HomeTech.fm - Episode 279 - Smart-Home Cheers and Consumer Fears with Brad Russell of Parks Associates

Episode Date: November 1, 2019

On this episode of HomeTech: We are joined by Brad Russel, Parks Associates’ Research Director, Connected Home. A leading market research and consulting company, Parks Associates is a go-to resource for anyone looking for a data-driven understanding of the smart home market. Our conversation with Brad covers the current state of the industry along with the “cheers and fears” driving connected home adoption. Don’t miss it! That, plus a very busy week in home tech news including: Is Wink in its death throes? Apple pulls a HomePod update after reports of bricked devices. Sonos launches a trade-in program. Playstation Vue is shutting down. More details emerge regarding HBO’s forthcoming streaming service, HBO Max. The Apple TV app is officially available on Amazon Fire TV devices. Reports that Apple is ramping up its HomeKit efforts. And more…

The Home Tech Podcast is supported by you. To find out more, go to hometech.fm support. This is the Home Tech Podcast for Friday, November 1st. From Sarasota, Florida, I'm Seth Johnson. And from Denver, Colorado, I'm Jason Griffin. How are you doing, Seth? Good, man. I'm looking at it at 81 degrees. Had a record high of 92 yesterday. Wow. I'm sure you're doing the same, right? Yeah, we're in kind of a deep freeze here. I went out to dinner with a friend last night. I drove home and the temperature on the car read

12 degrees. That's Fahrenheit. I know we've got international listeners and that's, I think that's fairly warm in Celsius, but that's pretty cold in Fahrenheit, especially for this early in the winter. Yeah, yeah. Well, I mean, for all intents and purposes, we're not having the bad weather they're having in California. Holy cow. Fire season now they have fire season. That's absolutely insane. I can't, I can't imagine that it's so bad up there. It really is. You're, you're staying cool. I'm staying hot. And, uh, well, yeah, it's so the week of Halloween, October. That's right. That's right. Seth, I got a different topic for you. I think we've got a new candidate for your...

I'm not even sure what name we've settled on for this. Seth's Home Tech Graveyard? The Home Tech Cemetery. The Home Tech Cemetery. I think we've got one to keep on your radar. It looks like Wink is in its death throes, according to some reports online. So you might have a new addition.

I saw they were out there. According to, we'll put this link in the show notes, according to The Verge over there, they're saying that there wasn't some funding that didn't come through from one of their Dubai-based retail giant who was going to give them some money to keep running. And I guess the money hasn't come around or whatever. And the employees have been working for like seven, I think I've

had seven weeks or seven months without, I think it's seven weeks without paycheck or seven months without paycheck. It was insane. Whatever the month doesn't really matter. They're working without paychecks over there. I can't imagine that, uh, that this is going to be good long term for, for wink. This is, this is, this is that this is going to be good long-term for, for Wink. This is, this is, this is bad. This is about as bad as things get when, when paychecks don't come. Not a good sign. Yeah. Yeah. The payments have been late basically all year. They say going on seven weeks without a paycheck is creating a serious financial, uh, personal problems. I can only imagine that's, that's, that's crazy. It's just absolutely crazy.

Right. One says they've resorted to delivering pizzas to pay overdue bills, while others says they're borrowing money for meals. That really sucks. Oh, man. Yeah, it's your side job, right? Side hustle. You got to deliver pizzas, and during the day you work on... Oh, I guess, yeah, that's an individual. I was thinking as a company, they're out there delivering pizzas or something, which is kind of ridiculous, but no, that is very unfortunate. That's actually not something to laugh at. So, um, yeah. Anyone who's ever been through that experience of, of having payroll, uh, get delayed as, as I

unfortunately have once in my life, it's not a good experience and, uh, you know, definitely wish the best to those, uh, over at Wink. Yeah and, uh, you know, definitely wish the best to those, uh, over at Wink. Uh, but Seth, you know, silver lining, you might get a new addition to the, to the cemetery. Right. Right. And I'm sure they're there. Well, I know that they're extremely, uh, talented people over there. The Wink product and app has been pretty good from, from what everybody says. It, it really, people do like it, uh, the people that have it, but unfortunately, I mean, it's been a roller coaster of a ride for this product kind of from day one, really. It's been tough.

Yeah. It's been tough. Yeah. All right. Well, let's shift gears here. We're going to jump into some home tech headlines momentarily. But before we do that, I want to just mention we had Brad Russell join us on this show. So be sure to tune in for that.

He's the research director for the Connected Home over there at Parks Associates. And most of the professionals in the audience are probably familiar with Parks, but in case you're not, they're a very, very well-established market research and event firm in the smart home space. They do some really, really great work in terms of just analyzing all of the trends going on out there in the smart home and what are the driving forces pushing on and pulling on consumer behavior and a really interesting conversation with Brad. So be sure to stay tuned for that. But first things first, Seth, what do you say we jump into some home tech headlines? Let's do it. All right. Well, it looks like Google is not the only one dealing with reports of bricked smart speakers following an update. Apple appears to have pulled the HomePod's multi-user update after numerous reports of the software rendering speakers unusable. The glitch typically leaves the speaker partly or completely unresponsive.

If an owner tries to reset the HomePod, it either freezes up or gets stuck in an endless loop. So two weeks in a row now. Last week it was Google this week, Apple really unfortunate. Yeah. And I honestly thought the, the Apple was going to be the next contender. Uh, the Apple home pod was going to be the next contender for the, uh, the, the cemetery. Cause this thing wasn't even on iOS 13, it was running like iOS 12. And you know, there was an update that may or may not be coming, but it didn't come at the same time as like the computers or the phones or the watches or anything else. They took their time getting it out.

And when they did, they bricked it. So this is not a very good look for Apple on this one for sure. But I understand. Software is tough. And sometimes you push something out and you kind of have to cross your fingers and hope it works. I don't know. It seems like Apple should be a little bit better. Bricks happen. Yeah, bricks happen. is tough and uh sometimes you push something out and you kind of have to cross your fingers and

hope it works i don't know it seems like apple should be a little bit bricks happen yeah bricks happen that's funny well speaking of products that that that aren't bricks but they they will actually make your bricks uh sonos is letting people who own its oldest products trade them in for more a more modern replacement. The new program offers a 30% discount to those who want to trade in their Kinect, Kinect Amp, ZP80, ZP90, ZP100, or ZP120, wow that's old, for the first generation Play 5 or something newer. Unfortunately, the Play 1 isn't part of the list, uh, but it's still available for sale.

Uh, relatively, relatively, uh, that one, that one was pulled from the shelves, uh, and replaced with the Sonos one and the one SL, uh, Jason, this is hilarious because as Google and Apple approved, like they can, they can brick the, the, their products. But Sonos is like, look, we can't kill our products. These things have been around for a decade. A ZB 100 series, ZB 90, they won't die zp100 series zp90 they won't die so we'll we'll kill them for you we'll kill them for you and uh and give you 30 off if you just buy something new please like that's that's so yeah the one the one exception

to that would be and i'm trying to remember the model number it's got in the the picture of the story it's got the little the handheld controller the cr200 what it was cr200 yeah it was my my oh it was so it was such a great controller too and like the digitizer would not it would like the bottom row of that digitizer yeah would die on every single one of them about a year into it yeah uh man that that did suck but man i wish they had a product like that because it was you could just walk right up to it hit hit the volume up or, you know, group your zones. Such a great product. Yeah, it was a great little device. It's unfortunately one of their more unreliable products, but yeah, good to see this trade-in program for anyone interested in an upgrade. A pretty good deal. Moving on here, after reports about trying to find a buyer,

it seems that PlayStation View has decided to shut down the service instead. The service, which debuted in 2015, so four years ago, was one of the first live TV streaming services to launch and is now the first virtual MVPD to shut down. The service will officially go dark January 30th, 2020. January 30th, 2020. So not too far, a couple months out. The company has had a difficult time growing the service with the addition of new entrants like Hulu, YouTube, Hulu Live TV, YouTube TV, AT&T TV Now, and others. There has been on and off speculation about Sony's interest in the business. PlayStation View continued to make, sorry,'s interest in the business. PlayStation Vue continued to make, sorry, interest in moving the business. PlayStation Vue has continued to make product improvements like MultiView and has renewed deals with WarnerMedia, NBC, and Disney in recent months. So

this kind of a startling development, I suspect, for many PlayStation Vue subscribers. Yeah, I know they like, man, this one, I think just had a problem with the name. Like it was so, I mean, PlayStation view, it's like, well, I don't have a PlayStation. I'm not going to get that. And I think they even had apps that were on other devices. Um, even more recently they had a Roku app that had popped up, but like, I, I just, man, I think the naming on that is just unfortunate. It's Sony, it, though, right? They're not very good with names. Sony, uh-uh, no. Yeah, I agree.

The name was always a little confusing, and I always found myself not even really putting that one in the running because I don't own a PlayStation, which is not an accurate way to look at it. So I agree. Good point. Well, speaking of streaming, after Disney Plus and Apple TV launch, the next big streaming service will be HBO Max. At a presentation for investors this week, service will launch in May of 2020, including the entire HBO service and library, as well as exclusive original content, as well as, quote, choice slate of acquired and library programming.

The company also said it will avoid binge and burn by releasing new shows on a weekly basis with plans for 50 new originals by the end of its first year. I'm an HBO Now subscriber, and this is the exact same price as HBO Now or HBO Go, whatever you want to call it. Yeah. And we're looking at it and we're like, what's the deal here? Like, I guess they don't do, they don't have the new HBO stuff. No, they have the new age. It's like the exact, it's the exact same thing. Basically what I think they're trying to get you to do is just move to this and you get more stuff for the same price.

Yeah. Yeah. It is confusing. HBO go and HBO now are confusing to know, understand the difference of, and now you're going to have this third one. So you do wonder, but yeah, they're, you know, they're, they're going to look like bring in more outside content. Uh, perhaps maybe that's one of the big differences, uh, going back to the PlayStation thing. I think that may be a brand. I wonder if that's going to be a branding challenge for them. You know, HBO is so strongly associated with so many HBO shows and to try to conceptualize that as having outside content might might be tough for some people but I don't know I've always been a big fan of HBO's miniseries I think they've generally been one of the best out there they've been doing this for a long time

in terms of producing these sort of viral miniseries you know they were doing that long before it was as big a thing as it is now. So HBO is certainly a well-established name. Again, $14.99. Close the announcement with announcing a new Game of Thrones spinoff dubbed House of the Dragon. Great. So that's going to be, I guess, like a prequel is what I read. So it'll be interesting to see how that develops.

Yeah, what I understand is, like, if you're subscribed to cable, you'll get the HBO Max free. what yeah so if you're a customer already and you're paying for hbo through your cable company this is kind of going to be part of it as well so it's kind of i think it's just going to replace 100 going to replace hbo now or hbo go those are those two apps and those names will go away and you'll get hbo max $14.99 or free. Yeah. Depending on how you pay for it. Confused yet? Yeah. I mean, I'm not, I just wish they would like, I would just, they would like draw the lines a little bit more clear to like, yeah, these are going to go away. We're just going to replace everything with this and you're going to be happy because you get more for the same amount. And I don't know why they have, it is confusing.

I don't know why they have to go jump through these hoops. Maybe there's some kind of legal hurdle hurdles with it. I don't know, but it's just really confusing. I don't know why they have to go jump through these hoops. Maybe there's some kind of legal hurdles with it. I don't know, but it's just really confusing. I think they're just trying to figure it out. Like everyone else in the business right now, streaming is so dynamic. Speaking of streaming, here with one week to go before the official launch of Apple TV+, Apple has added its TV app to Amazon's Fire TV platform, available starting October 24th for both the Fire TV Stick 2nd generation and the Fire TV Stick 4K.

The Apple TV app will also be making its way to other Fire TV devices in the coming weeks. A story goes on to mention, of course, the biggest reason is because of Apple TV plus companies soon to launch streaming video service. Um, so no surprises here. We've known this is coming, but, uh, you know, cool all the same to see it, uh, popping up. And this is a big, uh, kind of sea change in terms of Apple's, uh, Apple's approach. It's always been Apple's on Apple devices. And so to see this coming up on Amazon devices is, uh, it's almost a little bit jarring. Yeah. It's kind of, kind of weird, but, um, I mean, to be expected, this is a different, different play by Apple. When we were having our conversation, my wife and I were having a conversation about HBO max, uh, last night and going and trying to get unconfused by the

confusing announcement. Uh, she was like, what's Apple TV plus. I've never heard of that. And I was like, Oh, well we well, we'll be getting that. It's just a bunch of like new Apple, independent Apple shows that they've made themselves. And it's only $5 a month. And I think I get it for free because if you buy an Apple product, then you do get it. I think you do get it for free. And I have the new iPhone. So maybe it came with that or maybe it didn't.

I'm not too sure. But we'll have to see whenever it launches. If I am able to watch stuff for free, I won't complain. I won't complain at all. Well, there you go. And speaking of Apple, Apple is ramping up hiring for a team that's working on new smart home software and devices in an effort to catch up in a field where Google and Amazon have dominated. This is according to people close with knowledge, close to the matter. The company is seeking engineers to work in its Cupertino, California headquarters

and in San Diego. Hey, that may not be a bad place. As part of a group revamping Apple's smart home platform, the overhaul is designed to spur more outside accessory and appliance makers to connect smart home products, such as lights and garage doors with the iPhones and with the iPhone and Apple's voice activated digital assistant, Siri. Um, yeah, this, this is kind of good. 15 people, it says they're, they're trying to hire, hire. And, um, I don't think 15 people are going to, going to exactly do it, but I'm glad they're investing more into HomeKit and the platform. It's nice to see. Yeah. Story also mentions from Bloomberg that the company has been privately recruiting

potential candidates from the internet connected devices industry, as well as saying that they've already hired several new engineers and managers this year from Amazon, Qualcomm, and other companies. So they appear to be beefing up and trying to make a big push here. And that's great. Seth, you and I have always been fans of the HomeKit framework and the vision there. And progress has been slow but steady to their credit. They've continued to make progress there. So we'll see. The story Seth did mention that the team is also exploring the possibility of building new home devices beyond the HomePod speaker. So I don't know if that means more home, more HomePods, cheaper HomePods, or, or if the HomePod is

indeed, uh, destined for Seth's cemetery. Well, what if it means accessories? What if it means that they're going to come out with an Apple camera or an Apple doorbell? That's right. Yeah, it could mean just about anything. Yeah. I mean, they need to do that, right? They should do that to be kind of competitive. Look at Amazon.

They have Ring. They have a half dozen other companies that they've acquired in their own brand-labeled stuff. And Google has Nest doing all this stuff. I think Apple, to catch up, is going to have to ramp up and do something similar. Um, especially if they want to kind of keep banging on this privacy drum that they've been able to do. I think it's a, it's going to be huge for them to, um, keep some of that close to close to the vest, I guess is what they're saying is like, just keep that a little bit closer so they can, uh, they can regulate what is going on and kind of test out those experiences without having

to rely on a third party manufacturer to come up with a camera and develop all the API and everything integrations with it. And then maybe release a product that's kind of subpar. Um, man, I, I, I, this, this could be, this could be very interesting if they, if they start manufacturing hardware accessories around it. Yeah. Don's got a good one here that Apple can send Don a check for if they go with it. The pod of trust. Don, thank you for that one. Don in the chat room, the pod of trust. I like that. All right, cool. Well, we're going to shift to our interview here in just a moment, but all of the links and topics that we've discussed here in our headlines section can be found in our show notes at hometech.fm slash 279. While you're there, don't forget to sign up for our weekly newsletter.

We'll send you weekly show reminders and other occasional updates about all the great things going on here in the world of home tech. Once again, that link is homet tech.fm slash 279. And don't forget, you can join us in the chat room live Wednesday, starting sometime between seven, seven 30, a little bit later tonight for an, we had an interview that, uh, that came up, but, uh, you can find out more on how to join us over there at home tech.fm slash live. Absolutely. All right, Seth. Well, without further ado, let's go ahead and get into our conversation. Once again, we were joined this week by Brad Russell. He's the research director for the Connected Home segment over there at Parks Associates.

And we hope you enjoy. So let's get started. Hey, Brad, welcome to the show. How are you? Hey, I'm doing great. I've been looking forward to the conversation. Yeah, likewise. I'm glad we were finally able to get you on. You and I met in person for the first time several months back at an industry event, and we've been trying to make schedules align ever since. So we're happy to have you here join us on the show, and we look forward to diving in to a lot of the really valuable information that I know you can share with the audience.

So before we do that, why don't you give a quick, just personal introduction and talk about what it is that you do over there at Parks Associates. Sure. Yeah, it was great to spend some time with you. So at Parks Associates, I lead the smart home research practice. So we have a team of analysts. We conduct consumer research. We've been doing this for over three decades, actually looking at consumer technology. We'd like to say we studied the connected home before it was actually connected, at least wirelessly. So we generate a lot of business intelligence for companies as big as the tech giants down to startups and innovators. We produce a lot of business intelligence, consumer research. So we're really just focused on every aspect of the

connected home ecosystem, whether that's the device level, the service platform level, all of the connected home ecosystem, whether that's the device level, the service platform level, you know, all of the horizontal technologies that play a role. Yeah, so we, you know, we produce a lot of research. I speak a lot of events and always look forward to, you know, to just diving into kind of the latest things that are going on. Yeah, absolutely. Well, speaking of that, let's just jump right in. One of the big things, Brad, when you and I met, you were talking about your cheers and fears sort of presentation that you do. And I thought it was just a great way, very succinct way to sort of frame what's going on in the smart home today, because there's a lot to celebrate. There's also a lot of uncertainty and

doubt still remaining out there with regards primarily, I would say, to the more mass market adoption of the smart home. So let's start just by setting the stage a little bit and talk about some benchmarks. Where is the industry at today? How do you guys at Parks Associates think about that question? Sure. Yeah. So, I mean, we always try to take, you know, an objective view, as objective view as possible. You know, it's probably about a decade now, if you think about the first wireless connected devices like, you know, the Nest thermostat that came out in 2009. So we've had a decade in the market with a lot of these products and services. And so just

kind of some benchmarks that we watch very carefully as far as trending numbers. You know, currently about one in three U.S. broadband households own any kind of connected device. Now, all of the data I'll share references broadband households because that's kind of the underlying infrastructure, you know, to have these kinds of products. So basically 36% of households say, you know, I own something that I can remotely access, monitor, or control via a smartphone, tablet, or computer. So that's one in three. One in four broadband households own specifically a smart home device. So when we talk about smart home, we talk about, you know, lights, locks, thermostats, kind of control devices, home automation devices.

So roughly 28% of households own one of those. That's up from 9% in 2014, just as a benchmark. If we look at homes that own at least one device, the average number of smart home devices they own is currently at six. Now, that doesn't sound like a lot to someone who's had a pro install and they may have 50 or 100 devices or whatever. But when you do the averages of all households in America, it's a pretty solid number and it's growing. When we look at things like consumer satisfaction levels or NPS scores, we see that across all product categories, these numbers are up year over year. And so that's a really positive sign about consumers finding

these devices to be increasingly reliable, providing those kind of delightful experiences that manufacturers are trying to provide. And so they want to recommend them to their friends. Finally, over one in three households now owns a smart speaker. And this has been kind of the watershed moments in the last couple of years where smart speakers came on the scene and really simplified the user experience. And so 36% of U.S. broadband households now own a smart speaker. And that, of course, is leading to, it's kind of a gateway drug into the smart home experience. And so we see more and more people now, because the user interfaces are simpler and easier, that they're experimenting with usually often kind of point solutions.

And so those are all really positive signs. I think they're good for the industry. The across product categories, we see kind of incremental growth. Yeah. So those are those are things to cheer about. Yeah, going from from what, 10% to 28%, as you say, it's pretty good. That's that's a pretty good, you know, trend line, I guess. What are you seeing people, it sounds like people are really excited about smart speakers right now, but what are you seeing these, what are you seeing like most people getting involved with outside of the smart speaker area? Sure. So, yeah. So the most heavily adopted device for a number of years has been a smart thermostat. So about 12, 13 percent of households own a smart thermostat. Nest really pioneered kind of driving a replacement cycle with all these features.

You know, behind that is network cameras. You know, the video doorbell came on the scene in 2015. Category didn't even exist. And they have really done incredibly well. Smart door locks, you locks, smart light bulbs. These are kind of the top five, six devices, both in a current adoption and also in purchase intentions for the coming year. So these are the devices that people are most thinking about buying. And that's what they're excited about, getting a smart thermostat or a doorbell camera and that kind of thing.

Yeah, I mean, I think when you think about the mass market, you know, obviously that's a different customer than a pro install customer. But for the mass market, we're still in this stage where largely they're buying point solutions. They're going to Costco's. Now they're seeing video doorbells stacked deep and sold cheap, right? And so, or they're getting a camera

or, you know, something like that. So we continue to see that those are kind of the hot products. Yeah, that makes a lot of sense. I mean, that's what we hear from in the pro-install industry. This is what we've heard from people for years. It's just, like you said, it's a smaller technology package that they can pick up at Costco, you know, stacked deep. And what was it? Stacked deep and sold cheap.

Stacked them deep and sell them cheap, right. Yeah, and security use cases still kind of drive adoption. So anything with a camera, anything that has kind of that security use case certainly is an inroad for most consumers. That kind of brings me on to the next thing we would want to talk about is fears. And security is generally sold through fear, right? But it seems like over the last couple of years, we've been talking about this for, I don't know, Jason, it's been a long time that we've been kind of banging

on the security drum. But it seems like the market in general is really concerned about having a product that they can put in their house, whether that be a smart speaker from a company like Amazon, like a major company like Amazon or Apple, down to like a $20 camera. They want to have security built into it. Is that what you're seeing? So you're asking about data security as opposed to physical security? Yeah, yeah, exactly. Data security. Privacy. Yeah, yeah, exactly. Data security.

Yeah, yeah. We always have to parse the difference for that security word. Right. So, I mean, one of the things, so when we talk about fears, you know, what we're practically talking about is purchase inhibitors, right? These are those barriers. These are why people are not buying things. And so consistently, data privacy and security concerns for about the past five years have been in the top three inhibitors that consumers will cite. This is people who don't own devices and don't intend to buy them. And when they're asked, what is it that concerns you most? Data privacy and security has been consistently reported by about 25% of people that don't own devices and don't intend to buy them. So we do think data privacy and security is a very big barrier to a segment of the population.

I mean, we certainly know that even people who own these devices, they also have data privacy and security concerns. And in fact, one of the things we know is that the more you own these devices, the more concerns you have about data privacy and security. It's not like you don't have the concerns. In fact, the more you're familiar with them, the more you're aware of what's at stake around privacy and security. Yeah. Interesting point there, because, you know, it's both a purchase inhibitor, but also, you know, a growing fear for people who own any devices as both the number of devices they own grows as well as time goes on. I just think, I sense anecdotally, and I of course don't have the data, but sense anecdotally that there's quite a bit of growing angst and worry about data privacy and security

around the smart home. So how do you think, I think we all have a general sense that that's a big fear and something that really anybody operating in the smart home space should be aware of. Where do you see opportunities? What sort of companies do you see doing things perhaps intelligently right now with regards to data privacy? And maybe conversely, where do you see mistakes being made or perhaps untapped opportunities? Sure. Right.

That's a great question because I think a lot of companies have been really ambivalent about how to approach this issue. On the one hand, we have some that don't even want to talk about it, right? Outside of kind of some blanket, we care message, they don't really want to talk about the very real vulnerabilities of products and services. outside of some blanket we care message, they don't really want to talk about the very real vulnerabilities of products and services. There's also this constant tension between providing a simple user experience, but also doing the hard things that are required, like two-factor authentication. It's another hoop for the user to jump through. Certainly, you know, certainly most recently, you does as kind of the one in the marketplace

that takes security most seriously at the hardware level and at the policy level, and they don't share data, things like that. So I think those are good. I think any manufacturer or service provider that is working to educate consumers about their side of the equation. I mean, there's always going to be a part of this that it's a burden on the consumer. So it's amazing how consumers don't use strong passwords and they don't use two-factor authentication. And when Nest got in trouble this last year with some of their cameras getting hacked, it wasn't that they haven't provided a way to secure the cameras. It's just that they didn't force consumers to use two-factor authentication if they didn't want to.

And then after those incidents, they said, well, OK, now we're going to require everybody to use two-factor. We're not going to leave it up to the consumer to decide. So I think those kinds of steps where the consumer's interest is at the fore, those are really important steps to see. At the end of the day, I would like to see some kind of third-party cybersecurity certification process. I'd like to see more and more manufacturers say, you know what, we've taken it to the lab, we've had it tested in some kind of, not so much regulatory driven, but some kind of recognized certification that this product

has been tested and proven that it rises to the best practices. Yeah, I think more standardized certification. I think as you were talking about passwords, I went back in my head to last year, it was actually, it looks like just about a year ago, October 2018, California passed a law that banned default passwords in connected devices, which I thought was really interesting to see this sort of thing. And not terribly surprising to see California, a very progressive state, getting out in front of this stuff. And I thought that was a smart move. And so, you talked about the balance. And I think that's one of the big things Seth and I have been discussing recently. Nest's recent move to get rid of the Works with

Nest program and move everyone over into this new API. And it is that balancing act because in many respects, it was a move to kind of tighten things up and have more control, and that rubbed some people the wrong way. but ultimately it will arguably lead, you know, Ness motivations may have also lied elsewhere. Let's not, let's not delude ourselves about that, but really important topic and so many different angles to that. We could, we could probably spend an entire show on it, but let's shift gears a little bit and talk about some of the other fears that we think are, or that your data shows, I should say, are perhaps preventing broader smart home adoption. And one of the other ones I know was fear of the new and different.

Right. So just offer some thoughts on that. What are the people out there really thinking about when they're, you know, we're kind of an insular industry, and we tend to forget that many people, for them, this is very alien, very new. Yeah, you know, I mean, and there's a sense of which, you know, the fear of the new and different is inherent with any technology adoption, right? There's, it's always, there's an element of newness to it. In this last year, one of the things that made me think a lot about this is that we did a series of focus groups across the country,

East Coast, West Coast, Deep South, kind of all over. And we listened two hours at a time and let people talk about these products. And most of them may have owned one device or something. But I mean, there is just a real concern about what it means to bring this connected device into my home. Now, there's kind of layers to that. We talked about data privacy and security. There's also part of that fear of the new and different is the complexity, that they don't really quite understand how these devices work. They're afraid that they're going to

be difficult, that they're not going to make life easier or simpler, but they're going to add this. This is another thing that can break. This is another thing that I'm going to trust and then it's not going to deliver. And if it's another app that I have to manage, it's another user interface, it's another set of settings and configurations, all of that. So there's a real legitimate fear of consumers around things that are new and different. And certainly manufacturers who are really addressing this are those who really are being very thoughtful about the user experience. At every touchpoint, they're really taking an educative approach, providing all of those DIY helps, really telling simple product stories and not making it too complex to digest. Seeing kind of a path that you lead consumers on this journey from simple experiences to more complex experiences. I think all of those are kind of strategies

that solution providers can use to kind of help consumers feel confident from day one that they're going to get the most out of this. Because another fear that's kind of tied to that is just this fear that this product won't benefit my lifestyle enough to offset the cost. In fact, that's the number one fear that consumers have. In fact, over half of people who don't own or intend to own will say, I don't see any benefit to my lifestyle. That's the number one reason why I'm not going to buy. And so sometimes if you think about, take a smart smoke detector, for instance, the price differential between a smart smoke detector and a traditional one can be 10x, right? So how, go ahead. And you still have to replace them every three years or whatever it is. Like there's a there's a time they expire right like it's either 10 or 3 to 10 years somewhere in there that you have to replace

the smoke detectors because they just they're not effective anymore yeah so like even the best of them will say like i it has a sealed 10-year lithium battery right but but it's not eternal right and so that that 120 investment for a single unit, which is what a smoke detector costs at retail, you know, and if your home has 10 of them, right? So, and I can buy a traditional one for $12 to $15, or I can go buy a Z-Wave first alert for $40 and integrate it with a ring alarm DIY system, right? And so just the economics really require for many of these devices that the manufacturer has to bring a lot of value, right, for the consumer to think that they're really going to get enough benefit for the cost. And so that's just part of the interplay of feature value, of cost, and all of these things just kind of, you know, working together that have to be addressed. Right. And another big part of that is products being, you know,

obsolete by the time I install them in my house. Like, I just bought a Roku the other day, and I'm pretty sure it's probably already obsolete. Like, I'm not even, it's a $30 device. I really can't complain too much. But I'm pretty sure in the next couple months or within a year, I'm sure Roku will have a decent replacement for that product and it'll have more features on it. How much of a barrier of waiting, I guess waiting for the next big new shiny thing that I don't really need, how much of a barrier is that for people to get involved with the smartphone? Well, I think it is a huge barrier. I mean, when we listen to focus groups, you know, product obsolescence, they don't, consumers don't say it quite that way. That's how we know it. But there's a real legitimate fears that this device or this system is going to get bricked, right? They've read too many headlines, you know, Jason, you mentioned the

works with Nest program, you know, all the heart all the heartache, just from the average consumer, not from the system and platform providers and device makers, but just from the consumer who's set up all of these if this and that connections and all this stuff, and then suddenly none of those recipes work anymore. And so we've seen a number of hubs that have been bricked. We've seen a number of systems bricked. We've seen devices. And so bricked. We've seen devices. And so consumers are really concerned about obsolete technology. And they need to be reassured that the technologies they're buying is solidified, right? It's not going to move again, and it's reliable, and that the partners involved are in it for the long term. And so, yeah, I think those concerns are really legitimate. And so I think that's where kind of legacy players actually have an upper hand and tech giants.

Well, I would say tech giants have an upper hand, but they've been some of the most responsible for bricking things. So, yeah. There was an interesting discussion over at one of our neighboring podcasts this last couple of weeks. I don't know. I'm really behind when it was. But it was the Smart Home Show where Adam Justice, he's a manufacturer, and Richard Gunther, they were kind of going over. Where I'm going with this is this plays into the cost of the device. Everybody is racing, and this is another big barrier to entry, right, the cost you just mentioned, but everybody's racing for that,

you know, the low-cost product. Well, it may not be the low-cost product that can survive getting the software updated or staying updated for the new Works with Nest program. Now you have to have Google assistant. How are you going to pay developers to redevelop the entire product and do firmware updates on, on a, on a, on a product you sold for $11 three years ago. So it, it, it, it, sometimes it may be the more premium products.

No, not with the, uh, the, the, the latest news with Google and all that kind of thing. But sometimes with the premium products are the ones that tend to not break because you've paid a little bit more for them to have that support on the back end. So it's a multifaceted thing when it comes to manufacturing these things, like where the balance is between cost, price, and being able to kind of update these products later on. Absolutely. And that's why, you know, deep pockets win. Unfortunately, it's harder and harder for startups and new players, you know, to break in because there's just layers of complexity that keep added on. I'll also be quick to say that, you know, the mass market consumer by definition is a waiter, right? They wait, whether you're talking about early majority or late majority or the people later in the adoption lifecycle.

They wait to see that technology is reliable, that it's stable, that they're risk averse, right? And so we kind of think what we're experiencing right now is that we've had the innovators and early adopters for a while, and we had this core group of people that they bought into the connected lifestyle. They're buying more and more devices themselves, but we're not seeing this massive movement of new greenfield buyers coming into the marketplace. And there's kind of this waiting gap, I think, that the early majority, if more of their fears had been relieved, they would have bought in already. But they're still on the sidelines watching till some of these fears are better addressed. And so I think that's a huge market problem. Yeah. And I mean, I try to

explain this to people who are not smart, home savvy all the time. When people ask what I do for a living, and this is really the early days of this stuff. It really truly is. I mean, you think about the other trades that are out there, like electricians, okay, they have 100 years on you. Of course, they're going to have the light bulb down. Plumbers, well, they go back centuries to the Romans, right? So like, they're going to have pipes down and getting water into the house down pat. So like, and building houses, I mean, that just, that goes back to the beginning of time for, for humans. So like, for smart home to expect this stuff to kind of like magically appear to be,

start working in, in, in, in, in really, I mean, for a consumer, we've only seen this stuff around for maybe 10 years. Like, like you were talking about nest, just kind of appearing on the market for guys like Jason and I being in being in the pro channel, we've dealt, we've seen this stuff for, what, 30, 50 years, I guess. It's kind of been around for the super wealthy to get involved. But yeah, it's super early days. And you can't expect, you know, an $11 or $25 camera to work and perform and jump through hoops and magically keep working.

It's just a tiny piece of technology that you're adding onto your house. And it's so not mature right now for the broad market, I guess is what I would say. But it seems like the early adopters like me and probably you and Jason, they're okay with that. They're okay with paying $25 for a camera. And yeah, it may or may not break. And if it does, they may complain and rattle some noise up. But those types of people like you and me and Jason, we're not the mainstream public out there. And there's a whole lot more of those consumers out there. When they get bit by a camera dying off or falling off the Wi-Fi and not working anymore, it kind of taints them a different way. Sure.

And keep in mind that their household income typically is always going to be lower than innovators and early adopters. So it hurts more. That's true. That's true. Yeah, absolutely. It hurts more. And so that's why they need more value, but they also need more reliability and, you know,

but then the industry needs the scale, right. To really drive down costs, you know, so it's all of these things kind of work together, but you're exactly right. Innovators, early adopters were more forgiving. I mean, really what we're talking about, it is quite, to me, it's still phenomenal about what some products can deliver and do, accessing AI in the cloud and just all these things that it's, it's like an incredible technology lift for a hundred bucks, you know, or whatever.

Or even less like $30, $40 for a Google. It's like this thing has a Google home has a microphone and speaker and it's in the Amazon, same thing. Like how in the world are they selling a product for that price for under $50 most of the time? Uh, and, and, and doing all of those things, uh, that, that you just mentioned, it's incredible. And the answer to that is because they have business models. They're actually going to use that little device to make thousands of dollars off of you in the long run. Exactly. But, you know.

Yeah. Yeah. Well, I think this is a nice segue to kind of, in a sense, a slightly broader topic. And, you know, we've talked a lot about the different fears that people have and just recently hear about how the technology is evolving and what's becoming possible for a very, very inexpensive price, that of course leads to one of the big conversations going on across the industry, both for kind of existing professional channels or established professional channels and all of the newcomers and startups. And it's the whole do it yourself versus do it for me. Um, how do these markets evolve? Do they largely coexist? I think sometimes people tend to think

of these things as black and white, you know, one's going to beat out the other. And I think certainly, uh, there's going to be both, but, but how do you guys see the do it yourself versus the do it for me, uh, conversation? How do you guys think about that in the sense of your research? Sure. Well, certainly we have seen self-installations. I mean, for me, the core notion of DIY begins with installation, right? I can install it myself. We have seen that continue to grow year over year,

the share of devices that are self-installed either by myself or by friends. So we consider that also a DIY product. Every across 15 different product categories, the share of DIY keeps going up. So that's a really significant movement. It also goes hand in glove with the power of retail as a distribution channel. So when I can go down to the big box store or a home improvement store on a holiday weekend, and I can buy a couple of devices and I can go pop them in myself, all of this kind of works together. And so, you know, DIY has brought, you know, luxury products into everyday people's households, you know, and that's the beauty of it. DIY is also great for some service providers because now they can sell additional devices

to layer on top of systems and they can just drop ship those to the homeowner who can install it themselves, right? So they don't have to roll a truck. And so business models start to work a little bit better when consumers can self-install some devices. For some people, we know that there's a pride of doing it themselves, and so that's kind of a consideration as well. But in the security space, we see DIY systems,

at least for purchase intentions, we're seeing them starting to capture the imagination of consumers that haven't been in the pro-monitor space before. And so that's hopefully gonna be kind of an injection of energy to help them reach a new segment. So, I mean, we see that growing, but on the flip side of that, the Do It For Me customer,

you know, DIY has not eroded Do It For Me at all. I mean, what we see is the pie expanding. So there's more than enough to go around. So if you go, you know, we do a lot of research among pro installers as well. And in the last few years, they've seen their average project costs go up. They've seen their number of projects that they do each year go up. They've not suffered particularly from the DIY side of the market. So I think there's both of these aspects of the market have their own segments. Now, there's a lot of speculation as to will today's DIY customer become tomorrow's do it

for me customer. And I certainly think that with rising affluency and the business, the busyness of people's lives, that many of these people will become do It For Me customers. So I think building bridges between those two worlds is probably a really healthy long-term strategy. Got it. Cool. Well, we are starting to run up against our time. I want to zoom out one more level as we close out here. And with all of this in mind and all of your research,

what sort of business models do you expect to be the most successful in, you know, in the years ahead? There's a lot of moving parts. And where do you see kind of untapped opportunity? Sure. Well, I think one of the most exciting things has been to see kind of nontraditional channels open up that have their stakeholders in the value of these products. So for instance, the insurance industry, right? So there are certain product categories like smoke, fire, and theft prevention devices that insurance companies have, they have a vested interest in seeing these devices adopted in homes, reducing risk and claims, lowering operational costs,

expediting the claims process. I mean, there's value to be captured by these devices for insurers. And so to see them realize that, to see them develop insurance business models where they are incentivizing the adoption of these devices, they're offering rebates or subsidies or products that reduce costs because actually they stand more to gain than the consumer does. So water devices, it's a great story. Consumers are not flocking to buy water-controlled devices. On the other hand, the average water damage claim is $9,000.

And the bulk of that responsibility is on the insurance company. So I think we're going to see some business models that way. Home builders are getting more and more committed to including smart technology in the basic specifications of the home. It helps them differentiate their product and attract new buyers. It helps the home buyer by rolling in all that hardware cost into the mortgage, so it becomes relatively painless. And so that's kind of a new business model, the same with apartment property managers, rolling in smart technology as part of your monthly rent. You know, I saw, I think a lot of those kinds of new channels opening

up where there is, there's multiple ways to capture the value of the products than just a consumer buying it outright upfront. So Got it. Cool. Well, those are great insights and we really appreciate Brad, you coming on and spending some time with us. I've always been a fan of Park's work and for anyone listening who isn't familiar or wants to learn more, maybe connect with you, ask a follow-up question. What would be the best way for them to do that? Well, certainly, our website, parksassociates.com, has a lot of information about what we do. We release a lot of data about all the topics that we've talked about. And so there's newsletters you can sign up for. We also have six industry events a year. And so that's

where a lot of people, whether they're manufacturers or service providers, you know, they'll come to our events in San Francisco or in Austin, Texas or San Diego or other places. Whether your interest is energy or health or security and smart home, all of those are great opportunities to kind of connect. But yeah, this has been a lot of fun. Thanks for having me on today. And I really appreciate what you guys are doing to help educate the industry. Yeah, absolutely. Well, thanks again, Brad. And we'll look forward to connecting again with you very soon. All right, man.

Take care. All right. Well, that'll do it for our interview with Brad. Once again, I really enjoyed it. And just hearing his perspectives, specifically, I thought the data privacy and security section was really interesting. I think that's such an important topic. We've talked about it many, many times here on the show, especially recently. And I think there are lots of challenges and hence lots of opportunities as well in that space. So hopefully that sparked

some ideas and some interest. And again, I'll echo what I said there towards the end. I've always been a big fan of Parks, uh, Parks work, and they release a lot of their stuff, uh, out there for free. So go check them out if you're interested in, in getting your hands on some interesting data, uh, around the smart home. Hey, nothing in the mail back this week, but, uh, I do have, uh, uh, kind of a follow-up then. Um, I wanted to get you to click this link to go over to this website. I've never seen this before. NSA.gov. Yeah.

Oh, wait. Yeah. Okay. Got it loading here. Three-letter agency. Yeah. Yeah. Never heard of that one, huh?

That's by design. Remember last week we were talking about the Wi-Fi negative three is kind of what we dubbed it, but the little one bit per second Wi-Fi and how they were inserting kind of like a white noise or a pattern, and they would use that pattern to basically decode on the other end what the bits were, what the data was, what the data was. So they would transmit data with a pattern

that they knew to be the same on each end, and they'd look at it when the data was. So they would transmit data with a pattern that they knew to be the same on each end. And they'd look at it when the data arrived and said, okay, well, here's the actual data. Here's the one or zero that has come through. And it kind of reminded me of this system that I read about or heard about a long time ago. And it's this, I think they called it SALI. It's a secure digital voice communications in World War II. A lot of people I don't think really know about this technology that was developed back then because it was all top secret for a long time. But there was basically, as you can imagine, you've heard of the Enigma machine, right? The one that the Germans had.

It was like a typewriter thing. And they have that movie about Turing and how he basically reverse engineered it and made a big giant decoding computer. Well, this was kind of like on the American and British side. They needed to communicate as well. And they have a vast ocean with German submarines floating around in them and boats intercepting communications that are going back and forth. So they need to communicate securely, too. And how do they do that? Well, this is, this is, I guess, the way they decided to, uh, to connect the office of the president and the prime minister together. Uh, this is a,

if you look at the cover of this book here, there is a giant, uh, a giant computer, like the size of a room. Uh, you know, the, one of these, one of these massive old, like one, how many racks do you see here that's probably like 10 or 20 racks in this picture um of all the communication that goes on and basically what they did very similar to the wi-fi thing that we were talking about um is they developed and now this is this is the very beginning of of things like vocoders and synthesizers um you know vocoders we know that from like funk music back in the seventies and sixties, this is going way back to like the 1930s that they developed the vocoder. Uh, and they figured out that they could use that to kind of like digitize the voice and, and put

it, mix it in with, uh, some, some static sounds. And they burned, they, they basically burned, uh, a key, uh, uh, the, the, the data that they knew would be the same on both sides was what they called a key. And they would burn that or etch that onto a record. And they would take one record and give it to the president. And one record went to the prime minister. And the president would record his message. They would encode it with that record. And they would send the message over.

And if you're in the middle and you're a German, you would just hear a bunch of static. And when it gets to the other side, you would hear, they would play the message with the record player playing the record, the decoding, to decode it at the same time. And you'd hear kind of not, I've heard of a recording of this somewhere, and it's not a very good recording of it,

but at least you get the message back and forth, going back and forth of what people said and how they said it. So very interesting. There's a huge book here. It is. Yeah. You can see exactly how they did all this stuff and go into like the technical details of it. Because, of course, it's all been declassified since like the 1970s sometime in there.

Oh, yeah. Yeah. Yeah. I mean, 20, 30 years after the war ended, they declassified it. So yeah. Yeah. Yeah. I mean, 20, 30 years after the war ended there, they declassified it. So look at this, the terminal weighed 55 tons. Insane. Insane. Wow. It's cool. I I'm, uh, kind of a history geek and also a technology buff. So this is right up my alley. I'm definitely going to take a look at this. Um, this was a good find. So definitely go check this out. Uh, again, i think there's um always some

interesting things you can glean from just seeing how you know those giant computers for example and now we've got these iphones in our pocket that that probably have you know orders of magnitude more power than that computer did so if nothing else it's a good good reminder of just how far things have come yeah yeah since i mean since the 19 1950s uh 1940s yeah yeah this is this is wild uh to to see how far things have come and uh you know we we've definitely we have uh supercomputers compared to this stuff like in our pockets every day doing more computation and and and scrambling bits and and encrypting things back and forth for us every day now because of the groundwork that these guys laid way back then. So very cool. Very cool stuff.

Right. All right, cool. Well, if you have any feedback, questions, comments, picks of the week, or ideas for a show topic or guest, please give us a shout. We'd love to hear from you. Our email address is feedback at hometech.fm. Once Our email address is feedback at hometech.fm. Once again, that's feedback at hometech.fm or visit hometech.fm slash feedback and fill out the online form. We read all of those messages. And again, we'd love to hear from you. We do want to give a big thank you to everyone who supports this show, but especially those who are able to financially support the show through our Patreon page. If you don't know about our Patreon page, head on over to hometech.fm slash support to learn how you can support Home Tech for as little as $1 a month. Any pledge over $5 a month gets you a shout out here on the show,

but every pledge gets you an invite to our private Slack chat at the Hub, where you and other supporters can gather every day to discuss the inside World Series baseball conversation about all aspects of home technology. Absolutely. And if you're looking for other ways to support the show, we'd love if you'd take a moment to leave a review on iTunes or podcast app of your choice. Those reviews definitely help more people find the show. So if you're entertained or educated or just generally enjoy what we're doing here on the show, we would really appreciate you taking a minute to go leave us a quick review. So Matthew has come up with a

Christian rock band that hit a Commodore 64 program on a vinyl album in 1984. That is pretty wild. That that is really cool that is crazy well we'll have to include a link to that in the show notes as well nice find there all right seth well that'll uh that'll do it for this week we do want to also remind everybody that home tech is a proud member of the technology.fm collective of podcasts You can find other great shows like Home on the Smart Home Show and DTNS. Once again, that's technology.fm. If you're a supporter of what we do here, go over there and check those shows out as well. We think you'll really enjoy them. Absolutely. And Jason, we need to hang up so you can get back to the baseball game. I know it's a big one.

That's right. That's right. I'm on delay on delay uh so no spoilers i'm gonna be watching on delay tonight game seven of the world series you know i i i'm not a huge baseball guy but man it's it's october like i can get into that yeah it's only if you only have to watch one game this would probably be it right yeah that's it well no i've watched i've watched the whole world series it's it's been an entertaining series so uh it's been my excuse to stay up way too late and uh kind of turned my brain off for a while which I don't often do oh that's that's always a good thing yep I I will probably be doing that when hockey season rolls back around because it's generally fun to to go to a bar or sit down at the house and and just sit down and do nothing but watch people skate back and forth on ice and yeah exactly

all right well I have a good time watching the baseball game there, and I will talk to you next week. All right, sounds good, Seth. Take care. Take care. Take care. Take care.