After testing the waters with smart TVs, smartphone brands are now venturing deeper in the smart home category, competing with electronics biggies like Samsung, LG and Philips. Motorola, in partnership with Flipkart, has forayed into smart home appliances such as washing machines, ACs and refrigerators. Realme has launched smart plugs and smart cameras, while Xiaomi has extended its smart home range by launching a smart speaker.
A smart home set-up comprises connected devices that can be remotely controlled either through a smartphone or any other device on the network. Falling within four broad categories — entertainment, lighting, surveillance and appliances, these devices may also respond to voice commands relayed through a smart speaker.
According to Rishav Jain, senior director and lead – consumer and retail sector, Alvarez & Marsal, the smart home (connected) devices segment in India is valued at Rs 45,000-47,000 crore. About 70-75% of this market, he says, is ruled by smart TVs, while smart home and kitchen appliances, speakers, lighting products, etc, make up the rest.
Globally, the market for smart home devices is projected to grow at 4.1% year-on-year in CY 2020, with over 854 million shipments, according to IDC. Devices other than smart TVs could have over 58% share in this.
What’s on offer
Much like its smartphone business, top-notch specifications at competitive prices seems to be Xiaomi’s strategy for the smart home business, too. The Mi Smart Speaker is priced at Rs 3,499, while Google Nest Mini is priced at Rs 4,499 and Amazon Echo Dot at Rs 3,249. “Consumers use these devices to access voice services, but not necessarily to listen to music, and hence, we are offering a smart speaker that also sounds good,” says Raghu Reddy, chief business officer, Xiaomi India. Smart water purifiers, smart air purifiers, smart cameras and smart TVs are its other products in this portfolio.
Motorola has positioned its smart appliances in the mid-premium to premium segment, but with a “competitive pricing” approach. “Our 533 litre French door refrigerator, for example, is priced 60-70% lower (at Rs 69,990) than competition,” says Prashanth Mani, country head and MD, Motorola Mobility. A Samsung 594 litre French door refrigerator is priced at Rs 1,09,990.
The company is targeting tech-savvy buyers by reaching out to Flipkart consumers who have bought high-end products in the consumer durables and appliances category.
Realme and Xiaomi have adopted an omnichannel strategy. The two are tapping online channels to target the early adopters, and conducting demonstrations offline to generate wider acceptability for these products. “Though e-commerce drives volumes, our AIoT (Artificial Intelligence of Things) products are available in more than 30,000 stores to enable consumers to experience the technology,” says Madhav Sheth, VP, Realme, and CEO, Realme India and Europe.
Realme has products such as smart speakers, smart TVs, smart plugs and smart cams in its smart home portfolio. The company is relying on its tried-and-tested method of community-based marketing to create awareness for these products. Xiaomi India, meanwhile, is retailing its products through its exclusive stores.
Experts say that the market for smart home devices in India is quite fragmented, with everyone from smartphone companies to traditional brands in the lighting and electronics categories vying for a piece of the pie. For instance, Hero Electronix, a technology venture by Hero Group, has launched a smart home security system.
Moreover, the ‘smart’ proposition may not be enough to excite the customer into buying a product, especially when the traditional variants are priced much lower. “A customer will not buy a product just because it is smart,” says Ajay Gupta, partner, Kearney. The purchase decision for a category like appliances, he adds, is based on factors such as replacement cost, product life, serviceability, capacity and after-sales network. “After being satisfied on all these counts, a customer will decide whether they want to pay a premium for the smartness.”
For smartphone brands to find acceptability as they cross over to other categories is another challenge. According to Jain of Alvarez and Marsal, companies entering the appliances category will need to overcome consumers’ preferences for specific brands.
Given that almost 75% sales in the appliances and consumer durables category comes from the offline channel, these new entrants will have to have a robust offline strategy to expand the business.