Russian playwright Anton Chekhov said:

"If you mentioned a gun hanging on the wall in Chapter 1, you should shoot it in Chapter 2 or 3. If you're not going to shoot it, get rid of it."

This is the so-called Chekhov's gun. It means to get rid of any device that will not be used during the story development.

Home IoT devices and services are exactly like this. Companies are marketing to consumers to install and use home IoT devices and services in their homes to expand their businesses amidst the IoT boom. However, people don't listen. No matter how well-made, if they're not used, they're useless. Like Chekhov's gun, they might just have to be thrown away. Therefore, to expand their home IoT businesses, companies must get people to use their devices and services.

On October 24th, the 2018 Korea Electronics Show was held at COEX in Samseong-dong, Seoul. A series of seminars titled "KES Tech Insight 2018" were also held. Among them, at the IoT/Big Data Conference, SK Telecom's Manager Woosik Jeong shared his thoughts and efforts on how to develop the company's home IoT capabilities and expand its home IoT business.
Markets ignoring home IoT devices
The Korean home IoT market differs significantly from that of the West. In the West, large service providers create service platforms and open APIs, allowing various businesses to leverage these APIs to build their own services. In contrast, the Korean market is small, and with the exception of major home appliance manufacturers, such capabilities are often lacking. Furthermore, operating a dedicated server is essential for seamless service delivery, but the enormous operating costs are often unaffordable.

SK Telecom, which had already established an Internet Data Center (IDC), began building platform servers within its IDC four years ago and began seeking out various home appliance manufacturers. SK Telecom categorized these manufacturers into sectors based on the intended use of their core products. And by designating eco-partners for each sector and strengthening partnerships with those partners, SK Telecom has attracted various business operators to its servers.
To enhance the service competitiveness of its home IoT app, SK Telecom designed apps in collaboration with each of its eco-partners and enhanced their usability. In June 2015, SK Telecom launched its "IoT Smart Home" service with its partners' home appliances. However, the market response was lukewarm. Subscribers stagnated. This was due to the low penetration rate of home IoT devices. At the time, home appliance manufacturers sold devices with and without IoT modules separately. Furthermore, distributors marketed the relatively low prices of devices without IoT modules as a selling point. Consequently, subscriber growth was unlikely.


Let's integrate home IoT devices and services.
SK Telecom, struggling to expand its home IoT device user base and service subscribers, found a breakthrough in the differences in housing culture between Korea and the West. While the majority of people in the West live in their own homes, the majority in Korea live in apartment complexes. Furthermore, while Western homes, with their predominantly wooden structures, make it easy to install new equipment within homes, Korea, with its predominantly concrete buildings, makes it nearly impossible for individuals to establish an IoT environment. Even if an individual has the ability to build an IoT environment, it is often impossible to change homes without the landlord's permission due to the monthly rent culture.

In summary, there was only one solution: install IoT modules from the beginning of apartment construction. Then, there would be no need for individuals to set up their own IoT environment or purchase home IoT devices. SK Telecom immediately approached construction companies. However, despite SK Telecom's home IoT implementation capabilities, construction companies were skeptical. Even SK Telecom's affiliate, SK Engineering & Construction, was skeptical. This was because installing additional IoT modules during apartment construction would increase the unit price per unit. Construction companies, having already established an appropriate unit price per unit, were unwilling to incur additional expenses.
But there was a twist. Since the 2010s, newly built apartment complexes had their own servers connected to the internet, linking with each home's wallpad. These wallpads controlled various built-in appliances through the complex's servers, and the apartment market marketed this as a "home IoT service" and promoted it as a selling point. However, despite this environment being established, people simply didn't use it.

Why was that? Because it wasn't a continuous service. Home network companies are solely responsible for the connectivity between servers and wallpads. Their business model ends with building a home IoT network during construction. There was no business model for post-construction services. Since no one cared about operations, the service naturally died over time.

So SK Telecom decided to integrate its servers with those within the existing complex.
Today, we live in an age overflowing with apps. Therefore, reducing the number of apps is crucial. SK Telecom has integrated all functions into its smart home app, allowing users to control apartment common facilities, built-in appliances, and SK Telecom-affiliated appliances all at once. Furthermore, the company is currently offering voice-activated control via its AI voice recognition speaker, NUGU. As of October 2018, 410,000 households in 39 complexes are experiencing SK Telecom's IoT smart home.

As success stories increase, the number of apartments that are installing IoT modules from the construction stage, which was the initial goal, is also gradually increasing.


From smart home to smart village
This isn't enough. For most IoT smart home users, the most frequently used function is turning home IoT devices on and off. Some may consider this a waste of money. How many people would continue to use a service they don't necessarily need? Therefore, SK Telecom believes that home IoT services should advance beyond controlling home appliances to managing their entire lives.
To enrich the home IoT business, we need to pursue a smart village that goes beyond the smart home. This involves maintaining the existing smart home while adding smart living. Recently, new apartments offer various community facilities, such as gyms, saunas, and cafeterias. Smart living integrates these community facilities and surrounding local services into the app.

Specifically, plans include apartment announcements, repair requests, electronic voting, reporting of living disputes, reservations for access to various community facilities, management fee inquiries and payments, parking information sharing, advertising services for nearby businesses, unmanned delivery services, and automated elevators. The smart home app will serve as a forum for communication between residents, residents and managers, and residents and nearby business owners.

Existing smart homes were apps accessible only to users, so they lacked an administrator menu. However, implementing a smart village naturally requires an administrator menu. SK Telecom is dividing its smart home app into two parts: a user app and an administrator app, and is rushing to develop and improve them.


The scalability of home IoT businesses
Could home IoT businesses expand from B2C to B2B? A major domestic developer is exploring ways to leverage smart home data when building apartments.

Large developers typically undertake five to six complex projects a year. However, because they lack a clear understanding of the characteristics of prospective residents, they often rely on intuition. The developer's experience plays a significant role in determining the type, size, and location of facilities in an apartment complex. If the developer's intuition is wrong, the facilities will simply fail, leading to significant risk.
Even at this very moment, countless people's behavioral data is constantly accumulating on smart home servers. If developers can leverage this data, they will be able to make rational and reasonable decisions when building their next complex. There are currently no business cases in this area anywhere in the world. Whether SK Telecom or another home IoT provider can capitalize on this opportunity, they could create new business areas.

SK Telecom is not making much profit from IoT smart homes. Currently, residents are provided with a free IoT smart home service for three years, after which a monthly fee of 3,000 to 5,000 won will be charged. Operating costs for the three-year period are covered by funds received from the construction company, but this is not sufficient. Rather than monetizing the IoT smart home service, SK Telecom plans to establish a foundation for home IoT and explore other business opportunities, as described above.

Home IoT is a business that can continue to expand with just a smartphone and Wi-Fi. SK Telecom's home IoT business is impacting not only construction companies and developers, but also other affiliates. By integrating IoT smart homes with SK Broadband's BTV, information within the complex can be displayed as subtitles below the TV screen, effectively turning this into a selling point.

The Fourth Industrial Revolution is an era of convergence. Without convergence, survival is impossible. As the SK Telecom case illustrates, it's time to consider how to integrate with other companies and services and expand our own businesses.