The High Tech House

By: Phil Morettini
Submitted: 2007-01-17 15:51:28
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So, looking around for a really big opportunity that isn’t yet being served? Look no further than the High Tech house.

Yes, I know, all the big computer and consumer electronics companies are investing billions in the market for pumping entertainment content via fat pipes into and throughout the home. And no doubt, this is becoming a very large market that will ultimately be huge. But that’s not what I’m talking about. I believe that there is an even larger, but more mundane opportunity for software, semiconductor and electronics companies that has been largely ignored.

This new concept has been alluded to and talked about in theoretical, general terms by futurist speakers at trade shows and TV sound bites for many years. So in that sense it’s not really new. But little has been done in terms of actual investment in companies and product development to attack this potentially enormous market. So what exactly am I talking about? Do you remember several years back all of the snickering about the Internet Toaster?

Let’s call this the Internet Refrigerator market.

What’s so compelling about this potential new market segment vs. the home entertainment opportunity that nearly every monster high tech company is already chasing? Well, of course, the first attractive thing is that not everyone is chasing it yet! As far as I can tell, very few are. The second thing that pops up when considering this potential market is that there should be an attractive payback available to the customer. That’s something the entertainment space will never be able to say—it’s sexy, fun and high profile—but it’s looking to take a share of the already stretched consumer wallet for discretionary purchases. Thirdly, all of the technology necessary is already in existence. In the most recent study on broadband penetration this year, Nielson/Netratings found that 56% of US homes connected to the Internet are now using a broadband connection. Worldwide, almost two thirds of all Internet connects are broadband. The broadband world has arrived, and it’s time to start utilizing it for something other than simply surfing the World Wide Web. And finally, this concept should yield substantial benefit the US and world economies by driving costs out of some of the most labor intensive, inefficient tasks in modern western society. Yes, I said substantial economic benefits. Curious yet? Read on!

I’m proposing that all of the major systems and appliances in our high tech homes be Internet-enabled and connected to our home network. Let’s look at the benefits of this concept using an example of our Internet Refrigerator.

The Problem

This example is an amalgamation of similar experiences I’ve had many times since reaching adulthood. You’re employed full time at a job that you drive to 15-45 minutes away from your house. If you’re married, your spouse also is likely similarly employed these days. A major appliance such as your refrigerator breaks down—and of course it’s outside of the warranty period (they plan it that way!). You either call the store you originally purchased the appliance from, or if you’re the thrifty type, shop around for a lower cost independent service provider. What happens next? Mostly frustration, if my experience is typical.

First off, no one can make it out on a service call for three days (there’s a reason for this—these are highly inefficient businesses). You still don’t even know what’s wrong with your Fridge, and by the way—the food is starting to rot. In addition to having to wait three days, no one will give you an actual specific “appointment” these days. Most often they give you the dreaded “4 hour window” appointment. Oh, and by the way, there is a minimum charge of $65 just to come to your house. No guarantees, no refunds even if they can’t fix it. But what can you do? You swallow hard, eat out for the next 3 days (at added expense to your budget and waistline) and wait for your appointment.

The day of the appointment finally comes and you head home for your 4-hour window, much to your boss’s consternation. Four hours come and go, and of course no one shows up. You call the service company, and as usual, “they’re running late”. (This happens because these inefficient service companies are in such demand that don’t need to have a customer orientation, and utilize very little technology to optimize their business). So you wait an additional hour for them to get there, and then another hour to diagnose the problem. Pretty much a whole day of work productivity shot—I hope that you weren’t getting paid by the hour! But it gets even better. Upon diagnosing the problem, the repairman says “It’s $200 for the part and $150 for the labor. Unfortunately I don’t have the part available in the truck—I’ll have to order it.” Great! Now you’re scheduling another appointment with a 4-hour window—you get the drill at this point. It’s pretty ugly. In this modern world, there’s got to be a way. And I believe that there is.

The Solution

What if that refrigerator was instrumented and outfitted with a cheap microcontroller, embedded web server software and Ethernet or WI-FI Port? Well, especially with all of the broadband households now online, you could make major changes to this productivity-sapping service fire drill.

The first thing you would do under this new scenario is to call up your preferred service provider and explain the problem. After granting them access to the Refrigerator’s IP address using the “Home Network Console” software on your PC, the service provider would run a diagnostic software program on your Fridge. With luck they could diagnose the problem right then and there. Maybe all that’s required is a minor tweaking of the appliance setting that can be done remotely or by you, and only a small service charge is due. Even if it’s a failed part, the service provider could check their parts inventory immediately and order the part if it’s out of stock. Only when the part is available would a service truck be dispatched for a quick installation.

Think of how much service technician time would be saved. Or how much gas saved, fewer trucks on the road, not to mention the productivity regained by the hapless customer waiting at home. The service providers would become much more efficient, allowing them to provide better service, at lower prices, using less techs. Customers would be thrilled and have added productivity in their own jobs. And I believe that the first Appliance manufacturers offering this capability would have a huge advantage and an opportunity to quickly gain market share while enhancing their brand as “cutting edge”. This opportunity applies to just about every capital purchase in the home: Refrigerators, Washers & Dryers, Home Entertainment, Furnaces, Air Conditioners, Stoves, Dishwashers, etc.

Some of you may think this sounds great but it’s too futuristic and not realistic. Yet as I mentioned above, all of the necessary technology exists today. When you think about it, this idea is really just an extension of the software being installed in most modern computers which allows control and problem diagnosis remotely by an IT professional. And the campaign for acceptance of this concept could piggyback the huge investment by companies pushing entertainment and communications products/services over broadband pipes, which is already in process.

Who and When?

So why hasn’t this happened yet? Why is this being ignored, while everyone dukes it out over home entertainment? It’s hard to say because it could really be the proverbial “Next Big Thing.”. But again, it’s not very sexy. And the Appliance manufacturers are not technology-driven companies, and as a result don’t’ innovate or adopt new technology very quickly. But this is going to happen, it’s just too big. It is only a question of when. So what’s it going to take? Maybe it will be a smaller appliance manufacturer who needs an edge to compete, and is nimble and more willing to innovate and take risks. Or it might possibly occur when a network/systems management software company looking for a way to grow, decides to extend their core competency from B2B to B2C by approaching appliance manufacturers with market-ready software. Or an embedded software or silicon company that sees the opportunity to extend their microcontroller or embedded web server from the industrial world to the enormous consumer market.

When will it happen? I don’t know. I expected it to be well underway by now. But sometimes, big ideas are slow to catch on. With this one, I’m convinced it’s just a matter of time. Will your company be the one to capitalize?

Phil Morettini is the Author and President of PJM Consulting, a Managment Consultancy to Software and High Tech Companies. PJM Consulting executes special, strategic projects and can also supply interim senior management in General Management (CEO, COO, Division Manager), Product Marketing, M&A, Distribution Channels and Business Development. You can contact Phil on the PJM Consulting Website (http://www.pjmconsult.com/data/contactus.htm) or via email at info@pjmconsult.com

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