Consumer Receptivity To Home Connected Capabilities

Connected Home Roadmap Digital Home Forum

Prepared Exclusively for

February 17, 20111

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Research ObjectivesThe primary objectives of this research are to:• Identify and refine connected home opportunities• Understand the need for these opportunities• Quantify the strength of these opportunities• Determine if important differences exist among different market

populations and demographics

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Two Phased MethodologyPhase 1: Focus Groups• Primary objective: Identify, validate and refine a list of home connection capabilities to be

quantitatively evaluated in the second phase• 3 Geographic Areas:

– Northeast: Fairfield Connecticut– West: Orange County California– Canada: Mississauga Ontario

• Two Consumer Market Segments:– Moderate income ($50,000 to $150,000 total yearly household income)– High income ($150,000 to $500,000 total yearly household income)

Phase 2: Web-based Consumer Interviews• Primary objective: Quantify the opportunity size of capabilities identified in Phase 1

– Determine the importance of each capability– Assess the level of consumer satisfaction with the options currently available for each – Measure market willingness to pay

• 2 National Markets:– US (1,300 interviews)– Canada (700 interviews)

• Respondent Criteria:– Home-owner decision makers with household income of at least $50,000– High income households ($150,000+) were over-sampled to ensure an accurate reading – Respondent data weighted back to US and Canadian census proportions

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Five Connected Home Capability Areas Examined

• Energy and Green Living

• Safety and Security

• Home Entertainment and Computing

• Home Control and Monitoring

• Health, Wellness and Eldercare

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Strong Opportunities Exist For Home Connection• The largest home connected opportunities lie in the Energy and Green Living category:

– Products/services that enable homeowners to manage, track and reduce energy consumption

• Safety and Security capabilities hold the second largest opportunities:– Linkage of critical home functions to existing home security systems:

• Interior and exterior lighting• Electricity (i.e. power loss notification)• Comfort systems (i.e. loss of heating and cooling) • Water (i.e. flood notification)

• Opportunities in the Entertainment and Computing space are weaker– The strongest opportunity is for a universal charging device (not a true home connection capability)– Multi-room DVD/PDR and HD quality high speed wireless connection appeal to the more innovative and upscale

demographic market segments

• None of the Home Control and Monitoring capabilities evaluated generated strong opportunity scores

• Opportunity scores for Health, Wellness and Eldercare were the lowest of the five categories• In all five categories, opportunities are strongest among a few demographics:

– Younger decision makers (respondents 25- 44 have higher scores than those 45 – 64 and they have higher scores than those 65+)

– Innovators and Early Adopters– Higher Income decision makers– Decision makers of larger homes and/or with one or more children

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Capabilities Consumers Want• From the perspective of the connected home, consumers want access and control

– The ability to access information from anywhere using multiple devices (whatever device is most convenient at the time)

– To obtain information needed, make a decision, and impact whatever change is necessary

• While everyone did not have the same requirements, nearly everyone expected to have remote access, monitoring and control capabilities

– The device of choice a cell phone• The explosion of smart phones combined with seemingly limitless "apps“ has created an expectation that

anything can be accomplished with a cell phone• Further support for cell phones as a primary interface is that everyone has them and most carries them

everywhere, even at home

• Some participants indicated a desire to access light, temperature and other home comfort/ security controls from a universal entertainment system remote

• A few participants indicated a desire for voice recognition capabilities for such activities as home comfort/security and grocery lists, menu selection and meal preparation

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US: Energy & Green Living Opportunity LandscapeThere is a substantial market opportunity for energy reduction products/services:• Systems that track where and when energy and water is being consumed• Products that schedule and control appliance usage• Products that allow users to centrally control room temp and lighting

Table Stakes

LimitedOpportunity

Solid O

pportunity

>10

High O

pportunity

>12

Extre

me

Opportu

nity >

15

• Eliminate phantom drain • Individual room control

• Programmable lighting controls • Analyze appliance efficiency • Monitor/ track electricity consumption • Water conservation/ monitoring system • Off-peak appliance scheduling • Energy management program

Allowing energy provider to remotely adjusting temps

• Automatic maintenance notification • Programmable window covering

Over-Served

Appropriately Served Under-Served

Percent top 2 box Satisfaction and Importance scores

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Energy and Green Living

8

Table Stakes

LimitedOpportunity

Solid O

pportunity

>10

High O

pportunity

>12

Extre

me

Opportu

nity >

15

Over-Served

Appropriately Served Under-Served

Canada: Energy & Green Living Opportunity Landscape• As in the US, there is substantial market opportunity for energy

management/control products/services:– Systems that track where and when energy and water is being consumed– Products that schedule and control appliance usage– Products that allow user to centrally control room temp and lighting

• Eliminate phantom drain • Individual room control

• Programmable lighting controls • Analyze appliance efficiency • Monitor/ track electricity consumption • Water conservation/ monitoring system • Off-peak appliance scheduling • Energy management program

Allowing energy provider to remotely adjusting temps

• Automatic maintenance notification • Programmable window covering

Percent top 2 box Satisfaction and Importance scores

8

Energy and Green Living

9

Willingness To Pay

• For several high opportunity areas, many of those dissatisfied with their current situation are willing to pay for improved capabilities

– Programmable lighting controls– Eliminating phantom energy drain– Individual room temperature and lighting control

You appear to be most dissatisfied with your ability to perform the following activities. How willing would you be to pay for a better solution to each?

Base are those very/somewhat dissatisfied with their current ability to perform each capability

Very Strong Willingness >75%Strong Willingness >65%Mild Willingness >50%Weak Willingness <50%

Energy and Green Living

= Solid Opportunity Score

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Markets Expect To Purchase Energy Solutions From Their Utility/Energy Provider

Who would you be most likely to purchase improved solutions from?

• Utility Companies are seen in high regard and are who most home decision makers look to for help in managing their energy usage

“I could see it with the utility company, and that it should come on your bill as a monthly thing. It could show you that this percentage went to lights, this percentage went to heating, etc.” CT Moderate Income Group

• Over one quarter of home decision makers look to their energy provider as a source of energy management products

• Fewer expect brown or white goods manufacturers to offer these products

Energy and Green Living

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The Market Is Divided On How Capabilities Will Work

Which would you most prefer?

Energy and Green Living

• Over one-third of respondents prefer energy management programs to be PC based

“It would be nice if our home PC would have access to the appliances where we can see the energy usage that’s going on” CT Moderate Income Focus Group

• An equal number prefer these capabilities to operate as stand-alone devices“Something that I would jump on right now is a wireless module that you plug into an appliance and let it run a week and it transmits how much electricity the appliance is using.” CA High Income Focus Group

• Few are interested in purchasing these capabilities as services

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US: Safety and Security Opportunity LandscapeThere is a strong opportunity for two safety/security capabilities• Home decision makers want immediate notification of home problems• They want to link their lighting with their security system• Other capabilities could easily become opportunities as this category grows

– Remote control, monitoring and interaction with lighting, safety and security systems

Table Stakes

LimitedOpportunity

Solid O

pportunity

>10

High O

pportunity

>12

Extre

me

Opportu

nity >

15

Over-Served

Appropriately Served Under-Served

• Notification of alarms, power/heat loss, water leak• Connect home lights to security systems

• Internet monitoring of home security cameras • Keyless home access

• One touch control of alarm, door locks, lights, etc • Notification of basement moisture • Seeing who is at the door on your TV • Two way communication with alarm monitoring company

Percent top 2 box Satisfaction and Importance scores

12

Safety and Security

13

Canada: Safety and Security Opportunity Landscape

Table Stakes

LimitedOpportunity

Solid O

pportunity

>10

High O

pportunity

>12

Extre

me

Opportu

nity >

15

Over-Served

Appropriately Served Under-Served

• Remote notification of basement moisture • Notification of alarms, power/heat loss, water leak• Connect home lights to security systems

• Remote Camera monitoring via internet

• Keyless home access

• One touch control of alarm, door locks, lights, etc • Seeing who is at the door on your TV • Two way communication with alarm monitoring company

Percent top 2 box Satisfaction and Importance scores

There is strong market demand for several safety/security capabilities• Home decision makers want immediate notification of major threats

– Basement flooding, power/heat loss, security

• They want to link their lighting with their security system• Other capabilities could quickly become opportunities as this category grows

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Safety and Security

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Willingness To Pay

Safety and Security

• Willingness to pay is strong for a few safety and security notification features– Remote notification of basement flooding– Remote notification of alarms, power loss, etc– Keyless home access.

= Solid Opportunity Score

You appear to be most dissatisfied with your ability to perform the following activities. How willing would you be to pay for a better solution to each?

Base are those very/somewhat dissatisfied with their current ability to perform each capability

Very Strong Willingness >75%Strong Willingness >65%Mild Willingness >50%Weak Willingness <50%

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Home Decision Makers Expect To Purchase Safety/Security Solutions From Monitoring Companies

Where would you most prefer to purchase improved solutions from?

• Approximately half those interviewed want to purchase these solutions from their security alarm monitoring services

• Nearly one third prefer to purchase them from a big box retailer

• Few want to purchase them directly from the manufacturer

Safety and Security

16

The Market Does Not Want To Be Tied To A Contract

Which would you most prefer?

• Most home decision makers prefer the “alarm monitoring” business model– Purchase any equipment needed and pay a monthly service fee

• A large minority of home decision makers would prefer to purchase the equipment outright with no monitoring fee

• Few want to be tied to a long term contract, even with little or no upfront cost

Safety and Security

17

US: Entertainment & Computing Opportunity Landscape

Table Stakes

LimitedOpportunity

Solid O

pportunity

>10

High O

pportunity

>12

Extre

me

Opportu

nity >

15

Over-Served

Appropriately Served Under-Served

Universal Charging Device

• Multi-room DVD• High speed HD wireless connection

• Voice activated TV internet search engine • 3-D TV programming • Interacting with TV content

• 1st run Video On-Demand • On-Screen Caller-ID • TV widgets • Wirelessly downloading content to car • Voice activated TV internet search engine

Percent top 2 box Satisfaction and Importance scores

While there is a strong opportunity for a universal charging device, there appears to be limited opportunity for true home automation capabilities•Demand is more demographically driven

– Especially for whole house entertainment networking capabilities:• Multi-room DVD• High speed HD wireless

Home Entertainment and Computing

18

Canada:Entertainment & Computing Opportunity Landscape

Table Stakes

LimitedOpportunity

Solid O

pportunity

>10

High O

pportunity

>12

Extre

me

Opportu

nity >

15

Over-Served

Appropriately Served Under-Served

Universal Charging Device

• Multi-room PDR• High speed HD wireless connection

• Voice activated TV internet search engine • 3-D TV programming • Interacting with TV content

• 1st run Video On-Demand • On-Screen Caller-ID • TV widgets • Wirelessly downloading content to car • Voice activated TV internet search engine

Percent top 2 box Satisfaction and Importance scores

While there is a strong opportunity for a universal charging device, there appears to be limited opportunity for true home automation capabilities•Demand may be more demographically driven

– Especially for whole house entertainment networking capabilities:• Multi-room PDR• High speed HD wireless

Home Entertainment and Computing

19

Willingness To Pay

• Home decision makers are highly likely to pay for a universal charging device• They are also very willing to pay for other improvements important to them:

– High speed HD quality wireless– Watching recorded content in any room

• There is even strong willing to pay for some less important capabilities:– On-demand 1st run movies– TV internet access

You appear to be most dissatisfied with your ability to perform the following activities. How willing would you be to pay for a better solution to each?

Base are those very/somewhat dissatisfied with their current ability to perform each capability

Very Strong Willingness >75%Strong Willingness >65%Mild Willingness >50%Weak Willingness <50%

Home Entertainment and Computing

= Solid Opportunity Score

20

Table Stakes

LimitedOpportunity

Solid O

pportunity

>10

High O

pportunity

>12

Extre

me

Opportu

nity >

15

Over-Served

Appropriately Served Under-Served

• Remote monitor/ control major home functions• Remote viewing home security cameras/

monitoring devices• Remote monitoring and controlling home PCs,

TVs and electronic games

Universal remote for TV, Cable/Satellite Box, Stereo Receiver, DVD, CD, PC, lights, and thermostat

US: Home Control & Monitoring Opportunity Landscape

Percent top 2 box Satisfaction and Importance scores

The opportunity for home control products is somewhat muted• A universal remote controlling TV, Cable/Satellite Box, Stereo Receiver,

DVD, CD, PC, lights, and temperature could easily become an opportunity if interest in this category expands

• Opportunity in this category is more demographically segmented

20

Home Control and Monitoring

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Canada:Home Control & Monitoring Opportunity Landscape

As in the US, the opportunity for home control products is quite limited• A universal remote controlling TV, Cable/Satellite Box, Stereo Receiver,

DVD, CD, PC, lights, and temperature could easily become an opportunity if interest in this category expands

• Opportunities in this category are more demographically segmented

Table Stakes

LimitedOpportunity

Solid O

pportunity

>10

High O

pportunity

>12

Extre

me

Opportu

nity >

15

Over-Served

Appropriately Served Under-Served

• Remote monitor/ control major home functions• Remote viewing home security cameras/

monitoring devices• Remote monitoring and controlling home PCs,

TVs and electronic games

Universal remote for TV, Cable/Satellite Box, Stereo Receiver, DVD, CD, PC, lights, and thermostat

Percent top 2 box Satisfaction and Importance scores

21

Home Control and Monitoring

22

Willingness To Pay

• In spite of weak opportunity scores, willingness to pay for many home control and monitoring capabilities is surprisingly strong:

– Universal remote– Remotely control of all major home functions– Remote access to home security cameras

You appear to be most dissatisfied with your ability to perform the following activities. How willing would you be to pay for a better solution to each?

Base are those very/somewhat dissatisfied with their current ability to perform each capability

Very Strong Willingness >75%Strong Willingness >65%Mild Willingness >50%Weak Willingness <50%

Home Control and Monitoring

= Solid Opportunity Score

23

US: Health, Wellness, Eldercare Opportunity LandscapeOpportunities are extremely limited in this category• While current demand is insufficient, Electronic Personal Medical History could easily

become a key opportunity in the near future especially among some market segments

Table Stakes

LimitedOpportunity

Solid O

pportunity

>10

High O

pportunity

>12

Extre

me

Opportu

nity >

15

Over-Served

Appropriately Served Under-Served

• One touch audio/video system connecting elderly relatives with family members

• Generate meals based on preferences and existing food inventory

• Monitor, dispense and control of prescription medication

• Electronically track/ update food inventories • Remote generation of shopping list • Store, pre-schedule/ remotely cook meals up

Electronic personal medical history

Percent top 2 box Satisfaction and Importance scores

Health, Wellness and Eldercare

24

Canada:Health, Wellness, Eldercare Opportunity Landscape

Opportunities are extremely limited in this category– The market does not have sufficient demand for any of the Health, Wellness and Eldercare

opportunities evaluated

Table Stakes

LimitedOpportunity

Solid O

pportunity

>10

High O

pportunity

>12

Extre

me

Opportu

nity >

15

Over-Served

Appropriately Served Under-Served

• Electronic personal medical history• One touch audio/video system connecting elderly

relatives with family members • Remote monitor, dispense and control medication • Electronic meals planning based on food inventory

• Electronically track food inventories • Remote shopping list generation • Connected device to store and cook

meals

Percent top 2 box Satisfaction and Importance scores

Health, Wellness and Eldercare

25

Willingness To Pay

• There is relatively weak willingness pay for improvements in this category– This correlates with the category’s low opportunity scores

• The one exception is a one-touch audio/video system for the elderly

You appear to be most dissatisfied with your ability to perform the following activities. How willing would you be to pay for a better solution to each?

Base are those very/somewhat dissatisfied with their current ability to perform each capability

Very Strong Willingness >75%Strong Willingness >65%Mild Willingness >50%Weak Willingness <50%

Health, Wellness and Eldercare

= Solid Opportunity Score