Smart Home Interconnection and Intercommunication Still Need Five Years. How About the Island Phenomenon?
The Internet of Things era is so attractive. As one of the important components of the Internet of Things era, how can the "island" phenomenon of smart homes be broken?
Reporters of *Frontline Financial Daily* recently interviewed different enterprises from all links of the industrial chain successively, ranging from suppliers and trading platforms of upstream components of smart hardware, manufacturers of smart terminal products, to third-party cloud platform access service providers, and e-commerce companies with powerful cloud platform capabilities. All parties hold high expectations for solving the problem of smart home "islands".
However, a senior insider in the industry predicts that it will take five years for smart home products to achieve interconnection and interoperability.
Branded Home Appliances Fail to Connect
As an e-commerce platform for China's electronic manufacturing supply chain, "IngDan" has been promoting the intelligentization of home appliances. Wen Dong, assistant to the president of IngDan, candidly stated that there is currently no unified communication protocol for smart hardware, and different cloud platforms adopt different communication protocols.
"Competition is inevitable. A new market will be chaotic without unified standards," said Wen Dong. For communication interface standards, there are WiFi, Bluetooth and others; at the operating system level, iOS and Android are the two major systems, and manufacturers can solve the problem by developing two App versions. The bigger problem lies in cloud access: whether Internet companies such as Alibaba, Tencent and JD.com, or manufacturers like Samsung, Haier and Midea, none of their cloud access has a unified standard, and "if you connect to me, you cannot connect to others".
A relevant person from an e-commerce platform also frankly stated that the pain point of smart homes is that products cannot achieve linkage. People do not necessarily buy all home appliances of the same brand. For example, Midea air conditioners, Haier refrigerators and Samsung TVs cannot connect to each other. Even if all products within major brands can connect vertically internally, there is a barrier horizontally with products of other brands. This large e-commerce platform is planning to promote interaction between brand owners.
In fact, whether it is Alibaba, JD.com, Suning or GOME, all have the same idea. The problem is that manufacturers also have their own concerns, and they dare not easily give up the discourse power of user data and product usage data.
Sun Yingkai, dean of the Vanward Research Institute, candidly stated that enterprises are worried about the confidentiality of their own data. "In the future, data is money. Would you give your money to others?" Therefore, there is bound to be a game process between large e-commerce cloud platforms and manufacturers, and powerful manufacturers will also build their own cloud platforms.
Sun Yingkai said that from Vanward's perspective, product intelligentization will go through the following three stages: the first is "single product, single cloud", where one product connects to one cloud—products sold on Alibaba connect to Alibaba Cloud, and products sold on JD.com connect to JD Cloud, and 70% to 80% of manufacturers follow this model; the second stage is "single product, multiple clouds", where one product is compatible with different clouds. Third-party cloud service providers such as Gizwits have emerged now, but the business cloud layer is not very mature or stable yet, because more factors to consider mean greater technical difficulty; the third stage "multiple products, one cloud" is a higher state, where products of different brands all share one cloud platform, which will bring a better user experience. However, "single product multiple clouds is still being promoted, and multiple products one cloud is still in the cradle!"
The Rise of Third-Party Cloud Access Platforms
Gizwits is headquartered in Guangzhou and was founded in 2005. At the beginning of its business, it mainly provided software technical services for European and American companies; five years ago, it entered the ecological chain of Apple peripheral accessories. There are many electronic enterprises in the Pearl River Delta with products like sphygmomanometers and bracelets, but these enterprises lack software capabilities, so they need partners to help them realize the intelligentization of their hardware.
Looking back on the company's growth process, Huang Xixiong, general manager of Gizwits, told *Frontline Financial Daily* that the "service platformization" around 2012 was only based on the fact that many small and medium-sized electronic enterprises could not afford software development costs, so Gizwits adopted a charging model that extracts commission based on product sales volume. "Some products cost less than 100 yuan, and their sales volume needs to exceed 100,000 units to cover development costs, so we built the cloud platform to monitor product activation volume, usage time and other indicators."
Naturally, with the growth of Apple's ecological chain, Gizwits's business also expanded into the home appliance sector. In fact, Apple released the HomeKit smart home platform two years ago, and Haier, Midea and others have become its partners.
Huang Xixiong said that Gizwits has two charging models: for small enterprises, it generally charges platform service fees based on product sales volume, and Gizwits provides one-stop product cloud access and management services in the form of public cloud; for large enterprises such as Haier and Midea that hope to build their own cloud platforms, Gizwits provides technical support to assist them in building their own private cloud services, and the data of smart home appliances is controlled by these large enterprises themselves.
"Smart hardware has three core elements: sensors, cloud access, and the intelligent system on the server side." Huang Xixiong believes that all big data will be stored in the cloud in the future. For example, a smart socket is very small in size, its computing, learning and storage capabilities are all in the cloud, and the socket receives instructions after cloud analysis. For another example, sensors such as temperature sensors, infrared sensors and laser sensors are like people's eyes, ears and nose that collect information, while the cloud is like the brain that aggregates information to make decisions, and then notifies the terminal to adjust accordingly.
At present, the communication protocols for cloud access vary from one to another. At the home appliance enterprise level, there are different manufacturers such as Haier, Midea, Gree, Hisense, TCL, Skyworth and so on; at the e-commerce platform level, there are Alibaba, JD.com, Suning and Gome. Just as the protocol opened by Midea will not necessarily be adopted by Haier; a smart product that first accesses Alibaba may not be accessed by JD Cloud. "Factories had a very hard time last year. JD.com, Alibaba, Suning and Gome all required smart home appliances to be made according to their own standards (referring to cloud access protocols)."
This is exactly where the value of neutral third-party cloud access platforms lies. "We have cooperated with 70 to 80 communication module manufacturers, and opened our source code. Manufacturers can find that through Gizwits, they can connect to multiple communication module suppliers." Huang Xixiong said that for protocols of different e-commerce platforms, Gizwits acts as a "translator". For example, "we have connected with JD Cloud, and we adapt to your protocol". Gizwits hopes to connect products with different protocols and enable them to achieve interconnection and interoperability.
Such third-party cloud platform service providers are also emerging in the United States, such as Ayla Networks, which was founded in Silicon Valley. David Friedman, CEO of Ayla Networks, said in an interview with this reporter at the end of 2015 that building an enterprise-owned cloud platform requires large investment and brings uncertain returns, while using services of third-party cloud platforms can save money and trouble. Apple, Google, Amazon and Samsung are all acquiring IoT platforms to implement their own IoT strategies.
In China, the three major Internet companies BAT also compete fiercely. "Ayla does not compete with them. We focus on enterprise-level cloud platforms and hope to cooperate with all of them. Amazon and WeChat have already cooperated with us," he said. He also expected that the industrial value of IoT smart home appliances will reach 490 billion US dollars in 2019, and developed countries will account for 60% of the market share.
At present, Ayla Networks has completed Series B financing with a financing amount of 20 million US dollars; Gizwits also obtained 200 million yuan in financing last year, which is the largest single investment in China's IoT cloud service industry so far.
The Only Way
Although third-party cloud access platforms are rising, after all, giants such as Alibaba and JD.com are too large in scale. To break the "island" phenomenon of smart homes, major manufacturing and circulation giants still need to "sit down together" to promote open cooperation. Wen Dong believes that this requires guidance from the government and industry associations, integration in the process of marketization, and the formation of several major alliances globally, just like 4G which ended up with two standards. Because if all parties do not cooperate, users will not get a good experience and will not accept smart homes.
As one of the partners of Alibaba Smart Business, Shanghai MXCHIP is a communication module supplier. Ren Jianhong, vice president of Shanghai MXCHIP, introduced to *Frontline Financial Daily* that the smart home industry is still developing very rapidly. In 2015, there were more than 120 smart single products on the Alibaba platform, while there were no more than 10 one year earlier. It is expected that the number of smart single products on the Alibaba platform will exceed 300 in 2016, covering various types of smart home appliances.
"We have served 500 clients, and 150 clients achieved mass production of smart single products last year. It is expected that more clients will achieve mass production this year," said Ren Jianhong. The WiFi modules of Shanghai MXCHIP are embedded with Alibaba's cloud access protocol, so as long as manufacturers assemble the modules into smart products, these smart products can access Alibaba's cloud platform. He revealed that Alibaba will promote interconnection between branded home appliances this year. And at present, Shanghai MXCHIP also has cooperation with JD.com.
Leading home appliance enterprises are also pushing forward with great efforts. All Midea air conditioners will be equipped with WiFi modules as standard after August 2016. Fang Hongbo, chairman and president of Midea Group, said in a rare interview with *Frontline Financial Daily* at the end of last year that hardware, software and cloud system constitute Midea's smart home system. In 2016, Midea will release a full range of smart home appliances and its smart home system, and connect with all external systems.
The cost of WiFi modules has dropped rapidly in recent years. It was about 100 yuan two years ago, dropped to more than 20 yuan last year, and will drop to more than 10 yuan this year, even lower than 10 yuan. Therefore, Huang Xixiong believes that networking function will gradually become a standard configuration for home appliance products. Only interconnection can generate value. For example, when an air purifier is turned on, it can also trigger the air conditioner to start; when the stove is turned on, the range hood automatically starts to suck lampblack, and once the smoke concentration exceeds the standard, the smoke alarm will sound. "Lack of an open mind is the biggest problem now." In Ren Jianhong's view, the ideas to break the "information island" of smart homes are: first, continue to promote the intelligentization of single products—once connected to the Internet, through big data analysis, products can be iterated to identify user pain points more accurately; second, major standard alliances should further open up and cooperate; third, more neutral third-party service providers, including service providers for hardware intelligentization, third-party cloud access service providers, and big data analysis and application service providers, should be called on to jointly promote interconnection and interoperability between various products.