Penetration of devices

THE

CONNECTED HOME MARKET 2.5x 3x

1%
Households

7.
with +$100K 7%

income are: more likely to more likely to have

In the span of a few short years, connected devices have entered the homes 6%

3%
of millions of Americans, and are now poised for a new wave of growth. be connected. multiple devices.

5.
In this survey, approximately 2,000 U.S. households were asked for their views 5%

2%
on the connected home, revealing distinct customer segments and key

4.

5%
issues that need to be tackled in order to unlock this growth. 4%

3.
3%

2%

1%
1%
Current Device Owners Where Users Purchase

2.

8%

8%
7%

2.
7%

2.

5%
2%

1.
3%

3%

1.
1.
1.
Their Devices (Retailers)

1%

1%
1.

0%

0%
1.

1.
Any Device

9%

1.

1.
1.

1.
1%

0.
16%

Security and Safety

SECURITY UTILITIES WELLNESS
11% AND SAFETY MANAGEMENT MONITORING
Security Utilities Wellness Smart Smart
and Safety Management Monitoring Appliances Entertainment
Utilities Management
1. Connected smoke/CO detector 1. Connected thermostat 1. Vitals data uploading 1. Connected washer/dryer/dishwasher 1. Multi-room music
6% Home improvement
2. Seamless audio/video playback
32 39 3 retailer 2. Remote video 2. Connected lighting 2. Connected scale 2. Connected stove/oven
3. Connected lock 3. Connected energy tracking 3. Elderly/child activity uploading 3. Connected refrigerator/pantry 3. Room-controlling home theater
Smart Appliances
4. Connected leak detector 4. Connected lawn sprinklers 4. Connected pill case 4. Connected cleaning/vacuum
4% Online retailer
22 21 29
Wellness Monitoring How Users Adopt Their Devices Awareness Channels for Connected Home Products
3% Big box store
8 14 23 SECURITY AND SAFETY UTILITIES MANAGEMENT WELLNESS MONITORING USER NON-USER
Smart Entertainment (Retailers)
MEDIA PROVIDER
3% Health care provider From a contractor SAW TV AD OFFERED BY HOME SECURITY COMPANY
0 0 21 28 18 7
27
Direct device purchase OFFERED BY CABLE/TELCO/MOBILE COMPANY
Connected Home Users READ ONLINE 15 7
Home electronics
Utility company 23
11 7 7 retailer OFFERED BY UTILITIES COMPANY
26% 56%
19
14 9
Cable company READ IN NEWSPAPER/MAGAZINE
own 3+ devices own 1 device Specialty dealer RECOMMENDED BY HEALTH CARE PROVIDER
18
10 3 4 17 11 4
Telephone company
Product manufacturer
6 7 2 Home security/monitoring WORD OF MOUTH STORE VISIT/DEMOS
HEARD FROM FRIENDS/FAMILY SAW AT HOME IMPROVEMENT STORE
Home appliance 0 10 20 30 40 50 60 70 22 15 16 8
7 3 2 retailer READ ON A SOCIAL NETWORK SAW PRODUCT/DEMO AT ELECTRONICS STORE
13 6 16 6
Overall, non-users have similar
~40 % 2550 %
18 % store preferences for future
connected home purchases. of connected home solutions are more devices are purchased when a
own 2 devices
purchased from service providers. customer buys from a service provider.
 Adoption Leading Attitudes
SEGMENTATION Early tech adopter

11% 12% 14% 16% 33% Average tech adopter

Late tech adopter

Budget conscious
Traditionalist 13%
Invests in home
~$35K per year
24%
4564 years old Image conscious
Big box/home
improvement stores 19% Does not plan on moving

Single family Will likely move within 5 years

Suburban/rural
Cares about family well-being
Single/married with 22%
no children in house 21% Will pay more for green products

Considers themselves green

Urban Dweller Family First Affluent Nester Social Climber Traditionalist Urban Dweller Family First Affluent Nester Social Climber

~$40K per year ~$40K per year ~$75K per year ~$100K+ per year

2534 years old 2544 years old 4564 years old 2544 years old
Service providers/ Online retailers/ Home improvement/ Direct from
online retailers service providers service providers manufacturer website Traditionalist Urban Dweller Family First Affluent Nester Social Climber
Apartment Single family Single family Single family
Interests Interests Interests Interests Interests
Urban Suburban Suburban Suburban/urban
Security 18% Security 30% Security 32% Security 27% Utilities 40%
Single/married with Married with 12 kids Married with no children Married with 12 kids
Utilities 10% Utilities 26% Wellness 19% Utilities 24% Security 39%
no children in house
Entertainment 3% Wellness 26% Entertainment 17% Wellness 19% Wellness 32%

Barriers to Adoption Top Devices Top Devices Top Devices Top Devices Top Devices

T Connected Thermostat Connected Thermostat Remote Video Feed Connected Thermostat Connected Thermostat
INT
E RES EN Lighting Energy Tracking Connected Lock Energy Tracking Connected Lock
I NT T
Connected Smoke Detector Connected Smoke Detector Connected Smoke Detector Connected Smoke Detector Remote Video Feed

Key Barriers Key Barriers Key Barriers Key Barriers Key Barriers
SS

PU

Lowest awareness of any segment Skeptical that products work well Most concerned that devices will Lack recognition of need for Most likely to believe that
NE

RC

be difficult to install and use products technology is still developing

RE

Most deterred by price High concerns over price

HAS
AWA

High concerns over price Believe that technology is still Concerned about product setup
Concerned over setup and usability Deterred by current suite of
developing and usage
E

available products
Concerned over privacy and hacking
Concerned over privacy and hacking
 Non-Users Frequently Exhibit Behaviors That Indicate Latent Demand for Connected Security and Utility Solutions.*

INTEREST & AWARENESS

51% 41% 36 % 35 % 31%

accidentally left accidentally left wonder whats happening leave a/c running (even cant remember if they
Awareness & Interest in Connected Devices
lights on TV/appliance on at home while away when its comfortable) locked doors/windows

* Percent of non-users who exhibit behavior at least once a week.

INTEREST AWARENESS

TOP SERVICE TOP DEVICE Interested Non-Users Reasons for Not Purchasing
Brand Awareness
PROVIDER MANUFACTURER
Remote video feed
(% rating top 3 reason)
Connected lock Security and Safety Utilities Management

37% 21%
Security Connected smoke/CO detector
and Safety Connected leak detector

6% 11% 66% 39% 37%

Connected thermostat

Connected lighting Service provider brands enjoy a huge lead

Too expensive Not sure how Technology is
Utilities
Connected energy tracking in awareness over device brands. well it works still developing
Management Connected lawn sprinklers

27% 24% 22%

Connected scale

Connected pill case

Wellness Vitals data uploading

56% 29% who purchased
Monitoring Elderly/child activity uploading
of security and of utilities
devices, dont Concerned about Security/utilities/health Didnt see the need
safety users management users know the brand. privacy not a big concern until recently
Connected cleaning/vacuum

Connected washer/dryer/dishwasher

~ 50 % of multiple device owners are

Connected stove/oven Consumers in general feel strongly about but only a fraction see them as barriers
Smart the privacy and safety of their data... to connected home adoption, and those
Appliances
Connected refrigerator/pantry interested in purchasing a hub. who do dont list it as a top reason.
Connected pool cleaner

Connected lawn mower

TOP 3 BUYING FACTORS TOP 3 FEATURES
73% 6 % say privacy concerns are
86% 68%
Connected pet food dispenser are concerned about privacy. their top reason for not purchasing.
Price Operates smart devices at preset times

66% 2%
84 % 68%
Seamless audio/video playback Connects devices without need
Features and functionality to install individual controls are concerned about identity theft. are afraid of being hacked.
Multi-room music
Smart

79 % 67%
Entertainment Room-controlling home theater Convenience of managing
Ease of setup through a single app
0% 25% 50% 75% 100%
 Customer Satisfaction by Device Monthly service price Ease of use

77% 50%
58%
SATISFACTION
Customer support Available features

75% 54%
Product design

TOP 2 BEST FEATURES TOP 2 WORST FEATURES Vitals Data Uploading 54%
Top 3 Key Buying Factors* Customer support Product design Available features Cost of device
72% 52% 67% 55%
SERVICE BUYERS
62% Interface/app control Cost of device 60% Customer support Product design
SAFETY AND UTILITIES 65% 54% 64% 56%
SECURITY MANAGEMENT Ease of use

Connected Lock 65%

82% Ease of use 76% Monthly service price
Remote Video Feed

Customer service Available features Ease of use Interface/app control

81% Monthly service price 74% Cost of device 61% 44% 44% 30%
49% Monthly service price Privacy/safety concerns 37% Reliability Ability to connect to other devices

80% Reliability 71% Safety of my information

54% 44% 42% 31%
Interface/app control Monthly service price
Connected 44% Connected Smoke/ 31%
Thermostat CO Detector
DEVICE BUYERS

SAFETY & UTILITIES WELLNESS SMART SMART

SECURITY MGMT MONITORING APPLIANCES ENTMT Customer Satisfaction by provider type*

Ease of Use Reliability Cost of Device Available Features SERVICE BUYERS DEVICE BUYERS

100% SAFETY AND SECURITY UTILITIES MGMT WELLNESS MONITORING

SHOPPERS SHOPPERS SHOPPERS

88% 90% HIGHEST SATISFACTION

90%
87% 88% 87%
85% 86%
Ease of use Ease of setup/installation Monthly service price
80%
79% Ease of use Ease of use
75%
71% 70% 70% LOWEST SATISFACTION
68%
65% Connects to other devices Monthly service price Features available
60%
Interface/app control Connects to other devices
57%

52%
50%
0% 25% 50% 75% 0% 25% 50% 75% 0% 25% 50% 75%

40%

* Percent is based on users top 3 factors. * Percent is based on users top 2 features.
 Services vs. Devices What the Average Shopper Will Buy

WILLINGNESS TO PAY
PER YEAR FOR SERVICE ONE-TIME FEE FOR DEVICE

$310 $312 SAFETY AND SECURITY

SHOPPERS
UTILITIES MANAGEMENT
SHOPPERS
WELLNESS MONITORING
SHOPPERS
Music and video/specialty wellness
applications: POTENTIAL FOR Popular security applications:
NICHE, HIGH-END MARKETS READY FOR MASS ADOPTION
$234 Connected
$224 $219 0.69
Smoke/CO
detector
0.63 Energy-saving
thermostat
0.76
scale

10 15 20 25 30
HIGH

24
1 $166 0.61 Remote
locks
0.60
Connected
lighting Elderly
22 0.65 parent/child
activity monitor
Connected
2 0.58 Auto-adjusting
19 leak detectors 0.59
AVERAGE WILLINGNESS TO PAY

thermostat
6 23
3
Smart health
18 4 0.53 Remote 0.62
21 Connected monitor
video feed
8 0.56 energy
7 5
15 tracking
17 10 0.50 Roving smart
12
9 14 cameras 0.49 Personalized
0.59 Connected
13 thermostat pill case
16
0.46 Auto-door
Learning
locks 0.43
thermostat
11 Connected
Connected
0.53
20 0.39 health monitor
door phones
0.30 Connected
LOW INTEREST HIGH lawn sprinkler
SAFETY AND SECURITY UTILITIES WELLNESS 0.39 Connected heart
SHOPPERS MANAGEMENT MONITORING 0.31 Selective rate tracker
entrance
Thermostats/energy and safety monitoring: HIGH INTEREST BUT SHOPPERS SHOPPERS
VALUE PROPOSITION NOT UNDERSTOOD BY CONSUMERS

Customers Willing to Pay More Than $20/Month

Safety and Security Utilities Management 19. Elderly parent/child
activity monitor
29% 75%
45% 12% 6%
1. Roving camera 10. Personalized thermostat
2. Remote video feed 11. Smart lights 20. Connected heart
rate tracker of non-users interested in buying safety and of interested buyers are willing to pay 10%
3. Auto-door locks 12. Auto-adjusting thermostat
security services are interested in 24/7 monitoring. more for smart appliances over basic models.
4. Remote door locks 13. Lawn sprinklers Smart Entertainment

5. Smoke/CO detector 14. Energy monitor
6. Selective entrance 15. Learning thermostat
7. Remote window shades
8. Door phones
Wellness Monitoring
16. Connected scale
9. Leak detector
17. Smart health monitor
18. Connected health
monitor
43% ~60%
21. Seamless audio/video
22. Multi-room music
23. Smart music
of interested non-users are willing to pay of customers would prefer to pay
a monthly fee for an energy analytics service. a one-time price for their devices.
24. Connected hub