what can smart thermostats really do for your home (and portfolio)?
DESCRIPTION
Many people questioned the $3.2 billion acquisition of Nest Labs by Google (NASDAQ: GOOG) (NASDAQ: GOOGL) this past January. Then again, people are questioning the company's increasing pace of acquisitions of hardware products in general. Say what you want, it appears Google wants to begin learning our habits when we're connected to the world without staring into a computer or smartphone screen. Google is preparing for the Internet of Things. Data from the Energy Information Administration demonstrate that the market for programmable thermostats, including top-of-the-line smart thermostats from Google and Honeywell International (NYSE: HON), could be quite large. Only 37% of consumers surveyed by the organization had a programmable central thermostat for heating, while just 29% had the same capability for cooling. Meanwhile, research firm Forrester found that only 2% of American adults with an online presence could remotely access their energy management systems. In other words, smart thermostats could be staring at a wide-open market opportunity representing 98% of potential customers. Of course, that opportunity means little if smart thermostats aren't easy to understand, install, and value. Is throwing down $250 for the Nest Learning Thermostat really worth its potential benefits? How can Google and Honeywell International successfully market and message those benefits to consumers? And, although the market opportunity is massive, how will that affect your portfolio? Let's dive into the details in the following presentation.TRANSCRIPT
What Can Smart Thermostats Really Do For Your Home (and Portfolio)?
Smart Thermostats
1. Who are the players?
2. How big is the opportunity?
3. What’s the value to you?
Smart Thermostats
1. Who are the players?
2. How big is the opportunity?
3. What’s the value to you?
Smart Thermostat Leaders
Others to Watch...
Something to Ponder
Will smart thermostats represent meaningful revenue for companies as
diverse as Honeywell and Google?
Smart Thermostats
1. Who are the players?
2. How big is the opportunity?
3. What’s the value to you?
Central Thermostat Presence
Low penetration equates to a big opportunity…
U.S. Household Breakdown (Heating)Central Thermostat Type Estimated # U.S.
HouseholdsNo equipment 3.97 millionNo central equipment 6.62 millionNo central thermostat 9.27 millionNon-programmable central thermostat
63.6 million
Programmable central thermostat 48.0 millionSmart central thermostat <0.9 millionTotal Households 132.4 million
In other words…
Market Opportunity
BUT….
Up to 15% of households may not require a central thermostat for heating and/or cooling.
Don’t Forget About Climate
Mild summers and winters reduce need for cooling and heating in certain geographies.
So it’s more like this…
Market Opportunity
Smart Thermostats
1. Who are the players?
2. How big is the opportunity?
3. What’s the value to you?
Energy Savings Breakdown
Department of Energy:
“You could save as much as 1% on your energy bill for each degree if the setback period is eight hours
long. The percentage of savings from setback is greater for buildings in milder climates than for
those in more severe climates.”
In other words…
Energy Savings Breakdown
Up to $180 every year
Simply program your thermostat lower in the winter and higher in the summer
for 10 hours each day.
Cost of Selected Thermostats
$249 $249
$244$299
Estimated Payback Period
1.4 yrs 1.4 yrs
1.4 yrs1.7 yrs
Foolish Bottom Line
• Few serious players, competition will emerge• Features, design will be key (think smartphones)• Size of opportunity will support multiple players• Programmable thermostats can save up to $180
per year• Can smart thermostats save even more?• Best-case payback period under 18 months
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