With brands looking to simplify consumer lives, home automation is a much bigger task than it might seem. It has a long way to go in the Indian market, especially for it to find takers in the mass segment
Wouldn’t it be nice if your home could practically manage itself at your beck and call with a voice command and a few taps on your smartphone screens? While an evolved, intelligent and self-sufficient system like Jarvis from the Iron Man movies may be a far cry from what is available in the market currently, it is not too bad a benchmark to aim for. Like any industry, the home automation space is trying to prove its relevance and application in consumer lives while trying to avoid being seen only as a gimmick or a luxury.
In India, as per a Research and Markets report, the home automation market is expected to cross Rs 30,000 crore by 2022. The report finds that Delhi-NCR, Mumbai, Pune, Ahmedabad and Bengaluru account for a combined market share of over 50% currently. With products by legacy brands, local players, international brands and start-ups to choose from, home automation is increasingly seeing adoption in the upwardly mobile, technologically savvy and experiment-pro consumer segment.
Smart products, but who’s buying?
Schneider Electric India with its current range of home automation products, sees uptake among the uber-luxury category which includes homes of movie stars, sport stars, business tycoons and the likes. That isn’t to say that automation is absolutely unaffordable. Shrinivas Chebbi, president — partner and eco buildings business, Schneider Electric India informs that the company has launched smart home functionalities to cater to consumers purchasing new homes in the Rs 60 lakh-Rs 1.2 crore bracket. “We have developed solutions for, say, a two-BHK of approximately 1,000 sq ft which will cost about Rs 1 lakh,” Chebbi says.
This doesn’t mean alienating existing home owners. He further informs that some of the IoT technology doesn’t require redoing the switch boxes in the house; it is wireless with the switch box being overlaid with the IoT hardware turning it into a smart switch. Consumers today also get to choose whether to automate either just a room or just one aspect, which could be security or even entertainment. The drive for adoption will stem from easy and affordable availability of data (internet connectivity) and infrastructure in the form of connected devices (preferably with longer obsolescence cycles).
Nikhil Mathur, managing director, GfK South Asia points out, “A third of the sales value from panel TV in 2017 was from smart TVs, which grew 21% compared to the overall TV growth of 5%.” And products like Amazon Fire TV stick, etc may affect the growth of the consumer base for actual smart TVs in the shorter run. In the longer run, however, this adoption of low cost smart TV conversion methods will act as a catalyst to generate a higher user base for smart TVs, he feels.
Xiaomi India (the most recent brand entering the home automation space) launched Mi TVs (smart TVs) earlier this year with models priced between Rs 13,999-49,999. Some of the other smart products in India include the Mi Body Composition Scale priced at Rs 1,999; Mi Air Purifier 2 (Rs 8,999) and Mi Router 3C (Rs 999). The brand allows customers to discover its smart products at the Mi Home Experience stores in Delhi, Mumbai and Chennai. To push adoption of its smart products (and hardware products specifically), Raghu Reddy, head — category and online sales, Xiaomi India notes that the company’s hardware profit margin is indefinitely capped at 5%. Typically, smart home products need households with good wireless broadband based internet connectivity. “Based on various reports, currently the total number of these households in India is approximately 18-19 million,” Reddy says. “For smart home products to go mainstream, we need many more households on broadband internet for customers to see value in their smart home devices.”
A spokesperson from Panasonic Corporation informs that under its smart appliance range, the company has washing machines (with an automatic detergent input), robot vacuum cleaners (AI), smart speakers and door phones (enabled by smartphones) in Japan. “We forecast that 40% of all household appliances will be connected to the internet by 2030,” the spokesperson adds.
For home automation to take off in the Indian market in a big way, players will have to develop products/solutions to solve problems specific to the market. Ajay Gupta, partner, AT Kearney, clarifies that in markets such as Europe and the US, the use of IoT driven products is led by the consumer’s desire to have control over their homes both remotely and otherwise, for example, with security solutions. “In India, the potential market for premium security and entertainment solutions is six to 12 million households,” he deduces. A broader adoption of IoT driven products and solutions will need a timeline of three to five years.
The adoption tale
Discovery of these products requires an additional push from the brand side. In case of Schneider Electric, marketing and sales teams meet resident welfare associations to educate them. But a major chunk of adoption is developer-fulfilled. Havells’ home automation brand Crabtree India did advertise but that hasn’t proven to be its strongest channel. Vivek Yadav, SBU head and SVP, Havells India discloses, “Crabtree did advertise in the previous fiscal year but for home automation, advertising is not the best route. It is about getting awareness for Crabtree as a brand and getting associated with home automation. Engaging with builders and HNIs is a far better route than advertising.” Havells India uses its distribution strength of over 6,000 partners and has identified a set of partners that are willing to collaborate to create user experiences in their showrooms. The company is also targeting architects (more than 2,000) and interior designers from across the country for their engagement programmes.
Gerard Tan, senior director — APAC, GfK points out that the ecosystem products operate in needs to be given more attention. Today’s consumers use myriad products from different brands which may or may not ‘speak’ to each other which may pose challenges, he opines.
A couple of companies are talking about working with large operators where initially, the equipment will come at zero cost and eventually the customer subscribes to it by paying a nominal charge of `400-500 a month. Large telecom and DTH operators like Airtel, Vodafone and Tata Sky can start with this as they have the reach. “If these players start working on this model, then it will be easier for smart solution providers to reach a larger segment,” Yadav of Havells concludes.