Internet of Everything

Our Houses—or, at least, the houses of the tech-savviest among us—are getting closer to running autonomously. Now, it’s not just that you can open your garage door or turn on your living room lights from a smartphone app. Today, many home devices actually are beginning to communicate with each other. Lock the door on your way out and your thermostat shuts off. Or, if you come home and open the garage door, the kitchen lights turn on and the clothes dryer turns up its heat to dewrinkle the clothes that you left in there.

Welcome to the brave new world of the Internet of Things (IoT). Though still in its infancy—some of the developments described above only just debuted at January’s Consumer Electronics Association (CEA) Show—the potential effect on energy efficiency, home security and automation is enormous.

It is a potentially lucrative market for electrical contractors willing to put a little effort into training. Not all of the technology is wireless, and even the devices that run on Wi-Fi can be confusing for inexperienced homeowners to install.

While the term “smart” has become a common reference to a range of nifty gadgets, experts prefer a more specific description when discussing IoT devices. Specifically, according to Tom Kerber, research director of Parks Associates’ Home Systems and Energy Management practice, an IoT device is represented virtually on a remote cloud server, with that server understanding the device’s state at all times.

“If it were a garage door, [the server] would know if it were up or down,” Kerber said.

For Parks Associates and other market researchers, these devices fall into a category called “smart home.” 

Lighting, locks (or, more generally, security-­related systems) and thermostats lead the category, Kerber said, but smoke detectors are coming on strong. Traditional security providers have been the initial beneficiaries of most consumer spending, he added, because they are already working with sensors throughout a residence. Not so long ago, such companies as ADT were facing declining revenues as do-it-yourselfers began balking at monthly service fees. Now their business is resurging, as homeowners see new value in getting independent devices to communicate with each other.

“The security channel has been able to add home controls onto their system platform and be very successful,” Kerber said. 

As one example of the growth potential, Kerber cited a recent Parks Associates’ survey, in which more than 50 percent of respondents said they would pay up to four or five times more for a smoke alarm that would automatically turn off other devices than they would for a device that simply sent notifications.

“There’s a much richer user experience if the products work together,” Kerber said.

At this point, the market for smart home devices is relatively small. Kerber said that 60 percent of Parks Associates survey respondents didn’t know the category even exists. However, manufacturers already are onto the second or third generation of products, and bigger players are beginning to see value in acquiring startups and niche companies. For example, Google bought Nest Labs a year ago, and now the “Works With Nest” label has turned the famously intelligent thermostat into a high-value home-automation platform.

Revenues are expected to start growing quickly, according to the CEA. The group expects final 2014 wholesale figures for smart home products to hit $2.6 billion, and the category is anticipated to grow to at least $10 billion by 2018, year over year, according to Chris Ely, the CEA’s senior manager for industry analysis. Research cosponsored by the CEA and Parks Associates recently showed 20 percent of U.S. homes with broadband Internet connections were expected to purchase one or more smart-home devices in the next year, and 13 percent of broadband households already own one or more of the products. With 80 percent of U.S. households now boasting a broadband connection, those percentages could add up to serious money.

Even though wireless devices are garnering much of the attention, the interest in connected products is only increasing the market for structured wiring.

“Structured wiring and monitored security are the most commonly installed technology at 70 percent of new construction,” Ely said, citing figures from the CEA’s annual survey of homebuilders. 

Some 47 percent of new homes feature wired security systems, and 30 percent include a dedicated home theater space. With the population aging and emphasis on health concerns, 35 percent of builders say they are likely to offer health monitoring and support technologies in the next two years.

Ely said the CEA sees three major trends driving new-product adoption and features:

• Digitization of physical spaces—
this relates to the addition of sensors to everything from lamps to clothes dryers.

• Internet of me—there is an increasing use of algorithms to use our actions and device preferences to anticipate future actions and purchasing decisions (e.g., the way ads on a website might feature products you have recently browsed online).

• Fragmented innovation—instead of focusing on a few large product categories, such as smartphones or HDTVs, as they have in the past, today’s tech-product developers are casting their nets much more widely.

Lighting-controls manufacturer Leviton took a leap into the smart home market in 2012 with its purchase of Home ­Automation Inc. It further expanded its presence last year by acquiring BitWise Controls and ClickOn Technology. Though the company has offered its own centralized control products for years, it has been more of a niche market until recently. Greg Rhoades, Leviton’s marketing director for security and automation, said he started selling in the home-automation category in 2009, and he’s seen customer awareness of IoT-style devices soar since then.

“We had to explain the benefits, and now homeowners are begging for them,” he said. 

The company’s offerings are becoming as sophisticated as the Apple iOS mobile operating system used in iPhones and iPads has evolved. 

“We’ve had apps now for a long time, but now we have iOS apps in 17 languages,” Rhoades said.

While the company offers its own smart home platform based on structured wiring, Leviton also has established partnerships with companies now making waves (so to speak) in the wireless category, including Wink, whose wireless-hub-based products are sold through Home Depot. Similar to Lowes’ Iris system and Staples’ Connect line, Wink has developed a wireless platform that controls connected devices through a hub connected to a customer’s wireless router. In December, the company launched an in-home control panel that replaces a standard light switch with an iPhone-sized touchscreen, bringing more structured-wiring unification to what has been, until now, a collection of random products and smartphone-based apps.

“We consider the hub, in that market, [as] the razor, and the devices that go into it [as] the razor blades,” Rhoades said, explaining why Leviton opted against adding its own hub-based system to the growing list of proprietary competitors. 

Communicating through the popular Z-Wave protocol, Leviton’s switches also are compatible with Iris and Connect, enabling the company to match its “blades” to any number of available “razors.”

Certainly, wireless smart-home product manufacturers are touting the do-it-yourself aspect of their offerings, but Kerber said that some consumers can become frustrated when what seems to be an easy DIY installation gets caught up in passwords and communications snafus.

“Any product with a network connection has a 12 percent return rate,” he said. 

He sees a sweet spot for electrical contractors, who, along with traditional security companies and broadband service providers, are among the few outside resources that consumers trust to deal with home-wiring issues. Electrical contractors familiar with these technologies are in a great position to build both customer trust and their own business by bringing the new options into conversations about even the most mundane light-switch replacement.

“The problem with adoption is that people aren’t aware” of the available products, Kerber said, adding that face-to-face relationships are the best avenue for raising that awareness. 

“To the degree the electrician is in the home for another service, [there is] an opportunity for upselling,” he said.

Rhoades agreed that, wireless or not, the new technology offers a big opportunity for electrical contractors.

“They’re already in the homes, and they already understand wiring. It’s taking a little more training, but they are asking us a lot and we’re seeing a lot of electricians roll through our training programs,” Rhoades said.

The opportunity doesn’t lay just with individual homeowners, Ely said. With 93 percent of new homes including a broadband connection, homebuilders are looking for ways to leverage that Internet access in the upgrades they are offering to prospective buyers.

“More and more, builders recognize the need to offer and be able to talk about these technologies,” he said, adding that many are looking for new partners to help them with this task. 

“The role of the partner is to at least be able to speak about the technologies,” Ely said.

While electrical contractors might need some training on product-specific installation requirements and some network communications details, they already have the basic wiring knowledge needed to get into the field, Kerber said. And, at a time when revenues might be flat for standard service offerings, smart home expertise could be a big bonus to a contractors’ bottom line.

“This is an exploding industry right now. We have everyone from Kickstarter startups to huge conglomerates” entering the field, Kerber said. 

For example, he said that up to 99 percent of new homes have incorporated smart switches, which are an inexpensive upgrade from standard analog offerings.

“In the future, this is only going to increase,” Kerber said. “It’s amazing how fast this stuff is moving off the shelves.”

About the Author

Chuck Ross

Freelance Writer

Chuck Ross has covered building and energy technologies and electric-utility business issues for a range of industry publications and websites for more than 25 years. Contact him at

Stay Informed Join our Newsletter

Having trouble finding time to sit down with the latest issue of
ELECTRICAL CONTRACTOR? Don't worry, we'll come to you.