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Advanced System for Eco, Energy and Cost Efficient, Comfortable and Secure Smart Homes

Periodic Reporting for period 1 - HIQ-Home (Advanced System for Eco, Energy and Cost Efficient, Comfortable and Secure Smart Homes)

Reporting period: 2015-05-01 to 2015-10-31

Verifying the technical and financial feasibility of a comprehensive Home Automation System developed by the company Robotina d.o.o. was main objective of the action. The Smart home market is starting to boom, however smart homes are not as smart as they could be and actual state of the art products do not deliver substantial benefits. Most of available products do not really offer new, intelligent functionalities. The company has developed a functioning prototype of a really smart home (hardware, software, Cloud services and more) and it has a well-structured plan for further activities. Having finalised extensive research and development activities, the products and solutions will guarantee substantial savings and improvements. The technical feasibility of the project was assessed, the market potential of the product verified, assessed if the company needs additional know how to finalise the product, new marketing approaches evaluated and an approved business plan prepared. A risk analysis has been prepared, too. A market research in company’s key markets was carried out in order to verify how the product meets expectations of future customers and their willingness to pay for such a product. Existing smart home systems and their prices were analysed and it was determined how the product should differ from competitors’. A range of product packages and their prices were drawn thanks to this study. The company calculated to what extend the new product would increase its revenues and profitability in the following years. The total size of the investment was determined, as well as the breakeven point and profitability of the product. Additional tests and simulations of the prototype were carried out. Improvements to the prototype must be made, but thanks to cooperation with third parties and additional human resources, the existing challenges can be solved. The results of the study confirm that the project is technically and financially feasible and will impact positively and importantly the company’s business. The product is competitive and it differentiates itself from other existing products. The exponential growth of the smart home segment will allow the company to increase its revenues and profits substantially. Nevertheless, in order to achieve market launch, appropriate corrective measures should be taken, both technical and organisational. Risks are however limited and manageable. The launch of the product is planned for 2018 at the latest.
The company carried out a global market research with the cooperation of its distributors and partners in key markets. (UK, India, Russia, Netherlands, UAE and others). Using a self-made questionnaire, the company gained new knowledge about the desired features that a smart home should have, and how much a product should cost. It has been determined that energy saving, safety, security and cloud services are becoming increasingly important in customers’ eyes. Third party sources and own research were used to estimate the future growth of the home automation market and to pinpoint existing trends and market barriers. Although the market has not embraced home automation yet - due to shortcomings of existing products - this segment will grow exponentially. The company analysed also main competitors’ products, their features and prices, founding out that no competitor has such a comprehensive know-how as Robotina, and no competitor offers a range of features that compares to Robotina’s HIQ system. The technical feasibility of the solution has been further tested. Multiobjective optimisation, which is a key feature of the product, needs to be upgraded and algorithms that govern it must be optimised, since when more than 4 parameters are taken into account, energy efficiency decreases. A marketing strategy has been drawn, too. The company decided to focus on some key markets first and to focus mainly on B2B market. Preference goes to countries in Europe, Asia and Middle East where the building sector is still thriving and new buildings are being built. Primary customers will be facility developers, system integrators and service providers. A financial projection for the future product has been made. The analysis shows, that an investment of almost 7M EUR will be needed (4.5 in first two years, balance in the next two). A gap analysis carried out in August confirmed that the weak point of the solution lies not on the technical side, but on the marketing and organisational side. The product will be successful only if appropriate, targeted marketing measures are taken and the organisational structure of the company is upgraded and optimised. Risks are however limited. The project is very ambitious and foresees a substantial scale-up of company’s business; therefore, its capacities and organisation will have to increase relatively quickly and necessarily anticipate increased demand, including acquiring additional human resources and cooperation with third parties.
The feasibility study confirms the high potential of the product and that the company should pursue it. Even considering conservative figures growth of the home automation market and hypothesizing a global market share of less than 1% of accessible market, company revenues and profits will grow dramatically: forecast predicts that after launch, this product only will generate 5 years cumulative EBITDA of 71M (optimistically) or 35M (pessimistically), achieving revenues that will be more than 20 times higher than in 2015. Company will break even in year 2 of commercialisation period and will pay the investment back in year 3 or 4 at latest. The investment needed to reach the commercialisation stage amounts 4,5 millions of €, and the total investment will be 7 million of €. Part of the needed financial resources has been already secured. In order to reach commercialisation, the company will need to employ additional staff, estimated at 9-13 additional technical staff (Researcher, development engineers, software engineers, business development manager, and product manager). Once reached the commercialisation, the company will hire new staff for all of its departments: R&D (10), Sales and marketing (15), Technical support (5), QA and QC (2), Procurement (5), Area managers (5), Manufacturing (10), administrative staff (5) and others. Manufacturing of the new product will take place in Robotina’s facilities in Slovenia, some activities will be outsourced to other EU based companies, therefore the whole production will be EU-based. The product generate profits for companies other than ours: the proposed product allows user and third party programmability functions (similar to smartphones apps), so within the HIQ system customers may purchase functions and applications developed by other companies. EU is hardly following US in means of smart homes and subscription based services. We will substantially contribute to increase importance of Europe in this field, especially in SaaS and smart home. Finally, the newly developed product will substantially contribute to the energy efficiency of smart homes: thanks to our multi-objective optimisation, the prototype can already reach 10% energy savings in a typical home at the same level of comfort for the user, and even 15-20% energy with minimal comfort reduction for the user. Assuming only a 1% acquisition rate in EU, this will result in approximately a reduction of 1,250,000 metric tons of carbon emissions per year.