The connected home, Europe’s last chance to shine
The theme of this year's Le Web conference is Social, Local and Mobile. Once again it will be an opportunity for the leaders of the web and mobile industries to share their vision of the evolution of the Internet. Contrary to last year, Orange will be the only major European tech company sponsoring the event, as Nokia is no longer present. In mobile, like on the Web, the center of gravity of the internet is now located in the US, as shown in this slide.
Only 5 years ago the “leaders of mobile” were all European companies, from phone manufacturers (Nokia) to infrastructure vendors (Ericsson, Nokia-Siemens, Alcatel) and telecom operators (Vodafone, Telefonica, T-mobile, Orange). Our startups thrived in this environment, for example in mobile messaging and content services. Now they must compete with American companies that are closer to the new decision centers of mobile, either in Cupertino, Mountain View, Redmond or Waterloo.
However Europeans still rule on another kingdom, the connected home. We are undisputed leaders in IPTV,with 43% of the world total subscribers, and home networks with a penetration above 44% in European homes. According to OECD official statistics, 11 of the 15 countries with the highest fixed broadband penetration are located in Europe.
This has helped create a healthy ecosystem around the connected home, with broadband operators providing their own internet gateways, set-top boxes and triple play services, powered by leading middleware vendors (Kudelski, NDS ), set-top box vendors (Pace, Technicolor, Netgem…) and software developers. Pervasiveness of home networks has also bred innovative startups in connected device hardware (Withings, Arduino) and software.
But we are once again about to loose our throne, to the US or to China.
Let’s start with IPTV. Each country still has its own TV standards and regulators, influenced by local broadcasters. And right now they are all busy building up new walled gardens around connected TV applications (such as HBB TV in France, Spain and Germany).
On the other end, each broadband operator has developed its own customized IPTV platform, usually based on proprietary technology. Getting a new service or application deployed on a single platform can take several months and require a great deal of lobbying. All of this has considerably slowed down the pace of innovation in the past few years, and even innovative operators focus on big name, no risk services when it comes to launching new apps on their set top boxes.
Broadcasters and network operators seem to think this fragmentation will help protect them from US-based over the top players. But only until their existing platforms are displaced; just watch how long it took the Nokia/Symbian mobile platform to become irrelevant, and for the old mobile ecosystem to be replaced by the one we know today. The same could very well happen in the connected home.
Let’s try to anticipate. Google TV 2.0 has been launched in the US, along with the new IPTV and app-enabled Xbox, probably followed by a full blown Apple HDTV in 2012. These events should finally convince cable and IPTV operators to partner with Google or Microsoft. This should reduce a number of significant IPTV platforms in the next few years to the usual three, paving the way for content aggregators, social networks, game developers and brands to launch their connected TV app offering, and device manufacturers to implement proprietary home connectivity protocols like AirPlay.
Soon a healthy connected ecosystem will emerge in the US with a large homogeneous device base, application and content catalogue and even more important, new business models to support connected home services (like addressable advertising). When these players extend their offering in Europe, tt will then be nearly impossible for local software and hardware players to compete. Within 5 years our TV viewing habits and all the data generated by our connected devices will be processed by companies headquartered on the other side of the Atlantic.
Now what can we do to support our very own "connected home ecosystem"?
First let’s not fight the wrong war. Android, iOS and Windows have already won the OS war. The connected home will not depend on an OS in traditional computer sense but on a set of protocols that allow devices and applications within the home to exchange data seamlessly. This is where Europeans should invest now.
US based companies today clearly have the lead in centralized cloud applications based on large data centers and content delivery networks. On the other hand we European have launched many successful services based on peer to peer technologies (like Skype), have very decent broadband networks and are more concerned about where our data is stored. So our connected home OS should be decentralized, relying on local storage for private data and peer to peer technologies to allow communication between devices. The “home cloud” if you want.
To help this home cloud emerge, first we need to make sure networks are not throttling or filtering internet traffic from and within the home. A kind of “home network neutrality”, complementary to the net neutrality the EU parliament is trying to protect. This should be enforced by a European wide standard body for the connected home that would be modeled on the GSM standard. The goal of this body should be to draft standards and guarantee interoperability for any connected device or service launched in any European connected home.
Which leads us to smart energy. The EU commission already mandates deployment of smart meters in 80% of all European homes by 2020. Let’s use this opportunity and make sure all these new smart meters implement our connected home OS, so that devices and applications deployed within the home can retrieve energy data to automate power saving tasks. This would allow power saving to become actually practical and maybe even fun, while giving us a significant head start in smart energy.
Finally, to make sure our connected home OS has a visual interface, we need to foster the development of connected TV applications. For broadband, cable and pay TV operators this means adopting a friendlier (and more transparent) attitude towards third party providers and offering them a more homogeneous development environment. They should follow the trend started by connected TV manufacturers like Philips and LG and unite around one single SDK and approval process for connected apps.
For broadcasters this means standardizing metadata embedded in their broadcast feed. This would trigger a wave of social TV and second screen apps that could make use of our connected home OS. In this respect promising European projects like onTV or NoTube should be encouraged.
The connected home represents a major opportunity for all us Europeans to develop our own vision of a privacy and environment friendly “internet of the machines”. So let’s act now before we again loose our throne.