The Home of the Future: A Reality Check on the Emergence of Smart Appliances

Strategic Insights -

The long-awaited concept of a "home of the future" is finally taking shape, with major manufacturers showcasing their vision of a connected living space at the Consumer Electronic Show (CES) in Las Vegas.Cisco, Panasonic, and Intel have unveiled their versions of the home, where home entertainment products are synchronized, and a single remote controls all devices. Consumers will have remote access to control lights, heat, and air conditioning, monitor the sprinkler system, and even warm up the Jacuzzi. The adoption of smart appliances is expected to change the retail landscape, with stores needing to be reformatted to accommodate Internet-connected products.

Key Takeaways:

  • The home of the future will operate like a home network system, with synchronized home entertainment products and a single remote control.
  • Major manufacturers, including Cisco, Panasonic, and Intel, have showcased their versions of the home, with a focus on ubiquitous Internet access.
  • The project is targeted to educate builders on how to provide the proper wiring and internal technology for the home of the future.
  • Sears is partnering with Cisco to educate builders and is sponsoring the project to get an aggressive foothold in the category.
  • The appliance retail market is undergoing dramatic changes, with Home Depot and Lowe's expanding their presence in the category.
  • Best Buy is improving its home installation and services business to support the growing category and has added KitchenAid products to its inventory.
  • Smart appliances will be connected to the Internet, with Whirlpool's refrigerator prototype showcasing a touch pad that scans bar codes and keeps a shopping list.
  • Smaller portable devices, such as a Sunbeam alarm clock, are expected to be available by year-end.
  • Pricing for the major appliances has yet to be determined, but it's unlikely to be prohibitively expensive.
  • Internal wiring costs are approximately $1 per sq. ft. in new homes and slightly more in existing units due to labor costs.
  • Cisco Home Gateway devices will link home products together and are tentatively priced at $500.
  • The monthly fees to link to a broadband service provider are not specified.

Statistics:

  • The monthly fees to link to a broadband service provider are not specified.
  • Internal wiring costs are approximately $1 per sq. ft. in new homes.
  • The Cisco Home Gateway device is tentatively priced at $500.
  • Approximately 20% of Internet-capable devices will be linked to home computers by 2005 (Source: Parks Associates).
  • 10% of homes will be connected to the Internet by year-end 2001 (Source: Parks Associates).

Sources:

  • Cisco debuts its version of the home of the future near its headquarters in San Jose, Calif.
  • Panasonic has a working model set up in Japan.
  • Intel has a sample home built off-site.
  • Sears and Whirlpool are co-sponsoring the Cisco project to educate builders.
  • Parks Associates, a Dallas-based market research firm specializing in network connections.
  • Best Buy is adding KitchenAid products to its inventory.
  • Home Depot is rolling out the sale of major appliances in its entire store base.
  • Lowe's has leapfrogged Circuit City to become the second-largest retailer in the category.
  • Circuit City announced it would exit the appliance category and focus on CE and home office products.