Panasonic Targets Connected Home But Patience Required
Panasonic, a leading Japanese consumer electronics producer, announced a significant expansion to its line-up of smart home appliances and associated cloud services. Panasonic is targeting connected home products and services via developments to a number of appliances in its existing range including air conditioners, refrigerators and healthcare devices. BMI expects strong growth in the connected home vertical of the machine-to-machine (M2M) market; however, we believe that it may be slow to take off and as such be a medium, rather than short, term opportunity for which Panasonic is well positioned.
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BMI has a bullish outlook for the M2M market over the medium term, with particular progress expected in key verticals such as smart metering, security, shipping & freight, telematics and the connected home. Panasonic is set to target the connected home vertical with a range of connected appliances, supported by the launch of cloud-based services for the devices in Japan from September 2012. Panasonic is also launching the Panasonic Smart App, which will allow users to remotely operate Panasonic appliances, program settings and see energy savings. The app will be free to download on Google Android smartphones by registering as a user of Panasonic smart appliances.
The September launch of new appliances and cloud services builds on Panasonic's earlier launches of connected microwaves, launched June 2012, that enable users to search for recipes and cooking instructions using their smartphone. The new appliances include air conditioners that can be controlled remotely, refrigerators that can be checked remotely to see if they are running efficiently and a washing machine that can have the cycle set remotely. These will be launched along with healthcare products that enable users to track their weight and calories.
BMI believes the expanded range of smart appliances launched by Panasonic will improve its brand positioning at the high end of the consumer electronics market. However, as in the case of smart TVs, we argue that smart products in isolation create a significantly less compelling consumer proposition than an integrated connected home solution. Panasonic has taken the initial steps towards integrating appliances by the management of devices through a single app - however, this only begins to tap market potential.
The connected home is expected to be a medium-term opportunity with limited uptake in the short term. BMI expects the connected home to take off as a high-growth market once appliances are fully integrated with other M2M verticals, for instance smart metering and telematics. For instance, the consumer benefits of a number of appliances would be boosted by integration with smart metering technology, enabling customers to set appliances to run at off-peak times to save on electricity bills.
BMI believes Panasonic, and, indeed, the wider market, is some way off integrated connected home solutions. We argue the most compelling product mix will require collaboration between consumer electronics manufacturers, utilities companies and telecoms operators to provide increased functionality and efficiency savings for consumers, an example of which can be found in Germany where Deutsche Telekom has created a connected home management platform working with E.ON, EnBW, eQ-3 and Miele. However, even this collaboration, which includes some of the biggest names in the German market, is limited by the lack of development of smart metering and smart grid infrastructure - which will ultimately enable greater functionality and drive consumer demand.
BMI believes Panasonic will derive a brand benefit from smart appliance launches, and the launch of the Panasonic Smart App could be useful leverage to position itself at the centre of the connected home ecosystem, rather than being a junior partner to a telecoms provider. However, while Panasonic is well positioned for the medium term, we consider the Japanese connected home market, like the rest of the world, to be limited in the short term by the lack of integration of smart metering and smart grid infrastructure, and other M2M verticals.