Part IV: The Interconnectivity Issue In The Smart Home Needs to Be Solved

This is Part IV in a five-part series titled, “What The Next Billion Dollar Smart Home Startup Will Look Like”. Be sure to read Part IPart IIPart III, and download the free eBook to catch Part V.

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In Part III we addressed why cloud infrastructure problems hold back so many great connected device companies, but even the best designed products struggle to reach their potential in today’s smart home ecosystem.

Different than the consumer electronics industry of the past, the success of a connected device today depends just as much on a strong ecosystem of compatible devices as it does on the individual product design. No smart home device can stand alone. 

But despite living in this reality for a decade or longer, the smart home industry remains a world of tiny fiefdoms—each battling to lock out the other from encroaching on its small piece of territory. But this “walled garden” approach, copied from the mobile phone industry of the past decade, has not worked in the smart home. 

For any single smart home company to be truly successful, the industry needs to solve this interconnectivity issue and adopt an open, agnostic approach to device integration.

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The Walled Garden Approach Will Not Work In The Smart Home

The approach we see most often in the smart home industry today can be best described as a “walled garden” strategy. The bigger names in the industry try to gain influence and control by restricting which devices are able to integrate with their ecosystem.

This strategy is copied largely on the way the mobile phone industry evolved over the past decade—and for good reason. Apple has grown to the most valuable company in the world, with over $250 billion in cash on hand, because of how tightly they’ve controlled the iPhone ecosystem. When the App Store launched in 2008, any developer in the world could write software for iOS but they had to play by Steve Jobs’ rules.

Not wanting to pass up the opportunity to steal a valuable page from Apple’s playbook, many early entrants to the connected home market followed this same closed platform approach—i.e. you can use our APIs to integrate with our thermostat, light bulb, switch, lock, vacuum cleaner, refrigerator, etc., but you have to play by our rules.

As we’ve seen, this approach just does not work in the smart home the way it’s worked with mobile phones. The cost of expertise across every area of the home—lighting, security, communications, climate control—is just too high. Rather than delivering a tight, consistent user experience like we see on iOS or Android, users get a buggy, half-baked smart home experience.

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No Connected Device Can Stand Alone

When the connected device landscape is divided up into multiple, competing ecosystems, it doesn’t just hurt the user experience. The companies that build products for the smart home industry struggle as well.

A startup may set out to design the best connected lock on the market, but its success will be mostly determined by what devices and services it integrates with—not its electrical engineering or industrial design. The promise of every smart home company is home automation, not a beautiful, standalone product.

This hypothetical lock company has two options for fulfilling that brand promise. One, it can expand its product portfolio to include security cameras, indoor and outdoor lighting, switches, outlets, speakers, sensors, appliances, and on and on. Or, it can integrate with as many existing products in these categories as possible.

We’ve seen plenty of companies try the first strategy to lackluster results. We need to make it as easy as possible to execute the second. Otherwise, the potential for any single device or company to succeed in the smart home will always be limited.

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Open Ecosystems Should Not Require Vendor Lock-In

Thanks to the recent explosion of voice assistants in the home, we’ve seen an easy strategy for connected device manufacturers looking to integrate with more smart home products. Amazon’s Alexa and the Google Assistant seem, at first glance, like the answer for simple, open smart home ecosystems.

A lock manufacturer or a connected lighting company can easily build an integration to Alexa or the Google Assistant and be initiated into their home automation ecosystem. As more and more companies build apps and skills for these voice assistants, this starts to look like a panacea.

But with experience these manufacturers soon see that this isn’t the quick fix they sought for their interoperability problem. First, you’re giving up all control of user experience and user data to a third party. You’re giving someone else the keys to the castle and then walking away.

Second, you’re risking major potential for vendor lock-in. Yes Alexa and Google Assistant are the hot user interfaces in the smart home today, but what’s next after that? Are you going to start from scratch every five years without any owned infrastructure or data to build on?

As consumers voice that they would much rather control the smart home from their mobile phones, it would be wise to focus on building your own app experiences for controlling and integrating with the whole home.

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A Truly Open Smart Home Ecosystem Should “Just Work”

If we’ve seen anything over the past decade, it’s that no single platform is going to dominate the whole home experience the way iOS and Android have controlled mobile. A new strategy is needed.

From our experience in launching and developing the Yonomi App, we’ve found that consumers want choice in determining what devices to integrate with in their homes. They don’t want to be stuck with one or two brands for the whole home just because they bought a particular lock or light bulb.

In fact, they may choose different brands of locks or light bulbs for different rooms of the house when given the choice. Each home has different needs and each consumer has different tastes. The easier it is for everyone to choose the smart home set up that is best for them, the happier we will be.

An open device ecosystem isn’t just for the benefit of consumers either. When a new connected device can launch with hundreds of integrations on day one—including specialized routines and other kinds of in-app automation—it has a much better chance of being adopted in the market. With lower barriers to entry come more competition, and with more competition comes better innovation and faster growth.

By solving the interconnectivity issue with open, agnostic smart home ecosystems, the industry as a whole will see growth and adoption like never before. And for innovative smart home startups, it means that the chance of achieving a billion-dollar valuation will become more and more possible.


Part V: What The Next Billion Dollar Smart Home Startup Will Look Like

Get Part V of this series, along with Parts I-IV, delivered to you as a single e-book. In this concluding chapter we'll review all the changes that are needed in the smart home industry, and try to predict what the next billion dollar smart home startup will actually look like.

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