A report from Deutsche Telekom claims the European smart homes market could be worth in excess of €19billion by 2019, when around 50million homes are expected to have installed some type of ‘smart’ technology.

However, the report – ‘How to Create Growth from the Connected Home’ – finds that while the connected home could represent an excellent opportunity for a broad range of European businesses, it might also pose a significant threat.

Deutsche Telekom says that the connected home will have a huge impact across a broad range of industries, from telecommunications and utilities to retailers and insurers and from appliance to consumer hardware manufacturers. Its report suggests that much of the value will come from new and real growth, although it concedes that the Internet of Things is likely to result in some of that additional value shifting from one sector to another. The report also suggests that businesses will have to move from ‘just selling’ hardware to offering hardware based services. This, in turn, will have a significant impact on business models, margins and routes to market.

“We believe this report is a wake-up call for European business,” suggested Holger Knopke, Deutsche Telekom’s VP for the Connected Home. “Global competitors are eyeing up opportunities in Europe and they will not sit around and wait for European players to fully prepare their strategies and product development plans.”

According to Knopke, there will be dramatic implications for businesses looking to supply products or services.

“We expect the smart home will lead to further commoditisation for many players, to the disintermediation of many others and dramatic changes in the relationship that brands have with other brands and their route to market.”

The report looks in detail at the technologies associated with the connected home and how they are likely to change the way in which homes operate, from micro ordering of consumables to saving energy and providing proactive maintenance of devices.

It warns that it is crucial that more companies look at partnering as the necessary industry wide platforms or consistent standards are not yet available. In fact, Deutsche Telekom urges companies to ‘abandon previous proprietary and closed approaches and open up to more collaboration’.

According to Jon Carter, head of connected home business development for Deutsche Telekom UK: “The connected home is set to be a huge market and while it has been talked about widely for many years it has changed fundamentally – it’s not simply analysts pumping out reports – it is actually happening as consumers and, more significantly, manufacturers begin to understand the value that the IoT can bring them. We’re seeing businesses revising their business models as a result.”

The report also highlights some of the opportunities provided by smart connectivity. “Among consumers, the applications currently driving the market are those associated with security, self monitoring and safety,” explained Carter. “Future growth, however, will depend on greater compatibility and interoperability.”

Despite industry enthusiasm, consumer awareness of the connected home concept remains low. A recent study by GfK found that 72% of households surveyed had never heard of it, but when it was explained to them and specific user cases outlined, 98% expressed an interest in the benefits it could bring.

“We need to ground what we do, in terms of the connected home, in the reality of what customers really want or need. There has tended to be too much hype around the connected home and there needs to be a clear value that consumers can buy into,” Carter concluded.