Smart lighting: The gateway to the connected home and IoT markets
What makes smart lighting smart? Smart lighting is quite a broad topic. Can it be defined as using lighting in a smarter way? Or is more accurate to define it as innovations in efficient lighting? Does it include building design to incorporate natural light? Is it connected, wireless light bulbs? Is it lighting controls? As one entrepreneur put it, no matter which way you slice it, the smart lighting market is a billion-dollar-plus market.
McKinsey & Company puts the worth of the market for general lighting at $83B CAD in 2011, comprising 75% of the lighting market. Further, McKinsey projects the market to grow to $125B CAD by 2020 to comprise 80% of the total lighting market (the other two smaller market segments being automotive and backlighting). They segment the general lighting market into seven key applications: residential, office, shop, hospitality, industrial, outdoor, and architectural.
LED lighting is set to outshine competing lighting technology
In 2014, lighting in residential and commercial sectors consumed about 11% of the total US electricity consumption – a whopping 412 billion kWhs! For jurisdictions like the US with carbon intensive electricity production, these large numbers mean a significant carbon footprint. With carbon markets on the horizon, reducing this consumption will be critical.
Generally, while being the most inefficient bulbs on the market, incandescent bulbs, rather than light-emitting diode (LED) bulbs, are still the most widely in-use bulbs. This leaves a lot of room for energy savings by switching to more efficient bulbs. The incandescent bulb market share is already slipping to more efficient lighting such as halogens, CFLs, and LEDs, with some projections being revised as LED prices drop much faster than anticipated. This means that LEDs are expected to hold a large majority of the general lighting market by 2020 as they take share from both inefficient technology and other competitors in the efficient lighting market (see Figure 1).
Lighting controls: A multi-billion dollar market
Efficiency is not the only trend in lighting — lighting is also becoming smarter, which is having a significant effect on the lighting market. Lighting control and wireless or connected bulbs are two early entries into the smart lighting arena. McKinsey puts the market for lighting control systems as worth $2.7B CAD in 2011, which is projected to grow to $11.5B CAD by 2020. Ontario startup Ubiquilux has a unique lighting control product — gesture-controlled lighting — and is taking aim at this multi-billion dollar market. They have a light switch that can differentiate between random movement and a specific intent to control something. Miklos Tomka met with Joe Lee and myself about how the technology works, his insights into the lighting control market, as well as advice on how to take a product to market. Read the profile here.
Connected bulbs are the smart way to light up more homes
Since 2012, more and more connected bulbs are entering the lighting market. Rather than being controlled by a light switch or dimmer, wireless bulbs connect to the internet and are controlled through applications on a customers’ mobile device or desktop.
These connected bulbs are experiencing a boom in consumer interest and market uptake, and lots of vendors are getting into the game. According to Navigant Research, a market research firm, “wireless bulbs come with a significant price premium over their non-connected counterparts. While outlets such as The Home Depot have begun selling standard A-type LED bulbs for under $10, wireless bulbs are priced between $30-60 apiece. As this premium comes down, and as more users become interested in the range of possibilities made available through connected lighting, adoption is expected to increase rapidly.”
[inlinetweet]Canadian green technology startup Nanoleaf launches wireless bulb: Smart Ivy[/inlinetweet]
Led by three University of Toronto grads, green technology startup Nanoleaf is focused on creating the world’s most energy-efficient light bulbs. Their creative and unique design may capture customers who are not so inclined to make the switch away from incandescent lighting, or for whom the energy savings are not enough incentive (while we all hate our electricity bills in Ontario, compared to many jurisdictions, electricity is very cheap). More recently, they have launched a new wireless bulb, the Smart Ivy, which comes with a sleek Nanoleaf Hub. We caught up with CEO Gimmy Chu at the Nanoleaf office in downtown Toronto to see, test and talk about their new connected bulb and (really cool looking) hub. He also shared his insights on LED lighting, connected lighting and the future outlook for both. Read the profile here.
Figure 2: Nanoleaf Smart Ivy
[inlinetweet]Lighting control and connected bulbs: Lighting is evolving towards the IoT[/inlinetweet]
Between control and connectivity, lighting is well on its way in its evolution towards the IoT.
Gartner Research, a global market research firm, defines smart lighting as “a lighting system that is connected to a network and can be both monitored and controlled from a centralized system or via the cloud.” Gartner sees the next steps required by major lighting vendors as the addition of analytics and predictive modelling, in order to really make these bulbs smarter.
Figure 3: Gartner Research on the transition from traditional lighting and smart lighting
Figure 4: Smart lighting market players*
In 2014, MaRS Market Intelligence launched a Connected World Market Insights series. We focused on the connected home, digital energy, and connected health, among other topics. For our Connected Home paper, we interviewed Jeff Lin, Co-founder of Liricco Technologies. We wanted to touch base again regarding their whole home solution and their initiative to enter the commercial lighting market. We called Jeff in Hong Kong in September 2015 to see how things have progressed since we last spoke. Read the profile here.
A smart home automation solution that seeks to cut the smartphone umbilical cord
Manitoba-based Umbrela Smart Inc. CEO Salman Qureshi spoke to us about the Umbrela home automation system, which is designed around voice control, smart light switches, and outlets. Their connected home solution allows a homeowner to use their smartphone to control their home as an option, not as a necessity. As he said to us, “most, if not all, IoT products are smartphone-dependent. That means a home becomes smartphone-dependent. That’s an umbilical cord we want to cut.” Read more of our interview with Umbrela Smart Inc. here.
Smart lighting is joining the Internet of Things
I’m looking forward to seeing how the smart lighting market develops in Ontario. I think it will be much faster than we think (and if we can get all these home automation systems, controls and wireless bulbs to speak the same language, startup MMB Networks may be able to help here!). LEDs are making great headway; sensors, controls, and connected bulbs are hitting the market; and there are a lot of IoT vendors that can add essential analytics and programmable intelligence layers.
Stay tuned for more on smart lighting market developments from us in the future.
Smart lighting venture profiles
We spoke to several entrepreneurs about their smart lighting ventures. Read the profiles:
- Ubiquilux on gesture-controlled lighting.
- Nanoleaf on LEDs and the launch of their connected LED bulb.
- Umbrela Smart Inc. about their home automation system designed around smart switches and outlets.
- Valta Systems on Liricco and their whole home solution and their initiative to enter the commercial lighting market.
We sat down with Miklos Tomka of Ubiquilux to discuss smart lighting, the smart home, and the IoT market.
Tell us about Ubiquilux.
Miklos Tomka (MT): Ubiquilux is a smart lighting control company working with technology from a sensor licensing company called XYZ Interactive, which invented and patented the world’s first gesture-sensing technology using low-cost infrared components. This technology enables our smart lighting switch to differentiate between random movement and a specific intent to control something.
Ubiquilux felt that this innovation could disrupt the market for light switches — both traditional and smart switches. Light switches have stayed very much the same for over 25 years, and there has been no real innovation to the user interface. So we’ve spent significant time and effort to design a fundamentally new light switch with patent-pending features and design.
Our switch offers an alternative, reliable way to control lighting that does not react to random movement. If a light goes on or off when you walk by, it won’t be a good solution for areas such as the living room or an office. With our e-Motion switch, the light will turn on or off only when you want it to, based on specific gesture commands.
The key features of our light switch are GestureSense© and Active Saver. The main benefits of our product include greater hygiene, greater accessibility, convenience, design innovation, and energy savings through the Active Saver feature.
How exactly does your smart light switch work?
MT: Our smart light switch provides a touch-free, gesture-controlled way to interact with your lighting. You swipe your hand up in front of the switch to turn it on, and swipe down to switch it off. To dim, you would hold your hand in front of the switch, and move your hand closer or farther away from the switch to set the light to the desired brightness level.
Our solution is optimized for LED lights to ensure accurate LED dimming control, as many dimmer switches currently have problems with controlling LED bulbs. The switch can also be controlled by touch by simply pushing the switch face, for those who don’t realize that it is a gesture-controlled switch.
People sometimes forget to switch the light off, which leads to energy waste. Our switch has an active energy saving feature, which works by monitoring ambient light levels. When these light levels increase, the switch automatically shuts off the light.
Your product is smart. Is it also connected?
MT: When people say smart, most of the time they think connected. While our solution is smart, it is not yet connected. With connected devices, people expect technologies to control their home in sophisticated ways, using tablets, phones, and other tools. But we believe that gesture controls can offer much more convenience.
Just think about it: you come home and you want to switch the light on, but your hands are full with shopping bags. To use a connected device, you would need to put your shopping bags down, then pull out your phone, then launch Siri or another app, and then give it an audible command. Then Siri says, “Is that what you want?” and you say, “Yes,” and then the light comes on. This is not instant or convenient.
With Ubiquilux, you don’t have to put your things down. If your hands are full of groceries, or greasy from cooking, you can swipe up at the switch with your elbow and the light will come on. For typical use cases like these, being connected is not an advantage. But being connected has other advantages, which is why our next product will be both gesture-controlled and connected.
When were you founded?
MT: Ubiquilux was founded late 2013 and we were operating by early 2014.
Can you identify or define the industry that you see yourself operating in.
MT: Lighting control.
Have you identified the market opportunity around this?
MT: We can define the market opportunity in many different ways. We are in the lighting control market, which is projected to be over $11.5 billion CAD in 2020 (PDF) with CAGR of 20% by 2020. Then there is the narrower market for dimmer switches, and there is also the broader smart lighting market.
We’ve found that, no matter how broadly or narrowly you define our market segment, we’re part of a billion dollar market. It is a market that’s expected to grow very rapidly, and it is a market that has no real specialized company focused only on smart lighting. If you look at other market players, they have solutions for everything: temperature control, smart garage door control, connected switches, etc. We do only one thing — we only do lighting.
Our core differentiator is the patented gesture sensing capability, because nobody else has that. We’re very different from market players like Belkin or Legrand because they don’t have gesture control. We can build on top of that by making the switch connected. Since the switch has a number of sensors built-in, it can relay more than just simple on and off functionality, or dimming information. It can detect what’s happening around it, which can lead to further feature add-ons.
Who are your customers? Which customer segments are you targeting first and why?
MT: Originally, the team felt that this is a volume market, and that they needed to go directly to retail at launch. We see significant interest from retail, but retail expects mass market pricing and associated costing, which you cannot satisfy easily with manufacturing in Canada. Retail also requires significant marketing to create awareness, which can be very costly.
So we have shifted our strategy to begin with the commercial segment, with a focus on hospitals, home theatre installers, interior designers, etc. For the hospital segment, we are working with an organization, ChairCanada, which is an association to reduce hospital-acquired infections. They want to carry our product and believe the e-Motion switch has the potential to save lives.
How do you differentiate yourself from your competitors?
MT: We don’t have a direct competitor with similar gesture sensing technology. But if a customer is looking to control their light switch, they have many options. In a way, all of those options are competitors. To differentiate, we solve a number of problems that traditional switches don’t. We solve problems around hygiene, convenience, and energy savings. It’s also a really cool design solution, which is another big differentiator.
Some may say that our solution is very similar to a motion-sensing switch, which is in the market now, but this kind of switch is activated by a motion or proximity-sensing switch. I don’t think people want that — it’s not a real substitute for a light switch. It may work for the washroom to detect movement, but if you want a switch in your corridor that doesn’t go on or off by itself, motion sensing is not a real solution.
We believe that, although those switches solve certain issues, they’re not a real substitute for a simpler, gesture-based solution like our e-Motion switch.
What would you say has been your biggest challenge to date as a startup? What advice do you have for other startups?
MT: Our team is too small. Startups never have enough money. Therefore, having focus is crucial. Some of the team want to go retail and commercial at the same time, but doing too many different things at the same time can lead to failure. We need to make sure that we don’t spread ourselves too thin — we can’t solve all of our problems at once. So we focus on solving some problems in a credible way. We have a very targeted value proposition, which over time can be expanded.
I’ve worked with many companies over my career, launching new products or services. If you don’t have focus, there’s a high probability that you will fail. Having that focus is tough, because sometimes board members will say, “these people want to buy, why don’t you talk to them?” I have to say, “no, we cannot, because that will hurt our focused strategy.” And that’s hard to do.
Do you perceive any market barriers? What do you think the market barriers are in getting your product to market?
MT: I think the biggest barrier is awareness. We were talking to one retailer a while back and they said that in order for them to sell big quantities of the e-Motion switch, they would need to spend a million dollars in TV advertising. There are pros and cons to being a world-first product. The pro is that you have very little competition, but the con is that most people don’t know what your product is. What does gesture control mean? Is this like the Clapper switch? Is it like a washroom sink, where I wave my hand? Is it like motion sensing? What are the benefits of gesture control? We need to explain that this product is not the same as anything that’s come before it.
GestureSense is a natural way to control the lighting in your home. Think about when Apple launched their first tablet. They were showing the pinch and zoom feature in TV ads for a long time, so that people understood it. By the time they launched, people were aware. That’s a burden for us, because if people don’t understand what we do and why they should care, nobody will go to a retailer saying, “I want this product.”
What would be some key measures that could be taken to mediate this awareness barrier?
MT: This awareness barrier was one of the reasons we changed our sales strategy. If you go through the specialist channel, they provide hands-on training, so they don’t start with the gesture control feature. Instead, they begin by showing people the problem that needs to be solved. For hospitals, the problem is that patients are catching dangerous contagions by touching the light switches. Ubiquilux has a solution for that.
Specialist home theatre sales people can do it differently. They can say, “The future is gesture control. You can impress your guests, you can dim your lights… how cool is that?” But this type of sales tactic is only possible through one-on-one selling. Starting an Indiegogo campaign is another option that could raise awareness for us in the market as well, so that by the time we get to retail, there will be some kind of an understanding of what the product is.
What are your next steps then as a company?
MT: We are currently ramping up for manufacturing. We will start selling in October or November.
Our e-Motion switch recently received ETL and CSA certification. We expect to be available for sale in October or November, with an initial starting price of $149. First, we are going after early adopters and will also offer our product to the commercial channel. Commercial sales will include, for example, hospitals, home theater installers, or interior designers. We will manufacture the first couple thousand switches in Canada and later we plan to outsource manufacturing to reduce costs, eventually going mass market through retail.
We are also exploring the possibility of conducting pilot tests in hospitals, which should lead to some very strong press. We are in the process of building partnerships with the home theater channel, and we have several trade shows over the next couple of months. This will be our entrance to the global marketplace.
What is next for the smart lighting market?
MT: The whole smart home and smart lighting market will change radically over the next few years.
First, we expect to see the widespread adoption of new, simple, natural and reliable interaction models for light control in both institutions and homes.
Second, we expect to see a complete shift to LED lighting. This will require light switches and dimmers that are compatible with LED lights (many current dimmer switches are not). This shift has already started and I think it will accelerate as many countries stop selling the old light bulb technology.
Lastly, as switches become smarter, a whole range of new smart applications will emerge that can leverage the data collected by these devices.
What sector industry do you see yourselves operating in?
Gimmy Chu (GC): We’re in lighting, which is a sector split between a lot of things. Basically there’s the commercial space, the industrial space, and the consumer space. Considering the connected home, I think right now it’s going to start off in the consumer space, which is why we’re working with a lot of open standards. I think it’s going to quickly move into small to medium-sized businesses and expand from there. We’re going to stay focused on lighting and being super energy efficient.
Tell us about the Nanoleaf product solution. What is the problem you are trying to solve?
GC: There is a lot of innovation that goes into the Nanoleaf products that makes them so energy efficient. We custom designed pretty much every aspect of this product. Starting from the LED, we create custom packages, which we optimize for energy efficiency. That means we get the most amount of light for the least amount of energy. There’s also a power supply within the bulb to convert the AC power coming out of your wall into DC power, ensuring that a stable voltage and current goes into the LEDs.
Also, our method of having the light chips on the outside allows us to distribute more light without wasting energy. A lot of LED bulbs out there just have a flat board that shines the light upwards, so they have to use a reflector to make it omni-directional. The challenge with that is that a lot of light ends up getting reflected internally and gets trapped inside rather then coming out, wasting light. And wasted light is wasted energy.
It’s a lot of these types of innovations that went into our bulb to create something so efficient. Even our wireless technology is designed with energy efficiency in mind. We use ZigBee, a very low power wireless protocol.
Tell us more about this new connected bulb.
GC: There are a lot of connected light bulbs out there. When we first started thinking about connected lighting or smart lighting, we didn’t think that using an app to control your lights made a lot of sense. Your light switch was right there and it’s already convenient. Why unlock your phone and open an app just to control your lights? So we invented the Nanoleaf Bloom, a dimmable light bulb that doesn’t need a dimmer switch, allowing you to use your regular on/off light switch to dim your lights. Now everything is moving into the connected home space, and we feel that it’s important to provide sustainable options for people who are interested in smart lighting, so here we are. We believe that it’s really going to get interesting once devices are talking.
I don’t think devices are there just yet, but when Apple announced the Apple Homekit, we saw voice-controlled lighting for the first time. That got us really excited because we had always been thinking about, “How do we create something that people will want to use?” We had thought about things like gesture control. You wave your hand and the light comes on. We thought about sound control, too. We actually thought all the way back to when they had the Clapper, but that was very sensitive; if you accidentally stomped your feet, the lights would turn off. So with the voice control — being able to say, “Turn off my bedroom lights. Turn off my kitchen light. Turn off my reading light.” — it was really exciting for us.
The Nanoleaf One and the Nanoleaf Bloom, our products, both have the same look. Because of the style of the bulb, it is very focused for the consumer market. It got a lot of the geeky, techy people who are looking for something different and unique. Now, as we get into connected lighting, that brings us more into the consumer electronics area. This is why we’re partnering with Best Buy to get the product out there.
Who are your users? What customer segments are you targeting?
GC: We have a very different take on lighting. If you look at our existing light bulbs, they kind of hit a couple of different segments. For example, some of our products are very focused around the design market. I don’t know if you’ve seen our glass bulb, the Nanoleaf Gem. The glass bulb is more of an elegant style and it fits into the design and decor kind of shops. With the Gem, we’re targeting interior designers or people that are passionate about making their space look great. For the connected bulb, we’re really focused on energy efficiency.
How do you differentiate from your competition?
GC: I think energy efficiency is a big backbone for our company. However, we feel that energy efficiency alone is not always enough to get customers to want to spend a little bit of extra money. So we add in more features and benefits for the customer.
We’re adding a very unique design aspect to it. For example, the hub that I just showed you is a combination of form and function. It was designed to be that shape and that size to really maximize the intent of range, and to be able to support as many bulbs simultaneously connecting to it as possible.
What do you think is needed to alleviate market barriers?
GC: I think that the biggest market barrier is consumer awareness. For anyone that knows marketing and sales, they know that educating the consumer is very expensive and very difficult to do. Even a simple message like, “Hey, you can use your voice to control your lights”… somebody still needs to tell that to 30 million Canadians. That in itself takes a lot of marketing and a lot of marketing dollars. For a small startup, those are dollars that we don’t necessarily have. We also don’t necessarily have that kind of reach.
I guess the next step for us is to find a way to do that. It starts with creating a great product that’s really reliable, so that people will want to share it with those around them.
Lighting is one of those things that is kind of in the background. People don’t normally talk about it. When was the last time you thought about light? I think most of the time, for the regular person, even though they are surrounded by lights everyday, they don’t really think about it.
How do you see smart lighting fitting into the overall connected home market?
GC: Smart lighting is kind of like a gateway drug for the connected home. People might not necessarily want to spend $200-300 to buy a connected thermostat, or they might not want to go and get an expensive connected refrigerator that that might tell them that they’re out of eggs. Smart lighting, cost wise, is just a little bit lower than the other connected devices. And it just helps you start things off.
It’s connected by Ethernet?
GC: Yes. We have a WiFi chip in there as well, but we found that the installation process using WiFi is complicated, whereas if it’s Ethernet you just plug it in and it works. For someone like your dad, if you tell them, “Just plug it in and you’re good to go,” then they’ve got it. This is part of making sure that things are simple. Just because the feature is there doesn’t necessarily mean you’ll want to use it if it’s complicated.
Do you see the potential to integrate other smart home products into your hub?
GC: We’re not looking to be an integrator of everything. We’re focused on lighting. Our hub supports other brands of light bulbs, so if you have a GE bulb or the Phillips Hue bulb, for example, they all connect to this hub as well. You can control them from this hub. The way we see it, we want things to be very inter-operable and a lot of freedom for the end consumers. That’s the only way to get mass adoption.
What’s your opinion of the other connected light bulb makers out there?
GC: There are different ways that people do it. Some companies, they basically go to China, find a connected bulb, and then recreate it and claim, “This is my bulb.” I’ve seen a lot of these factories, I know where a lot of these products get made, and I see the price points and the technology inside. Some are not made well. Some are really well made, with a lot of innovation that goes into it. So there is a balance — there’s going to be a range of good and bad quality.
When it comes to innovation and lighting, the intersection of connected IoT devices and lighting, where do you think the biggest impact would come from in terms of consumer benefits?
GC: I think we are entering into a new era of connective devices and it’s so early that we don’t even know what the potential is. If you think back to late 90s, when the internet first started getting popular and people were thinking about how crazy it was going to be… did they think that everyone would have a little handheld device that’s smaller than a notebook that could do everything? Did they think that there would be services like Uber, where if you want a car to come, it’ll know where you are and it just kind of pays for itself? Did they even think about that when the internet first started? No. The internet enabled all of that by connecting people.
Now, we’re connecting things to each other. We just need to think of very innovative ways to utilize this kind of framework. Of course, the framework has to be built first and that’s where we’re at now. Creating is happening, enabling all of our devices to be connected. That’s the first step. Beyond that, I think only time will tell.
What do you think is the market opportunity for this connected product?
GC: I think in the next 10 to 20 years, all light bulbs will be connected. Just look around. How many light bulbs do you think there are? I’m not saying that this particular connected product is going to fit into all those applications. That’s the thing about lighting… it’s such a wide range of different areas that you have to be aware of.
You know, LED technology is just starting — it has yet to be utilized to it’s full potential. For example, we are still cramming little individual power supplies into each one of these bulbs. That makes no sense. What was the point of a bulb? It was because you had this little filament inside that actually generates a lot of heat. You need to contain all of that heat because you’re pumping a lot of electricity to it, but it still burns out every 3 to 6 months.
Now with LED technology, your lights last about 30 years. So why am I not just installing it as part of my renovations? When you build a house, build it with the right lighting because 30 years from now you will probably renovate. There’s a lot of wasted material in there.
You’re saying that the future could be anything?
GC: It’s already happening. For example, if you look at commercial light, they’ve started moving away from bulbs. They just go straight to fixtures. It’s cheaper, and it’s optimized to work with LED technology.
Also, if you look at the light source, the best light source that we have is the sky. Why? Because the entire sky is the light source. It’s not these individual points that create all this light. So how do we replicate the sky? Can we do it in a very nice and elegant way? Whoever can figure that out, that would be really cool.
These are some of the things that we think about on a daily basis.
Do you have any other plans beyond this connected bulb?
GC: We have a lot of exciting plans. For example, last year we really wanted to create a light bulb that could replace the housing bulb. If you look at this product, what we’re showing you over here, all of the color is just going to pop out. With LED technology, it’s been very difficult to get all the color to come out — sometimes it can create that sterile hospital feel. We’re actually getting an award for this product, with the Illuminating Engineering Society (IES), for being able to accomplish this light bulb with the level of efficiency that we’ve gotten.
Now that we’ve created all of these things, the next step is just getting them out on the market.
We sat down with Salman Qureshi of Umbrela Smart Inc. to discuss the connected home and smart lighting markets.
What sector or industry do you see yourself as operating in?
Salman Qureshi (SQ): Internet of Things and connected home are terms that are thrown around. It used to be just home automation, and home automation evolved into the Smart Home. We are in this market.
Tell us about your product and solution.
SQ: The company is called Umbrela Smart Inc., and the product is called Umbrela. We are designing a luxury, all-in-one smart device for homeowners to be used for security, ambience, energy savings, and comfort.
The system works by taking out conventional switches and outlets to install one of the Umbrela configurations. For the switches, we have three Umbrela configurations: the full-feature, main unit, which has a touchscreen and cameras built in; the Umbrela Mini, without a touch screen; and the Umbrela Micro, which has further pared-back features and is designed to fit in tight corners.
When Umbrela configurations are deployed throughout a house, a powerful Umbrela network is created which utilizes the existing powerlines for robust data communication. It provides users with security, centralized music, mood lighting, and lighting control features – all of which can be controlled by voice, built-in touch screens, or a smartphone.
Tell us more about why you chose a powerline solution over wireless.
SQ: Single-feature wireless gadgets are hard to deal with. They may work as a single unit, for example, and in that capacity they work great. But if you try to include other features or devices, then you need to have a tech-savvy mindset, not to mention the security and connectivity issues that are typical with any wireless technology.
Powerline technology has been around for 20-30 years or more. One of the few problems with powerline technology was that, first and foremost, it had low bandwidth. So very limited data could be sent over the powerline. The second problem was that if you ran a vacuum cleaner or a blender, the noise entered into the communication data and corrupted the information being sent. HomePlug technology has resolved both of these issues.
HomePlug is typically used for creating a home network for your computer. What we have done is found a new use for HomePlug technology, by creating a system used for entertainment, security, and home automation using voice control and/or touchscreen technology.
But not smartphone?
SQ: Most, if not all, IoT products are smartphone-dependent. That means a home becomes smartphone-dependent. That’s an umbilical cord we want to cut. We wanted the user to use their smartphone as an option, not as a necessity. As you walk inside the house, you no longer need to use your smartphone to connect to your home. You can essentially talk to the system because you have outlets deployed around the house, which have built-in microphones and Umbrela units that talk to each other and activate based on the commands that you provide.
In our system, the user can still touch their switches, which are now available on a touch screen. But you don’t need to pull out your phone and go through six clicks to turn on a light. Now you can just walk up to the touch screen or use the voice-control feature, and you can create pre-sets as well.
Power monitoring tells the users how much energy is being consumed either through the switches or through any device that is plugged into an Umbrela outlet. This helps users to save money over time by providing them with energy information.
Can you tell us about the security feature?
SQ: The customer keys in the security code when they leave the house to activate the built-in cameras, microphones, and occupancy sensors, in order to monitor their space for intrusion.
The very first thing the system does is turn the lights on and off, and creates sounds when an intrusion is suspected. In our YouTube demo, you can hear a dog barking from one Umbrela unit to another. It’s creating an illusion that a dog is walking back and forth. This is what we call occupancy simulation.
The customer will also be notified through their smartphone, and they can remotely view any of the built-in cameras and microphones. Then, in a single click, they can turn off the alarm or call security services, the police, or emergency services.
Let’s weigh in on standards. Which are you working with?
SQ: As discussed, we are using powerline HomePlug communication, and we also have built-in WiFi and bluetooth in each of the main Umbrela units.
While we are the providers of security, light control, and music, we also have provisions to connect with other devices. This allows us to provide a secondary network to connect with devices that are part of AllSeen Alliance, which allows us to link with other appliances the users have.
Another cool thing that we do is to provide a secondary WiFi network throughout the house, so there are no dead zones within our network.
Tell us more about using voice control.
SQ: Umbrela has voice recognition and voice control. If a visitor wanted to turn on the light, they would simply hit the switch. But if it was configured as a voice-alone network, they would require a password or would have to ask the homeowner to make the command, for added security.
Who’s your typical customer?
SQ: The ultimate end-users are homeowners who are interested in a full home automation system: they are interested in security, in creating a centralized entertainment system, and in comfort and energy savings. Secondary customers are home renovators, home builders, and the people who are providing renovations.
We want to make our system an appealing upgrade to a home, just like granite countertops or hardwood flooring or tile. That’s the kind of quality that we wanted to provide and that’s what we are going after.
How do you differentiate from your competition? The home automation market is quite a crowded space… what would you say is your advantage as a solution provider?
SQ: We have a few advantages. First and foremost, we are using powerline communication, so it’s not purely an Internet of Things play. You can turn off the internet and the system will still work.
Secondly, we provide a secondary wireless network for the homeowner to do anything they want with. We don’t fight with your regular WiFi network because we don’t take away any bandwidth. In fact, we enhance that bandwidth.
Thirdly, while we have full functionality provided through a smartphone, we are not smartphone-dependent, whereas a lot of current home automation systems and products are.
Finally, it’s all-in-one system with a lot of features built into it. It’s not a single-feature product. It provides security, ambience, light control, built-in mood lights, and music.
What would you say has been your biggest challenge to date as a start-up?
SQ: We’ve been very fortunate, actually. We have a very strong team — a very strong technical team and management team. We all have 10-20 years of experience in the high-tech sector. Our biggest challenge is access to capital.
What has been your biggest challenge within your product market?
SQ: Currently, we’re in the data-gathering stage. There are quite a lot of things that consume money during product commercialization such as marketing, manufacturing, and tooling. In order to be a very successful company, you have to attract investors. In order to have a viable business, you have to establish your business and your revenue streams. Crowdfunding is a more of a marketing tool to generate interest and awareness in a product. It’s certainly not revenue. Establishing a valuable revenue stream is the key, and communicating that valuable revenue stream to investors, in order to get investors on board.
What are your next steps as a company?
SQ: We are working with a couple of angel investor groups to bring in capital. We are in a beta development stage, which involves going through the electrical safety certification UL CSA. We are on the path to commercialization.
Do you perceive any market barrier at this moment in getting to your customer?
SQ: As far as commercialization is concerned, we don’t see any barrier other than access to capital. As far as acceptance in the market, we have conducted some initial primary market research and customer development through interviews with our target customers. After certification, we will be doing beta customer evaluation and feedback prior to full commercial launch. After that, our next challenge is raising awareness about our offering.
What do your foresee happening in the home automation or connected home market over the next five to ten years?
SQ: It’s a very noisy space — a lot of big players are stretching their muscles and are getting very interested in this market.
Advancements in home automation, including security and entertainment, will continue but likely at a slower pace than what is being predicted. So far, the piecemeal approach, single feature products with heavy reliance on the Internet of Things, has been accepted mostly by early adopters. The average homeowner has not been the focus so far.
We will see true sustainable growth when this shift happens.
Last year we met with you to discuss Valta Systems and Liricco. Things were on the way up in October, 2014, so maybe we can start by asking you: Has anything changed over the last year? Are you still solving the same problem?
Jeff Lin (JL): We have seen a good evolution of our technology. On top of adding to our B2C solutions in terms of sockets and lighting, we are now adding in sensors and environmental controls. We have also started to progress into the B2B side with our platform by coming up with scalable building management systems for various environments.
You’re targeting the commercial and MUSH sector now, is that correct?
JL: We evolve where the business takes us. Our partners in Asia see great applications for our system in commercial environments where there are a lot more cost sensitivities, and the desire to one up each other in their real-estate holdings. We are starting to implement our solutions on a building-wide scale in schools, shopping malls, and office buildings.
Do you have manufacturing capacity? Is your product available to purchase online now?
JL: Our manufacturing partners in Asia are all large players and publicly traded companies. They fabricate the hardware but we own the design both in terms of circuit and outshape [design]. And the software is owned and managed by us over the cloud. Our products are available for purchase now on Amazon, and will be through our own website soon.
I have a quick question about how you distinguish yourself from your competitors. Last year you were not using WiFi or ZigBee. How do you think the battle has played out since we spoke last?
JL: In terms of communication protocols, we have changed quite a bit. You know we have our own proprietary radio frequency, and now we are implementing ZigBee and Powerline Control (PLC) onto our ecosystem. This enables us to shorten product development cycles and enhance our product portfolio rapidly.
Do you see a different suite of competitors now that you’re targeting B2B?
JL: Our approach is different. We are constructing intelligent systems through a “Lego”-like approach. We have various component pieces that fit and match into any situation. Building Management Systems usually approach the challenge from top down, which makes it is impossible for them to conduct their business down to the micro level like we can. Thus, I think we are in a nice niche.
Do these markets have a greater spread between electricity prices or is it just higher overall?
JL: The energy prices in Asia are a bit more expansive than North America. However, the driver of change is more external pressures. Real-estate prices are extremely high here, which means that property owners are a lot more willing to invest in retrofits to upgrade their properties. Aesthetics, comfort, and cost are all taken into account in this equation. Thus, we need to provide a system that improves user experience along with ROI.
Do you have a good example of a use case for which you’d be able to share more details?
JL: We are currently retrofitting the lighting fixtures in Phase I buildings in the Hong Kong Science Park. The first project is to retrofit the aboveground parking garage. It is a 6-storey building with about 600 parking spots. We are going to replace the fluorescent lighting with smart/efficient lighting, which are equipped with sensor controls that react to ambient lighting conditions and motion. We will also be installing various environmental sensors such as CO and flood. The aim is to cut energy consumption by 60-80%, while dramatically improving user experience.
What industry do you see Liricco operating in?
JL: Our system leverages connected devices (also known as Internet of Things, or IoT), cloud servers for control and monitoring, and big data for analytics. It is used for energy optimization and environmental controls. The technology allows us to cut across various verticals including energy, heating/cooling, security, and health.
So you have a sensor embedded in the light bulb itself?
JL: For our commercial solutions, we have the motion and light sensors built in. For our indoor solutions, the sensors are stand-alone units that work seamlessly with the light. Our light is also unique in that it tracks its own energy consumption.
In our previous interview, you told me that you had planned to incorporate sensors in the lighting system that measures ambient light, motion, and air quality. Is this the new sensor that you’re speaking of?
JL: The solution that we are providing on the commercial side has the ambient light and motion sensor built in. Air quality relates to airflow control, so it is linked more to other systems.
Your product is connected to the smartphone of the person, is that correct?
JL: The phone is an integral part of this equation. It allows us to use the smartphone’s geolocator as one of the key drivers in our automation and optimization.
Where do you see your business going in the next 12-18 months?
JL: I see tremendous opportunities in structuring turnkey packages for various verticals such as restaurants, schools, offices, and car parks. The ROI proposition is worthwhile, and the government is mandating change. For example, the schools in Hong Kong are mandated to reduce energy consumption by 5% year over year. They have no idea how to do this. We will be able to show them solutions to do this quite easily.
You are more or less a system integrator yourself?
JL: Yes we are, but we’re also much more. We have an active say in the functionalities of the hardware that we integrate, as we use our own brand.
Do you have any preferred partners that you have in terms of partnership deals, or partners you usually work with?
JL: We have usually worked with utilities before, but we have found that they move quite slow. We are now working with partners with large properties such as commercial real-estate management (Science Park, Malls, etc.) and school boards. As for manufacturing, we get access to some of the best factories in the world, so we are quite blessed in having short product development cycles.
Where do you see this whole IoT, or connected devices trend, going in the next 3-5 years?
JL: A better value proposition needs to be presented to the end user in order for many of the businesses to become sustainable. Right now, many connected devices are fancy remote controls that allow you to turn things on and off from your smartphone, and many big data solutions are simply collecting huge volume of data. We need to make better use of the connectivity and conduct more relevant data analyses. We need to generate “actionable insights” and better optimization through automation.
Where do you think IoT can deliver the clearest value proposition to a business customer? For consumers?
JL: For businesses, energy savings is a key factor. However, they also want to make their properties stand out to maximize revenue. In another sense, they are also interested in playing around with the environment and measuring that against productivity and creativity. For consumers, the major point would be comfort, with energy savings as an added bonus.
Lynda O'MalleyLynda is a cleantech industry analyst with the Market Intelligence team, helping cleantech and advanced materials entrepreneurs and startups get the market intelligence they need to grow their companies. See more…