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Kickstarting the Smart Home: GE Turns Old Refrigerators Into Smart Devices


No doubt you’ve heard a lot in the past few years about the smart home. A flood of smart devices like the Nest Learning Thermostat from Google Inc (NASDAQ:GOOG, NASDAQ:GOOGL) and the Hue LED lighting systems from Koninklijke Philips NV (ADR) (NYSE:PHG) are now being sold by big-box retailers. But for the smart home to really take off and gain the momentum to go mainstream, the holy grail is home appliances: refrigerators, ovens, washers and dryers. And that’s a problem, because these appliances are both expensive and long-lasting.

smart home, GE offering free smart devices upgrade
Source: General Electric

GE Appliances — the division General Electric Company (NYSE:GE) is selling to Electrolux AB (ADR) (ELUXY) — has a novel solution to the challenge of kickstarting the smart home: give away an add-on component that turns old appliances into smart devices.

Gigaom reported on the plan that will see GE Appliances send 20,000 Wi-Fi modules to owners of select GE refrigerators purchased after 2009. The modules plug into an existing port on the refrigerators (keep in mind: not all GE fridges post-2009 have them), and will connect them to the Wink smart home system.

Wink is one of those start-ups vying with the likes of the HomeKit from Apple Inc. (NASDAQ:AAPL) and SmartThings from Samsung Elect Ltd(F) (OTCMKTS:SSNLF) to become the standard platform for home automation and the connecting hub in any smart home.

Why would GE Appliances offer customers the opportunity to turn their dumb refrigerators into smart devices? Doesn’t that mean foregoing a very lucrative sale if the customer then chooses to keep an existing refrigerator for a few more years?

The move is actually a pretty “smart” strategy (no pun intended).

A Shrewd Pivot Into the Smart Home

Most consumers hold onto major appliances for between 10 and 20 years. That’s a very long upgrade cycle. And those appliances are expensive, especially when you choose to upgrade to a “smart” version. The kind of basic GE refrigerator that makes its way into typical kitchens can be had for well under $1,000. The Wi-Fi-connected smart home refrigerator GE was showing off at CES 2015  will retail for nearly $3,000.

With its Nest products, Google has to convince consumers to spend $250 swapping out their thermostat, or to invest $110 for a Nest smoke detector. Those are relatively easy sells. Not a lot of cash for a product that’s proven to save them money –Nest even published a study that shows average energy savings of $131 to $145 annually.

$3,000 is a heck of a lot tougher (and that’s for just one appliance out of a suite that often get replaced together), especially when so many people are years from replacing their appliances. Even tougher, many of them aren’t entirely certain what a smart refrigerator actually offers them over a regular model.

GE Appliance introduced a full suite of smart appliances for 2015. It’s got early adopter consumers covered if they want to replace their appliances and go for the whole smart home thing.

But by sending out those 20,000 upgrade kits, the company will get a jump-start on the smart home revolution without asking customers to pony up three grand for the experiment.  The kits will infiltrate average homes, not just homes of high-tech early adopters.

GE can study how people use their smart devices, collect feedback, make adjustments and get those customers enthused about the prospect of living in a smart home. With a positive experience, this group of 20,000 will be more apt to choose GE smart appliances when the time comes to ditch their old refrigerator. Ditto for when their stove, dishwasher or washing machine ages out. If the experience is good enough, they might even upgrade a little sooner.

By suddenly adding 20,000 smart refrigerators into the smart devices mix, GE also gives the entire smart home ecosystem a much-needed boost.

Google’s Nest attempts to seize market share by publishing stats that demonstrate its value to consumers through cost savings. GE Appliances, on the other hand, is actually giving its customers a taste of what smart appliances offer — without having to sell them an unknown product or an expensive upgrade.

Both approaches are attempts to kickstart the smart home revolution by converting consumers, who they desperately need in order to turn their futuristic visions into present-day realities.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/2015/02/smart-home-ge/.

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