Is Intel On The Right Track In The Smart Home?

/ Connected Home / By

Smart home products and solutions have proven to be one of the faster-growing segments of the consumer electronics market over the past few years. According to Statista.com, sales of smart home devices in the United States are expected to reach $4.5 billion this year, a 36% increase over 2017. It’s a rapidly growing market in which many companies are wisely trying to optimize their participation in.

While sales are indeed accelerating, the category is incredibly expansive. There are literally hundreds of vendors offering comparable products with unoriginal value propositions and little-to-no differentiation. The sheer complexity of the smart home from a product SKU volume standpoint poses interesting problems for large legacy technology companies. Take Intel, for example—it has to figure out how to intelligently participate in the current market’s growth phase in a way that optimizes internal resources. Should it jump into the fray with its own set of smart home-related products aimed at consumers? Or rather, should it try to rerun its mid-1990s playbook with an “Intel Inside”-style program, embedding Intel-designed ingredients inside other companies’ smart home products?

These are not trivial questions for Intel. I previously wrote on Intel’s smart home strategy after the company’s showing at the Consumer Electronics Show earlier in the year.  Intel’s PC sector, once the company’s bellwether business, has been shrinking or staying flat from quarter to quarter from a revenue and units standpoint. The technology landscape today is a completely different world from the 1990s. Steady (though uneven) increases in bandwidth speeds in the United States and in most global markets have facilitated the huge explosion in connected devices that now are commonplace in the average consumer’s home. Mobile and “always connected” devices dominate consumers’ attention spans and pocketbooks.

From a sheer perception standpoint, Intel is in a particularly precarious market position. The company has had a number of troubles from late: the recent brouhaha over the Meltdown and Spectre processor vulnerabilities (though Intel wasn’t alone with this problem), rumors surrounding Apple’s potential dropping of Intel processors from their PC products, increased competition from AMD (who has been delivering great business results with its Ryzen processor lineup), and, most recently, some negative responses to its decision to pull out of the AR glasses category. Simply stated, a successfully executed smart home strategy could go a long way towards helping Intel re-establish its historical reputation for innovation and participation in high-growth markets.
I’ve spent nearly 3 months talking to key Intel executives, analyzing what the company has done in the past, and mapping its current and proposed actions in the smart home space. I think Intel’s smart home strategy represents a significant departure for the 49-year-old company and is remarkable in its humility and pragmatism. Given Intel’s legacy reputation for high-visibility marketing (punctuated with the long-running, costly “Intel Inside” program), readers might be surprised by Intel’s new approach.  For a more detailed look, I have written a research paper that can be accessed on the Moor Insights & Strategy web site. Ultimately, I believe Intel is well-positioned for success in the smart home, and consumers will directly benefit from it over the next several years. Other companies trying to muscle their way into the smart home sector would do well to take heed of Intel’s approach—it takes a smart, well-executed strategy to cut through all the noise and redundancy in this crowded space.