PSIFebruary2017

CES 2017 event showcases a host of home
security/smart home trends
Every January all eyes in the electronics world turn to Las
Vegas for the Consumer Electronics Show (CES) to see what
might be the next trending product or platform. There’s more
about Alexa elsewhere in this edition, so what else did the
50th CES event showcase? Here, Blake Kozak, principal
analyst, smart home and security technology, IHS Markit
gives us an overview:
• Smart home announcements weren’t just about cameras or
light bulbs. The announcements focused on the consumer
and enriching the consumer experience through seamless
integrations and feature-rich offerings.
• Globally in 2016, there were more than 80 million
shipments of smart home devices with an installed base
that exceeded 190 million devices.
• For cameras, the smart home focus at CES was around
facial recognition, 360 degree viewing, security motion
detection and HomeKit.
• Outdoor cameras were featured as well, with
announcements from Bosch and Ring, each of which had
outdoor cameras connected to outdoor power sources and
integrated with lighting. Baby monitors were also a
trending item, with Netgear Arlo and OneLink by First Alert,
each of which have features such as air quality monitoring
but the OneLink camera offers video respiration detection,
a feature that uses non-invasive methods to monitor a
baby’s breathing.
• Overall, the smart home camera market continues to
expand as suppliers enhance their portfolio with cameras
designed for various purpose such as outdoors, indoors,
wired, wireless and cameras with lower price-points. A few
new cameras that were announced combine several
connectivity standards and automation features into one
device (including voice control).
• Light bulbs such as Lifx provide two types of illumination,
one of which is infrared to assist with outdoor cameras
using night vision. The infrared helps the cameras see
clearer in complete darkness, which for battery powered
cameras, will dramatically increase battery life. Other light
bulb announcements featured integrated motion detection
and speakers.
• In addition to device refinement, business models are also
changing at CES. Many of the top service providers offering
smart home have focused on manufacturing their own
devices in order to create a seamless look and feel across
devices.
• Simplifying smart home also was also a trend. IHS believes
making smart home easier to install for the consumer (as
well as professional installers will remove one of the
biggest barriers to mass smart home adoption.
• And (as mentioned elsewhere) voice assistants could be
found at nearly every smart home booth at CES this year.
www.psimagazine.co.uk
THE BOTTOM LINE
IN ASSOCIATION WITH CSL
The interview that gets
the facts from the top
This month Simon Banks
talks to Philip Carse,
Principal Analyst at
Megabuyte – a leading
market research company for the IT
Service, software and telecoms
industries.
How important is recurring revenue and recurring margin when valuing a
business.
Cash flow is the fundamental driver of a business’s valuation, with the most
attractive companies converting a high proportion of profits to operating cash flow
and having modest capital investment requirements. However, other things being
equal, a business will attract a higher valuation multiple if it enjoys one or more of
the following; high growth, high recurring revenues and high margins. In particular,
high recurring revenues and margins give investors confidence as to the future
performance of the business and its ability to withstand economic challenges. To
mix metaphors, revenue is vanity, profit is sanity, but cash is king.
How easy is it to diversify into tech verticals?
There are examples of very successful business diversifications into tech; for
example online book seller Amazon has become the world’s biggest provider of
Cloud computing infrastructure. At a more mundane level, every business these
days – whether traditional, people based or tech-heavy – needs to constantly
evaluate the use of technology for business advantage. This is especially true given
the pervasiveness of the internet, the proliferation of mobile devices, the growth in
broadband, the rapid growth in Cloud computing and advances in areas such as
data analytics. Established traditional businesses with customers have a good
starting base, though should not underestimate the challenges of embracing tech.
In the case of the security sector, the broader Internet of Things (IoT) is an
obvious opportunity, leveraging devices/monitors, connectivity and data analysis
for business intelligence and consumer benefit. However, it is also an opportunity
for closely related sectors such as home automation, which could change the
competitive dynamics of the security sector.
Megabuyte reports on 400 companies across a number of sectors. What do
the best companies have in common?
Whilst we Megabuyte analysts like to opine on the companies that we cover, we
also back up our analysis with a rigorous, quantitative financial assessment – the
Megabuyte Scorecard. The Scorecard ranks UK companies – public and private –
based on seven revenue, profit and cash flow measures; therefore taking into
account a far fuller range of factors than other ‘fast track’ type league tables.
The Scorecard tells us that the top 25% of companies are growing revenues and
profits at about 20-25% a year, enjoy profit margins of about 25%, and convert
about 90% of their profits to cash after investment spending. CSL consistently
ranks in the top 50 UK private companies according to the Scorecard.
What is the projected growth in the tech sector?
Whilst the better performing (top quartile) companies are growing at above 19% in
organic terms, the average is of course much lower, at 12%, whilst a quarter of
companies that we track fail to grow organically due either to market or
competitive pressures or because of business transformations; for example
moving to software as a service (SaaS) models. The fastest growth areas tend to
be in Cloud computing/web hosting (for example Amazon Web Services) and SaaS
(for example Salesforce), whilst other hotspots include cyber security and mobile
Machine to Machine (M2M). The Internet of Things (IoT) is expected to be a future
major market and one which, as previously noted, could be a target for security
companies given the overlap with areas such as home cinema, automation,
biometrics, cameras and big data analytics.
YOU SAID IT!
A 50 year old getting excited about a DigiAir Connected with Pyronix! Full
remote access and push notifications on all events.
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