Input sound file:
10-16 am Session 1_1006.MP3
Session name: How retail will bring the Internet of Things to the mass market
Thank you Bill. You could not have a better moderator for our next panel – as I mentioned earlier – Stacey is not only a senior writer at GigaOM, but she is also the host of the ‘Internet of Things Podcast.’ If you really want to understand where the internet of things is going, who are the major players in that, I highly recommend you seek out that podcast. Download available in iTunes and anywhere else you can jam in a RSS feed. But she’s going to come out on stage right now and she’s going to be talking about, ‘how retail will bring the internet of things to the mass market.’ She’s going to be talking with Peter Gerstberger, the Senior Merchant of New Business Development at Staples, and Mike Harris, CEO of Zonoff. Please welcome our Internet of Things panel to the stage.
Stacey Higginbotham 00:44
All right. There’s more people here this time of day. I love it, thank you guys. I am really excited because I am buying connected devices like mad, doing it on Kickstarter, I’m doing it at the Apple Store. I’m wandering through Amazon, Best Buy, all these places and it’s tough. It is super tough to figure out where to buy my connected lightbulbs. It’s kind of a first world problem, but that’s why I was so excited when I saw this announcement that Staples is actually going to devote 12 square feet of floor space to connected devices, because the retail and the ability to buy this stuff it’s kind of like a missing link in the chain. So I’ve got Peter Gerstberger here, and Mike Harris of Zonoff, and they’re going to talk about why this is important, how this might develop – because not everybody is going to go on to Amazon and be like ‘I want a connected doorbell. I want this…’ So I’m going to stop talking so they can tell you all this. Lets start with Peter. Let’s talk about, why Staples? Which is reams of paper, routers all of these things. Why are you doing this?
Peter Gerstberger 01:51
Yes that’s a common misconception that we only sell office supplies. If you think about the consumerization of IT and who are our customers. At the core it is small business customers. These are customers that are coming to us to get help with their technology needs. It actually fits right in the wheelhouse for us to service not only our consumers but our small business customers.
Stacey Higginbotham 02:14
This idea of moving into the Internet of Things, how did that come to play, because you guys started this two years ago?
Peter Gerstberger 02:22
About a year and a half ago. I was actually the Networking Buyer at Staples before I moved on to the New Business Development Team. So I saw the roadmaps from all these different networking companies starting to explore this whole concept. I was becoming very frustrated at how long it was taking because at the end of the day I’m also a consumer. As a buyer – at the core of my job – it’s to make things easy for our customers and I wasn’t seeing any fast roadmap. So I took a step back when I went into the role of new business development and said, ‘what really is the problem here?’ it’s not just about where the networking guys are going, but it’s a bigger problem. It’s the problem of multiple protocols not being contained in one device. So taking that step back and really thinking about where we wanted to bring connected home with Staples. I asked the networking guys to put me in a room where all this product could work together through one hub and one app. It was a big ask but really I saw that as the true vision for where this needed to go. If it was going to be brought to the mainstream and pull it out from early adoption.
Stacey Higginbotham 03:29
And you guys worked with Zonoff to do that heavy lifting because I can tell you right now, I’ve got all these devices in my house. I’m testing a lot of hubs, I’m thinking, ‘this works with Zee Wave, this works with Zig Bee’ and if I gave that to somebody who wasn’t excited about this stuff, they would freak out. Even I find it’s hard, so what needs to happen on the back end? Even though consumers may never see it, it’s an important consideration when you’re building this stuff.
Mike Harris 04:00
When we look at it, it’s all about taking it to the mass market and regular consumers. Regular consumers don’t care about radios or protocols or any of that. What our platform ended up, we cover 12-14 different radios and protocols but again, hide that from the consumer. The idea is when we look at it, what are the right products for consumers? What are the right brands? What does a regular person look at? We were really focussed on building a huge ecosystem with the big players but leaving that open a lot of these new emerging companies can get involved as well. So for us it’s about building the whole back-end cloud platform, the app, and providing that but then doing it in a way that we can reach regular consumers. We’re a behind the scenes player. Staples has been great because that vision to go reach regular people, and get that available at mass market prices. Do all the education that is so critical to take it to the next level.
Peter Gerstberger 04:57
That’s really a key point, it’s not just about the hub and the app and pulling that together. That’s at the core of this but at the end of the day there’s nowhere you can go right now and shop for all these products in one place and see all your favorite brands. That’s what I endeavor to do in pulling this together, is creating an easy user experience but also a one-stop-shop for a connected home.
Stacey Higginbotham 05:19
I remember when Apple introduced Face Time you wondered, ‘what is this about?’ and then they had all these fabulous commercials that made you tear up a little bit. So I guess that’s kind of what you guys are doing because I can be excited about a connected doorbell but I know that I am strange. I am, it’s true. But when we start talking about ‘this isn’t just a connected doorbell,’ this is a way for you to be like, ‘I’ve got a package and I should send my neighbor to pick that up, or my kid just walked in the door so I know they’re at home even though I’m at work.’
Peter Gerstberger 05:54
Exactly. It’s those use cases that really sell this. You can imagine me being on this new business development team and having to pitch it internally too because they were the same questions of is this a natural fit for Staples. Once people really understood that we could sell multiple systems to one user. At the end of the day, you leave your home in the morning and if you’re a small business – CEO of a real estate agency, a law firm, even a pizza shop – that’s another building that you need to manage. So for our Staples customer, it’s much more about connected life and just where you are in that day.
Stacey Higginbotham 06:29
So I could walk out of my office and hit the big red button? That’s you guys right?
Peter Gerstberger 06:33
Stacey Higginbotham 06:32
I hit the big red button and my AC goes down, my lights go off, my alarm sets.
Peter Gerstberger 06:39
And it’s conveying those use cases to the customers where our executive team eyebrows go up and they get excited. The usability studies we did with our customers where we start to describe examples and you can actually see it on the plan-o-gram. It’s actually out in the other room, everyone can check it out afterwards. We really wanted to convey how pairing devices together moves us away from just a novelty of a lightbulb turning off and on, and towards utility. That added value is what people start to get excited about. one of my examples that I use all the time is, I have a two and a half year old daughter, she’s leaving her room now, she’s crying in the middle of the night. Knocking on our door, waking us up. She’s scared and now through this system I can convey to our customers, if I take a door window sensor and pair that with a Neutron lighting system, I can set commands that add value to my life. If she opens that door after 8pm or before 8am, then the lights turn on on the way to the bathroom. There’s a million use cases out there for all this. As we grow the amount of sensors and add more super categories into this – right now we have three – there are going to be endless parings that people can come up with. Both for consumer and small business use case.
Stacey Higginbotham 07:55
I’m super excited to hear some of the things. But let’s talk about cost, for example you guys are going to be the first retailer outside of Apple Stores to sell the Hue Lights. But those are $200 for three lightbulbs which is a lot of money for lightbulbs. So let’s talk about how do we bring this pricing inline? The lightbulbs are hard, my husband is like,’I don’t need connected lightbulbs that change color.’
Peter Gerstberger 08:23
It’s a great question, but everyones going to start and have a different entry point into connected home. The use case that I just described as an example is a relatively cheap one to get into. Probably under a hundred dollars actually. So I could see people coming in and starting with maybe one of the core items like a Yale lock or maybe there is someone who’s more interested than just throwing crazy parties and having the lighting come on.
Stacey Higginbotham 08:47
I’m interested in crazy parties.
Peter Gerstberger 08:49
So over time, you can slowly expand this. I don’t expect people to come in and drop thousands and thousands of dollars, sitting in front of this display and say, ‘great, I’m going to go home and install this all today.’ It’s something that can grow over time. One of our favorite pieces of the app is the fact that you can actually do ‘In App’ ordering of all these products. So slowly over time you can see – all these tiles that are illuminated in blue – would be examples of product that you already own. Anything greyed out would be something that you can add to the system. You just one-click into that and you can go to Staples.com and buy it. So it should be a slow adoption for even customers who are getting used to the concept of connected home.
Mike Harris 09:28
Just to add on that, having the real assortment of products I think is key as well. There’s over 20 products in the store but with Staples being the second largest internet retailer, the ability to add SKUs online an make that available overnight, free shipping and all that. That’s really powerful because now you’re got hundreds of products at launch that you’ll be able to pick from and bring into the system.
Stacey Higginbotham 09:52
You guys actually have the Doorbot which is a young start-ups’ product, and you have Ivy – we’ll ask you about Ivy in a minute. So you’ve got this mix of established brand names and these start-ups, how do companies work for you, and how open will your system be?
Peter Gerstberger 10:11
Extremely open. That’s one of the things that make it pretty exciting. I think to finish off the pricing, you can get into this hub for $99. Mike can talk a bit in a moment about how we can actually expand that system to different wireless protocols over time. My job is to essentially go out there and be a hunter and find the latest and greatest and continue to add to the system over time. So I’m constantly on Kickstarter and websites like that looking for emerging product. Evaluating if it can add value to this overall system. The Ivy piece to add voice control to this, was extremely compelling for me. Right now Ivy is a stand alone product you can certainly ask, ‘what’s Google stock price’ or ‘what’s a traffic light on the way to work.’ but to be able to turn to a device like that in my kitchen and say, ‘hey Ivy, turn on the lights,’ I don’t even have to go into my phone to control my Staples connect system. That’s pretty powerful.
Stacey Higginbotham 11:05
That’s one of the things I’m really excited about, because as I start doing this sort of stuff and connect things – again, another first world problem – I hate taking out my phone to do anything because I don’t always have it. Mike, you were talking about Ivy as an interaction. You work with a lot of companies. What do you think is going to happen five years into the future? What is your home experience going to be when you walk in? or wake up?
Mike Harris 11:32
I think it grows over time. Regular consumers aren’t going into the store and saying ‘I really need to buy a smart home today.’ What they’ll do is they’ll see one use case that’s really compelling to them, but then that gets them hooked, gets them educated around it. A big part of our whole app experience is education. What’s possible with this system, what activities can you set up? What products can you buy? How you can add services to enhance the experience? Then let them grow. It’s something whether it’s every couple of months, every couple of weeks. Maybe I’ll go bring this other room on there. I think it’s one of those things that expands over time and new products will emerge all the time. I’m sure we’ll hear about them here at the shows. Some great new products that would be great to be part of the system.
Stacey Higginbotham 12:25
Peter is judging our Launchpad. It could be very exciting for the winner. When we start thinking about this it seems very complicated if I start envisioning bringing on new lightbulbs for example. If I’ve got 50 lightbulbs in my house – I’ve never actually counted my lightbulbs – but I’m thinking I’ve got two. So how do you educate the consumer make that easy for a consumer? Maybe it’s via groupings, on the app side try to think about UI experiences that might matter.
Mike Harris 13:03
Inside the UI, everybody has a different approach. So for us we try to make it work for different consumers in a different way. I might think of it like I want to go control all my lights in my house. My wife might say I want to look at what’s happening in the bedroom. So through the app you can go in via room view, via device view. You can basically trigger an activity – of course you’ve got all these system activities that happen invisibly in the background as well. So for us it’s presenting that information but of course making it super easy doing the whole set up process as well.
Peter Gerstberger 13:42
It’s one of my favorite points about the app when I first saw the demo, is the fact that it doesn’t leave you high and dry as a consumer. Again the core of what I want to do here is pull this from early adoption to the mainstream. So we need to act as this customer really knows nothing about the concept. The ability to jump in and say ‘what can I do with the devices that I’ve already connected?’ Then see a populated list of, good morning, good night, vacation mode and showing you the sensors that you have and potentially the other activities that you could do if you added an additional sensor. Now you’re allowing people to teach themselves In App and get comfortable over time.
Stacey Higginbotham 14:18
Right now I’ve got like four connected hubs happening at my house. So there’s competition from ISPs – Lowe’s has their Iris Program. There’s various hubs – there’s one out there. If I think about all of this, what sets you apart? How can you convey that too?
Peter Gerstberger 14:44
I think for one, the $99 price point to get into this thing is very appealing. Second, zero subscription. You spend a hundred dollars out of pocket you’re not over invested in the system that you’re getting familiar with. Number three would be the trusted brands that we bring to the table. Number four would be the expertise that we’re going to offer you at store level as well as the consultation installation services that you can get from our easy techs onsite at your home or your office. Basically from the beginning to the end we have you covered from cost, from expertise and installation.
Stacey Higginbotham 15:17
So what happens – and I’m picking on start-ups here, like Ivy or Doorbot – if they go out of business? I’m installing a lot of this stuff, it takes time, it takes effort, my husband hates me tearing things off the walls. If that company fails suddenly I’ve got – it may not be a brick, but it’s effectively a brick that’s sitting on my wall or my door. How do you guard against that? How do you think that’s going to evolve?
Mike Harris 15:52
When we work with our partners, obviously we bring in the right partners that have great products, great support and all the rest of it so clearly it starts there. Beyond that, as part of the system is making sure that from a system level is, it works. Whether there’s long term support or not, most of the products that we bring in, all the communication is inhouse. Now some have value added cloud services that they may provide but if that cloud service goes down – just like if the internet goes down – the system still works inside your house. I think that’s one of the key pieces as well. When you look at the mass market is 59 reliability of the internet is just not there yet. That’s a real challenge, if you walk into your house and the internet’s down and you flick the light switch on and the light doesn’t come on because it’s a connected bulb that needed to go to the cloud to make that happen. That’s fundamentally problematic. So for us making that experience work has the side benefit of making that always work in protecting against any down side of partners. The key starts with the partners.
Stacey Higginbotham 17:03
It’s like graceful degradation of the Internet of Things. Something like that, that’s my web world coming in here. Audience, do you have any questions? Anyone? Mike? Go to the mike, you may not be Mike.
I’m Mike this week. It’s David Birch from Alert Me, we work with Lowe’s and power their Iris system and I wanted to ask – I’ve heard a lot of parallels when Lowe’s came to us a couple of years ago – around, all of this stuff is too complicated, none of the systems match together. As the space is evolving and some of the ISPs are coming in more aggressively – specifically Comcast and AT&T – just curious as to your thoughts on the retail channel versus the connected players that are also coming into this space, and how those forces will play out?
Peter Gerstberger 17:57
Our offer’s between the managed services piece and the DIY piece. Even today Staples battles against those managed services but our networking business is we’re number three. It’s a massive business for Staples, so I think there’s enough space in the market for everyone to play. It’s just a matter of how you’re going to service that customer.
Stacey Higginbotham 18:21
And different customers will probably want different things.
Peter Gerstberger 18:24
Absolutely, and a lot of people want that tied into their monthly cable bill along with everything else but some other customers don’t. They don’t want to have that monthly fee. If they feel compelled to install the solution themselves as the majority of our customers do, they can certainly do that and then they’re going to save a lot of money in doing so.
Stacey Higginbotham 18:43
Yes, I certainly don’t need to add to my cable bill. All right well, thank you guys very much.
Peter Gerstberger 18:48
All right that brings us to the end of the first part of the morning session. We have lots of stuff going on for you to do so you can explore lots of different things. We have an one hour break, network with each other, meet each other. Say how you doing? Visit the workshops, sponsors, Citrix sponsor workshop, ArkSaw sponsor workshop, CallCom sponsor workshop. Those are in the conference rooms 1, 2 and 3, around the corner. Again, get to those early because they fill up. Stop by the GigaOM research table, don’t forget to pick up your report for being a part of here today. Remember Gary Shapiro is doing a book signing as well – so if you enjoyed his talk this morning – get his book and get him to sign it. Refreshments and snacks are located on this level and the general session will resume at 11:05am. Have a good break everybody.