Russian playwright Anton Chekhov said this.

If you mentioned the gun mounted on the wall in Chapter 1, you must shoot it in Chapter 2 or 3. If you are not going to shoot it, get rid of it.

It is the so-called Chekhov's gun. It means to eliminate any devices that will not be used during the development of the story.

Home IoT devices and services are exactly like this. Companies market to consumers to purchase and use home IoT devices and services to expand their businesses amidst the IoT boom, but people do not listen. No matter how well-made a product is, it is useless if it is not used. Like Chekhov's gun, it may have to be put away. Therefore, for companies to expand their home IoT business, they must make people use home IoT devices and services.

On October 24th, the 2018 Korea Electronics Show was held at COEX in Samseong-dong, Seoul. Along with it, a series of seminars was held under the name 'KES Tech Insight 2018'. Among them, at the IoT & Big Data Conference, Manager Jung Woo-sik of SK Telecom shared his thoughts and efforts on how to strengthen the company's home IoT capabilities and expand its home IoT business.
A market turning its back on home IoT devices
The home IoT market in Korea is distinctly different from that of the West. In the West, when major service providers establish service platforms and open APIs, various businesses can utilize these APIs to build their own unique services. In contrast, due to the small size of the domestic market, most companies, with the exception of large home appliance manufacturers, lack the capacity to do so. Furthermore, operating in-house servers is necessary for smooth service delivery, but many companies are unable to bear the massive operating costs.

SK Telecom, having established an Internet Data Center (IDC) early on, began setting up platform servers within its IDC four years ago and sought out various home appliance manufacturers. SK Telecom classified these various home appliance manufacturers into sectors based on the intended use of their main products. And by appointing eco partners for each sector and solidifying alliances with them, SK Telecom attracted various operators to its servers.
To enhance the service competitiveness of its home IoT app, SK Telecom designed the app in collaboration with each eco-partner to improve usability. Thus, in June 2015, SK Telecom launched the 'IoT Smart Home' service alongside its partners' appliances, but the market response was lukewarm. Subscriber numbers did not increase at all. The reason was the low penetration rate of home IoT devices. At the time, appliance manufacturers sold devices that included IoT modules separately from those that did not. Furthermore, distributors were promoting the relatively lower price of devices without IoT modules as a key selling point to consumers. There was no way for subscriber numbers to grow.


Let's integrate home IoT devices and services
SK Telecom, which had been contemplating how to expand its home IoT device users and service subscribers, found a breakthrough in the differences between residential cultures in Korea and the West. In the West, the majority of the population lives in owner-occupied homes, whereas in Korea, the majority resides in multi-unit dwellings. Furthermore, in the West, where wooden buildings are the norm, it was easy to install new equipment within homes; however, in Korea, where concrete buildings are the majority, it is nearly impossible for individuals to establish an IoT environment. Even if an individual has the ability to set up an IoT environment, there are many cases where they cannot change houses without the landlord's permission due to the rental culture.

Considering all these factors, there was only one solution: to install IoT modules from the very beginning of apartment construction. This would eliminate the need for individuals to set up their own IoT environments or purchase home IoT devices. SK Telecom immediately approached construction companies. However, despite SK Telecom possessing the capability to implement home IoT systems, the response from the firms was skeptical. Even SK E&C, a sister company, felt the same way. This was because the additional installation of IoT modules during construction would increase the unit cost per household. Since the construction companies had already determined a fair price per household, they did not want to incur additional expenses.
However, there was a twist. Since the 2010s, newly built apartment complexes already had on-site servers connected to the internet, linking with the wall-mounted control panels in each household. These panels controlled various built-in appliances within the homes via the servers, and the presale market promoted this as a selling point, referring to it as a "Home IoT service." It was simply that despite this environment being established, people had not been using it.

Why was that? Because it was not a continuous service. Home network companies are merely responsible for the connectivity between the servers and wall pads. Their business model ends with establishing the home IoT network during installation. There was no business model whatsoever for post-construction services. Since no one takes an interest in operations, the service naturally dies out over time.

Therefore, SK Telecom decided to integrate its own servers with the existing servers within the complex.
We live in an era overflowing with apps. Therefore, it is important to reduce the number of apps used. SK Telecom has integrated all functions into its smart home app so that a single app allows users to control apartment common facilities, built-in home appliances, and SK Telecom partner appliances all at once. In addition, the company currently provides a service that enables various controls via voice through its AI voice recognition speaker, NUGU. As of October 2018, 410,000 households across 39 complexes are experiencing SK Telecom's IoT smart home.

As success stories increase, the number of apartments installing IoT modules from the initial construction phase is also gradually growing.


From Smart Home to Smart Village
This is not enough. The function most frequently used by the majority of IoT smart home users is turning home IoT devices on and off. Depending on the person, this might be considered a waste of money. How many people would continue to use a service that they do not feel is absolutely necessary? Therefore, SK Telecom believed that home IoT services must evolve from controlling appliances to caring for one's entire life.
To enrich the home IoT business, we must pursue a "Smart Village" that goes beyond the Smart Home. This involves maintaining the existing Smart Home features while adding "Smart Living." Recently built apartments offer various community facilities such as gyms, saunas, and cafeterias. Smart Living incorporates these community facilities and nearby local services into an app.

Specifically, features such as apartment announcements, defect repair requests, electronic voting, reporting of living disputes, reservations for access to various community facilities, management fee inquiry and payment, parking information sharing, advertising services for nearby shops, unmanned parcel delivery, and automatic elevators are being planned. The smart home app will serve as a platform for communication between residents, between residents and managers, and between residents and nearby business owners.

Existing smart homes were apps accessed only by users, so they lacked an administrator menu. However, an administrator menu is naturally required to implement a smart village. 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.


Expansion potential of the home IoT business
Could the home IoT business be expanded from B2C to B2B? A major domestic developer is reviewing ways to utilize smart home data when developing apartments.

Large developers typically undertake five to six complex projects per year. However, because the characteristics of prospective residents cannot be clearly identified, they often rely on intuition for development. This means the developer's experience plays a significant role in determining the type, size, and location of facilities to be installed in the apartment complex. If the developer's intuition is wrong, the facilities will likely be deserted. The risk is high.
Even at this very moment, behavioral data from countless people is steadily accumulating on smart home servers. If developers can utilize this data, they will be able to make rational and reasonable decisions when constructing their next housing complex. Currently, there are no business cases regarding this anywhere in the world. Whether it is SK Telecom or other home IoT providers, if they can seize this opportunity, they will be able to create a new business sector.

SK Telecom is not generating much profit through IoT smart homes. Currently, the IoT smart home service is being provided to residents free of charge for three years, after which a monthly fee of 3,000 to 5,000 won will be charged. Operating costs for the three years are being covered by the funds received from the construction company during the project, but this is not sufficient. Rather than making money through the IoT smart home, SK Telecom plans to lay the foundation for home IoT and pioneer other businesses as described above.

Home IoT is a business that can continuously expand as long as there is a smartphone and Wi-Fi. SK Telecom's home IoT business is influencing not only construction companies and developers but also the businesses of other affiliates. By integrating IoT smart home features with SK Broadband's BTV, information within the complex can be displayed as subtitles at the bottom of the TV screen, which can be used as a selling point.

The era of the Fourth Industrial Revolution is an era of convergence. Without convergence, one cannot survive. As seen in the example of SK Telecom above, it is time to consider how to converge with other companies and services to expand one's own business.