Currents of Disruption: The Smart-Home Revolution

 In Market and Investment Insights

See how Marika Christopher, Director of Product Development, and her family are embracing smart-home technology as a way to ease the pain points of daily life, with insight on investment implications from Portfolio Manager Denny Fish.

Key Takeaways

  • Smart-home technology is changing the way we interact with our environment, turning devices into command centers that streamline daily tasks and bolster home security.
  • As devices get smarter and standardization takes hold, investment opportunities – and potential risks – will likely emerge as providers expand on and further integrate their offerings.
  • What’s still unknown is which of the key players could emerge as the leader in the evolving home technology space, and why.

Dean Christopher: Most days I take my scooter to and from work. I have the garage adaptor hooked up to my smartphone that can open and close. So as I’m approaching the house, I’ll pull out my phone, click open.

Marika Christopher: I’m usually the first one home with my daughter and we’ll come upstairs to the kitchen to get dinner ready. And I am able to hear when Dean comes in the garage door because the chime goes off throughout the whole house.

I think that our life has changed dramatically over the past decade using smart-home technology, which has gone hand in hand with a lot of the ways our personal life has changed.

Dean: I feel that the smart-home technology has eased a lot of pain points that you don’t otherwise know are there in the first place. You don’t know what you don’t know. But now that it’s at your fingertips, it’s, “Why not close the garage door after I’ve left. I don’t need to be there or why not check in on the nursery to see how my daughter’s doing.”

We have about 14 devices in the house and they all communicate with each other in one way or another.

Marika: So typically in the morning when I wake up, I will voice command for the smart-home device to turn on the lights. So I’ll say, “Hey Google, turn on the bedroom lights.” When it’s evening, I’ll lay down for bed and I’ll say, “Hey Google, show me the nursery,” and I’ll be able to stream the nursery the whole night so that I can see what’s going on.

Dean: Camera monitoring is huge. We’re able to see Eva when she’s sleeping in her nursery if she wakes up. When others are in the home, we can keep an eye on things to make sure everything’s all right even if we’re tons of miles away.

Denny Fish: Clearly over some period of time I would imagine just about everything is voice activated. Because the reality is why wouldn’t it be? They are all coming with skills that are enhancing the most popular solutions that are out there. There are so many unique offerings out there that these devices will support the most common ones. And as they get deployed through homes, it will be a natural way that people will interact with them.

Dean: With this screen, it does a great job with visualizing information and kind of going through a bunch of different tasks. Some of the most common are just checking the weather, what’s on my calendar today.

And we also have this hooked up to the front doorbell. So if someone were to ring the doorbell, this would automatically launch into a live stream to see who’s there. It also acts as just kind of a rolling camera. Hey Google, show the front door.

Denny: Amazon has a clear number one position right now. They have about 60% share of the install base. Google has got about 20% share of the install base. Apple has got about 5. Then the tail for the rest of the market that Amazon is dominant. Why are they dominant? They were really first to market, with the idea of putting this device that is different than a phone, or different than a computer or a laptop or tablet, into your home. And they also had the benefit of 100 million Prime subscribers, they could actually target with this device with some meaningful use cases as well.

But I’d argue as you start thinking about layering artificial intelligence into the devices, and the way they learn, and the ability for, say, Google to leverage what it has done through search and the amount of data and its workaround artificial intelligence, I would expect Google to be a strong competitor.

I think over the next five years devices just get smarter and you are going to have a combination of devices getting smarter with standardization. So you are either going to have a common thread among the device providers or some level of extraction that is going to allow you to tie all that together. Could that be through the digital assistant, could it be through something else, we don’t know, but I think that is where the world is heading over the next five years.

Dean: She likes to dance around and kind of engage and sing along to different songs. And with on-demand music and our IoT (Internet of Things) speakers that we use, we can shoot a song from our phone to any of the local speakers. Not tied to Bluetooth, so it’s great to play songs here or when she’s going to sleep, we can put the white noise on in her nursery while we’re in our bedroom.

Marika: I see smart-technology and technology as a whole transforming the way that she understands the world, how close other parts of the world really are to her and her experiencing things at a much younger age than we were ever able to.

Denny: I think from a disruption standpoint, there are a lot of considerations. Google is a really good example. Is voice search additive or does it cannibalize search relative to the way that it has been monetized historically? Our current view is it is likely additive to the market, but it is something to consider. Does the proliferation of these devices just create an even more unassailable competitive advantage for Amazon, because of this combination of content, goods, media, all driven through this device that sits at the center of the home? So in many ways, a smart home isn’t necessarily disrupting much in the home as it is just incrementally adding to the things that you would deploy in your home that you may not have had otherwise. You know, you could argue that maybe there are third-party services that get disintermediated, because they are not as necessary any longer, but I think for the most part, this is truly additive.

The opinions and views expressed are as of the date published and are subject to change without notice. They are for information purposes only and should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation to buy, sell or hold any security, investment strategy or market sector. No forecasts can be guaranteed. Opinions and examples are meant as an illustration of broader themes and are not an indication of trading intent. It is not intended to indicate or imply that any illustration/example mentioned is now or was ever held in any portfolio. Janus Henderson Group plc through its subsidiaries may manage investment products with a financial interest in securities mentioned herein and any comments should not be construed as a reflection on the past or future profitability. There is no guarantee that the information supplied is accurate, complete, or timely, nor are there any warranties with regards to the results obtained from its use. Past performance is no guarantee of future results. Investing involves risk, including the possible loss of principal and fluctuation of value.
Janus Henderson is a trademark of Janus Henderson Group plc or one of its subsidiaries. © Janus Henderson Group plc.

The opinions and views expressed are as of the date published and are subject to change without notice. They are for information purposes only and should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation to buy, sell or hold any security, investment strategy or market sector. No forecasts can be guaranteed. Opinions and examples are meant as an illustration of broader themes and are not an indication of trading intent. It is not intended to indicate or imply that any illustration/example mentioned is now or was ever held in any portfolio. Janus Henderson Group plc through its subsidiaries may manage investment products with a financial interest in securities mentioned herein and any comments should not be construed as a reflection on the past or future profitability. There is no guarantee that the information supplied is accurate, complete, or timely, nor are there any warranties with regards to the results obtained from its use. Past performance is no guarantee of future results. Investing involves risk, including the possible loss of principal and fluctuation of value.

C-0319-22724 12-30-21

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