high speed internet
  2. 5G is designed to connect exponentially more devices than previous mobile generations – millions in a square mile
  3. 5G will enable a direct connection of some IoT devices to the mobile carrier
  4. The low latency and high speed of 5G will make some devices and services more usable, powerful and compelling
  5. 5G will connect lots of other devices well beyond the home

Guests:

  • Peter Linder, VP of 5G Marketing at Ericsson
  • Allison Schiff, Senior Editor at AdExchanger
  • Michael Stich, Chief Business Officer at VML Y&R
  • Yory Wurmser, Principal / Mobile Analyst at eMarketer

FIVE – The 5G Podcast for Marketers
Presented by the Emodo Institute and Ericsson Emodo

Host
Jake Moskowitz, Head of the Emodo Institute

Producers
Robert Haskitt
Adam Kapel
Jake Moskowitz

Music
Dyaphonic
The Small Town Symphonette


Transcript of Episode 3: Redefining the Connected Home and IoT

5G will be one of three or four innovations that will complement the others and ultimately create a virtual cycle that will accelerate experiences.

Jake:

Let’s talk 5G. Welcome to FIVE, the podcast that breaks down 5G for marketers. This is Episode 3: Redefining the Connected Home and IoT. I’m Jake Moskowitz.

When you hear the term “smart home,” you probably picture environmental automation like home lighting, music and climate control. Or appliances that prepare your food and tell you what you need to buy. And of course, everything is either holographic or voice activated, depending on how far into the future your smart home is imagined.

When you think of the marketing implications, it’s a little harder to imagine. You can see how companies like Amazon can win, right? If you need anything, you just ask.

But in a real connected home, will 5G help open doors for other brands in other industries? We’ve seen enough smart home propaganda and foreshadowing in videos, TV shows, movies to envision some form of the home of the future. We could discuss the Internet Of Things and smart home future for hours. There’s a lot of real. There’s a lot of “coming soon.” And a lot of “someday.” How will it really come together for consumers and what does that mean for marketers.

Just so we’re all at the same address, here’s some of the “real.” The connected home has two essential parts, a high-speed internet connection and a variety of devices that connect to the internet and automate in-home tasks, like smart thermostats, doorbells, sprinkler systems, and of course, voice-activated assistants and speakers. The Internet Of Things has been a thing for a while. Connected devices have shown a lot of promise in the form of cool new IoT gadgets for years. But the odd connected device doesn’t necessarily make a connected home “smart,” and the Apple Watch isn’t necessarily the culmination of IoT.

Even though the market’s growing, critics and frustrated IoT consumers continue to point out some significant problems. For example, for some of the most promising capabilities, speed and latency are real issues. There’s a lack of consistency when it comes to brands. People don’t live in a branded house, they live in a house of brands. I’ve got an August lock, a Nest thermostat, an LG smart TV, Blossom smart sprinkler system, Sonos speakers, Google home. The list goes on.

As consumers adopt new devices, they accrue more apps and discover broad variability of app support, setup, usability and connectivity. A connected home that’s smart doesn’t just house a random collection of unrelated gadgets. Part of the intelligence of a smart home is interoperability. Today, if there’s any unifying access point that allows for smart-home commerce, it’s pretty much owned by two or three companies, and they’re really not very unifying. For instance, I can’t buy a Google Home device on Amazon. I can’t download the Apple Home app on the Google app store. These are consumer issues, but they also present significant challenges for marketers. With the roll out of 5G, we’ll likely see even more of these devices pour into the market.

Even though the market for home and IoT devices is actually pretty warm, 5G is expected to light a fire under the whole industry, for good reason. Actually, five good reasons.

  1. 5G will broaden the market by increasing the number of users with high-speed internet.
  2. It’s designed to connect exponentially more devices than previous mobile generations; millions in a square mile.
  3. It will enable a direct connection of some devices to the mobile carrier.
  4. The low latency and high speed of 5G will make some devices and services more usable, powerful and compelling.
  5. And 5G will connect other personal devices well beyond the home.

These five factors will make the connected home smarter and peripheral devices much more common. The resulting mass market will be difficult for brands to ignore.

For some consumers, the impact of 5G may be felt first at home through the adoption of a 5G wireless broadband connection. It’s easy to assume that just about everyone has broadband these days, but according to 2018 numbers from the Pew Research Center, nearly a third of American adults still don’t have broadband internet access in their home. Finally, broadband doesn’t necessarily mean high-speed. A very high percentage of homes that have broadband still have comparatively sluggish internet service, particularly in suburban and rural markets that often rely on ADSL or satellite internet connections. For huge swaths of US consumers, internet access is slow. Too slow for the well-connected home. 5G is likely to change that with fixed wireless access.

Yory Wurmser is a principal analyst at E-Marketer and the primary author of E-Marketer’s recent report titled, “Getting Ready for 5G.”

Yory, in your report, you speak about fixed wireless access. Could you speak for a moment about what fixed wireless access is, how 5G impacts it, and what it might mean for cord-cutters, especially in the literal definition of cord-cutting as opposed to the figurative definition of cord-cutting?

Yory:

Fixed wireless access is very fast broadband internet delivered via 5G to homes or factories. It’s basically replacing copper or cable, whatever else delivers broadband to houses. What this does is it let’s very fast download speeds in homes that are not connected to a cable provider or not connected to fiber optics. One that can be updated with just a new modem and a new cell tower instead of having to rewire neighborhoods.

The effect of that is you’re going to see the speed of broadband service increase more quickly, generations coming more quickly than you would otherwise. Also, very fast broadband access to places that don’t have access to it right now. It could be a pretty big deal down the line, for sure.

Jake:

Peter Linder is Ericsson’s head of 5G marketing for North America. You may remember Peter from previous episodes.

Hey Peter, give us a little color on the advantages of 5G fixed wireless access?

Peter:

I see two large potentials for fixed wireless applications. The first one is in suburban scenarios. I don’t expect 5G to replace the fiber that’s already to subscribers home. Then all the digging, all the tying up the subscribers has already been done and taken care. The potential is for all the suburban customers that are not yet connected by fiber to play a role in eliminating the urban fiber broadband divide. The people that are not yet connected with fiber can consider 5G to be connected to more powerful broadband solutions.

The second area I see is, if you move out to the countryside, with all the movement, all the power right now, we’re going to make cities smart. We’re going to get cities 5G very, very earlier on. Cities already have 5G and fiber deployed to large [inaudible [00:07:58] to the cities. We have a job to do to make the countryside become clever, and the countryside becomes clever in the way that we’re making sure they get good things and more broadband connections. Having a core fixed infrastructure providing fixed broadband services, having in theory a mobile infrastructure that needs to be taking the next leap. It’s perhaps hard to upgrade both those two infrastructures for the future. We think 5G can serve both things in rural areas. You make one infrastructure investment but can serve two different purposes. These are the two biggest opportunities I see with fixed wireless access.

Jake:

Right now, Verizon is rolling out their new 5G fixed wireless service in key US markets, touting typical speeds of around 300 megabits per second, and peak speeds of 1000 megs, or gigabit speed. It’s wireless internet that rivals fiber.

Only about 15 percent of American homes are connected via high-speed fiber, so 5G brings a potentially higher-speed alternative to the table for the vast majority of American households. To marketers, that means scale and tons of potentially new consumer experiences. Given all the benefits of 5G at home, it won’t take long before some consumers are compelled to cut the cord with their old ISP in favor of fixed wireless access, making their carrier their new ISP.

Peter:

If you’re under 30, you’ve been on your family plan for your whole life on your mobile phone. All of a sudden, you should move away to your first home, and you’re going to foot the bill for your broadband connection and the mobile connection. You might not go for the package that your parents had, which was fixed phone, broadcast TV, internet access and then phones on the side. You might go for the package which is the powerful mobile phone and the powerful broadband connection that you can connect your TV into so you can stream whatever TV services you want to that device. I see that in urban and suburban environments, targeting non-fiber customers with a dual-play offering which is fixed wireless and mobile broadband connection is a very powerful thing.

Jake:

Lots of people talk about cutting the cord, so to speak, but those that do it today know that it’s a misnomer. You don’t actually cut your code; you still need a cord to support your cable modem. Fixed wireless access is true cord-cutting. We talked about the low latency capabilities of 5G in the last episode. Latency with 5G connection will feel refreshingly nonexistent. In most situations, we’re talking anywhere from one to twenty milliseconds response time.

5G improves latency because the 5G infrastructure is configured differently from previous Gs. 5G has a more distributed core network. In the connected home, the connection speed can make a difference. Take a common connected service, like home security monitoring. If someone is outside your door or your window, you want to know right now. Every second counts.

What makes 5G so fast and so accommodating for billions of IoT sensors and devices? 5G will provide much more network capacity by expanding into new frequency spectrums, especially new millimeter wave, 5G’s high-frequency spectrum. Some 5G experts speculate that 5G-enabled devices may eventually automatically configure themselves directly to a 5G network with minimal user involvement. So what’s that mean for WiFi and Bluetooth?

Yory:

It’s hard to say which of these really proximate networks will win out in the long run. 5G is certainly going to be important, but it doesn’t necessarily mean that things like WiFi or Bluetooth are going to be replaced. I think they will each have their role in certain ways. I’ll be interested to see which of those indoor networks find their niche.

Jake:

Alright, we’ve got high-speed internet and we’ve got a bunch of devices. What’s the big picture here?

Michael Stich is the chief business officer at agency VML-YNR.

Michael:

I look at the home as an extension of our lives and how it can help us be us. It really is our respite and our sanctuary. A smart home, along Maslow’s Hierarchy of Needs, ensure that we’ve got physical comfort, physical providence, moving up into mental comfort, mental providence, emotional ultimately up into our aspirational expectations as well. A smart home is going to be one that’s going to grow more sensing our moods, our stress levels, our expectations around the physical environment itself: lighting, heating, the kinds of communications we would have.

I see what we rely on today for devices inside of our home, whether it be the ability to turn on an oven or set the temperature, those are growing increasingly voice-enabled. I look at that as sort of the first step towards an increasingly personalized set of experiences and profiles inside of the smart home that are very dependent upon the individuals inside of the family.

When I’m sitting down at the television along in my living room and I pop open the television, it serves up content, it looks like what you are starting to see from Netflix and others today, specifically tailored to my needs. But as soon as my daughter walks in the room and sits down next to me, the personalized experience changes to meet our combined expectations, not only the television, but the temperature and the lighting and the security system, and the other aspects of our home that care for us depending on who’s there and what our preferences are. I look at that as something that becomes more dynamic in other ways. It also grows smart. Right now, we’re telling everything what to do. I see a real opportunity back to some of the automation discussions of learning about our frequencies and understanding what our natural preferences are. “Oh, I just noticed every single night you just happen to set the temperature to 68 degrees, whether it be over your Nest or over voice, or physically. Can we just take care of that for you?” The ability to learn and to automate grows more important as well.

As I mentioned, I see the opportunity for it to start to learn more about some of our emotional needs. The ability to suggest music or to suggest turning on a water fountain inside of the home, or turn on the fireplace, something like that to help with the ambiance around our own mental state to help us over time as well. I’m going up the Maslow’s hierarchy of needs on things, but I really look at is as saying it will grow more smart around and sensing around what our physical needs our. It will be personalized to the individual and how they coalesce inside of the home in their activities. Then, over time, we’ll also start to grow up into our mental, emotional, spiritual needs as well.

Jake:

Michael, let’s say you bought a new Samsung smart refrigerator from Lowes, in a smart home who owns the consumer the relationship? Is it the appliance brand, the retailer, or your smart speaker that you normally talk to to order service, replace water filters, etc.?

Michael:

It’s a great question. The analogy that I could use would be ink cartridges and printers, or laser cartridges and printers today. At least initially, those devices that were sold at the unit level, both the printer and the ink or the cartridge at retail. But increasingly are growing into subscription-based services. I’m just paying as I need on a monthly fee basis and the ink arrives when I’m running low. I don’t even know when it’s running low, it just arrives at my house.

So the water filter that’s sold to you through Lowe’s that sits inside of a Samsung appliance is one that I believe will initially start with the retailer, the physical provide. But over time, we’ll start to move into just a service. It could also include maintenance and cleaning and it could be across all of your appliances to make sure that all of the replaceable parts that have some frequency associated with them are part of a broader service. It doesn’t necessarily need to be from that manufacturer. It could also be provided to you by your home operating system. It could be an Amazon, it could be a Google as well, that learns your frequencies and provides integrated services replacements to you, including installation and recycling services of devices. Across multiple manufactures or by a single manufacturer.

Jake:

I’m going to have an opinion on this one. Let’s look at Samsung for example. You could by a Samsung dishwasher, television, phone, washer, dryer. You can buy anything from Samsung. Does it matter in the slightest? In 2019 versus 1999, is it one millimeter more convenient to have everything from the same manufacturer than it was 20 years ago? I’d argue no. These companies haven’t accomplished anything to create any economies of scale for a consumer to own these consumer. I think the answer is the OS because it’s Amazon and Google and Apple are the only thing that mattered. They’re the only things that tie all these things together and increasingly those companies are giving up any hope of having their own OS to sign on to have others.

Michael:

I agree. I could also argue, though, that it’s fair game right now to challenge all of them, including the home OS providers. Who’s helping me recycle? Who’s learning about my frequencies across devices and offering me services such that things are taken care of for me, and/or things are sent to my house when I need them? And that’s all my choice. Who’s helping me manage my spend across appliances around maintenance, around those devices over time and then reporting additional opportunities for saving, like a Mint.com might do for my financial services? Those kinds of services on top that help me without me having to investigate and choose and transact are missing.

Jake:

Yeah, but there’s got to be interoperability between all those things you’ve bought because you didn’t try to buy Samsung for everything, right? You probably have five or ten different brands of things in your house so the only way to accomplish that is through interoperability and there are only three companies really in that game, right?

Michael:

Assuming though, back to the vertically integrated first organization, is there someone who’s going to be doing more locally relevant content to you and people around you and/or are providing additional services on top that might be content related or augmented reality related that are first-come, first-serve, you have to buy the whole system? I’m mindful of the fact that first innovations typically succeed when they’re vertically integrated.

Another good example of this is the washing machine. I think we just saw it at CES. It might have been Whirlpool where they were coming out with a subscription based service that knew automatically when you were running out of detergent. It would just ship you detergent to your house so you could just unplug the last module and ship it back. It was a recyclable module that was a full system. Whenever you buy it, you’re buying the device and you’re buying the service on top. It was the printer and ink model brought to you as a vertically integrated services from Whirlpool. I think that’s an interesting play as an entry into this.

But I think whoever can abstract that out and provide that across everything inside of your home is a really opportunity.

The smartest smart home device for me right now is absolutely Alexa. I think 50 million households can’t be wrong.

Jake:

More than Google?! Ouch! I’m a Google guy.

Michael:

I love Google, too. I find Google to be smarter. I find Alexa to be faster. And for the top apps, despite the fact that Amazon wants us to buy more using Alexa, it’s the most stable and it’s the most proliferate in terms of its footprint of different devices. Its interoperability is out front and has been for a couple years now.  Who knows? I don’t know what the crisis is that happens to Alexa that makes it run by Google instead, but I think right now, to some extent because first-mover advantage, it’s an Alexa world right now.

Jake:

It was first mover, but it wasn’t just first mover. It was also they owned the storefront.

Michael:

And they had Prime advantage, the advantage of Prime as well, which was huge. As far as the future, I think the thing that grows more interesting is around these services that we’ve been talking about. For me, it’s someone who knows me, knows my life, knows my preferences inside of the house, and really gives me that very personalized, tailored experience. In every room I walk into knowing the time of day, knowing my habits inside of the house, and giving me not only what I want, but what I might have forgotten about. “It’s your aunt’s birthday next week.” You might just want to think about a couple of things that are coming up. Something that helps me manage my life while I’m at home. We’re able to do a lot of that ourselves today, but it might be helpful to build our lives in a way that helps us take things we need to take care of from the home. In addition to providing a very relaxing and/or rejuvenating experience.

Jake:

Thanks Michael. Good to talk to you again.

Let’s be clear. 5G won’t necessarily make the smart home or the IoT possible. It’s already possible. 5G will make it possible for more consumers, make it easier for a broad range of devices to connect, and make it all operate in real time. Which makes user experience and time-critical services more compelling.

The 5G-powered explosion of new devices opens new doors for brands and retailers to connect with consumers inside their homes or on the go. But they may find limited success if they don’t seize the moment, anticipate customer needs, or make the home and life smarter, not just the device. Some businesses will even provide incentives beyond automation and convenience. The proliferation of sensors in our homes and our lives will spark transitions in a number of industries.

For example, insurance companies and utilities have a vested interested in your activities at home and away from home. They reward homeowners for keeping their costs down and consumers for staying healthy. In the 5G future, you’ll like see insurance companies offering monetary incentives if you use their sensor-enabled services and provide them with specific real-time data. These incentive programs will, in turn, drive more IoT adoption. For instance, connected lighting systems, like the Phillips smart bulb, are often considered cost-prohibitive niche products. But they present a different value proposition when you can turn them on and off automatically to save energy. And that saves you money.

One more thing about that exchange. Consumers gaining convenience and simplicity but at the expense of personal data. The demographics of smart home and IoT customers can make that exchange a little tricky. Many devices are considered luxury items, or require installation. Their greatest appeal are with tech-savvy consumers who are headed into their 30s, 40s or even 50s. They are willing and able to pay for convenience and appreciate innovative technologies, but the older they are, the more resistant they are to sharing their data.

Long-trusted brands may carry more weight with these consumers than new, unknown market entrants. As long as that trust is preserved, that make privacy and trust a bigger deal for brands looking to benefit from IoT and smart home devices. If you’re one of them, consider the opportunities we’ve discussed: service, interoperability, incentives, anticipating individual needs. But don’t look sight of privacy. In the coming weeks, we’ll dedicate two entire episodes to the numerous data and privacy changes you’ll expect to see in a 5G world. 

The increased scale, speed, and adoptability make the smart home and IoT a viable, important domain for marketers. One of the most fascinating aspects of all this is the unknown.

Michael:

Every time we get into one of those major improvements in connectivity, whether it be over wire or wireless, tends to unlock complimentary technologies alongside it that really form as a virtual cycle to accelerate the demand for all of them. I see the same thing with 5G. 5G will be one of three or four innovations that will complement the others and ultimately create a virtual cycle that will accelerate experiences, and ultimately, capabilities for marketers.

Peter:

What makes 5G different is it opens up new avenues for new applications that we haven’t seen in the past. But for anything where you want the wireless experience, I think we will see it way before at stadiums and shopping malls and at venues, all kind of public locations and connecting there before we see it someday inside of the home, from the termination point to the device.

Jake:

Before we go: 5G is going to enable sensors of all stripes to connect in near-real time. More connected devices will produce more data and more data inputs than we’ve ever seen before. That means better data models or AI for consumer targeting. IoT is only one example. Starting with popular gathering points, some devices will eventually connect directly to 5G networks. For marketers, all connected devices present a connected world of opportunity, especially when consumers venture outside.

For a glimpse of what that looks like, I spoke with Allison Shiff, a senior editor at Ad Exchanger.

Allison:

I was talking to a Turkish teleco, TurkCell, and their EVP of marketing was talking about the ability to swap ads in real time based on the data of people who might be standing in front of a digital billboard. That might sound futuristic and perhaps even creepy, but it does speak to the speed of transfer and the ability to really, in real time, make decisions make decisions you wouldn’t necessarily have been able to do without that underlying infrastructure.

One thing that I thought was really interesting was, the point that there is the near-term benefit of 5G and then the long-term benefit that is going to be a little more difficult to pin down than the shorter-term benefits are just making what you can already do a bit better and a bit faster. Really, that’s just to start. If more devices come online, that is more data, and you can action on it more rapidly. It’s not necessarily going to change people’s lives to start, but there is going to be more volume because there is more speed and there are more devices. Nearly anything can be connected, and quite quickly. You would live, really, in a fully-connected world.

Jake:

On the deterministic side, when there are more devices, it gives you more data to use to link devices.

Allison:

Yes, there’s definitely an attribution use case. First you think about the home, all of the different things that would all be connected to the same network. When you’re doing probabilistic matching and you take things from one WiFi network to another, you can figure out, “Oh, this person lives here, and this is their laptop, and this is their phone, etc.” But when you blow that out and it’s not just personal devices, but that digital billboard all running on the same 5G network, there’s really an attribution opportunity there. There’s a loop that can be closed because of everything running on the same network, but then it’s really behooves the providers and whoever is the device owners, to get people to opt in to this sort of thing.

Jake:

Retail is an industry in crisis in the US. E-commerce is becoming the norm. Amazon is king, and brick-and-mortar giants are shutting doors in record numbers. 5G may give store owners a means to reinvent themselves.

On the next episode of FIVE, we’ll go deep on 5G and the reinvention of retail.

Thanks for joining us.

The FIVE podcast is presented by Ericsson Emodo and the Emodo Institute and features original music by Diaphonic and the Small Town Symphonette. This episode was produced by Robert Haskitt, Adam Kapel, and me. I’m Jake Moskowitz.