Samsung 'SmartThings' Success Depends on This

Controlling Price Increase Factors
'Performance Degradation - Energy Saving' Marketing

Yang Hye-sun, Vice President of Samsung Electronics' Consumer Electronics Division, speaking at a press conference for 'IFA 2022,' Europe's largest home appliance exhibition, held in Berlin, Germany on the 3rd (local time). (Photo by Samsung Electronics)

[Asia Economy Reporter Moon Chaeseok] Samsung Electronics has declared its emergence as the 'world's best' energy-saving home appliance company by promoting its home appliance platform 'SmartThings Energy,' which reduces both electricity bills and energy consumption. However, several challenges must be addressed for success. It is clear that this will act as a factor for price increases, and concerns have been raised about how to persuade customers when product performance may decline due to energy savings. There are also worries that the smooth introduction of net zero homes, such as in the Korean market where apartment solar panel installations are prohibited, could take a long time.

According to industry sources on the 10th, Samsung Electronics focused on promoting SmartThings Energy at IFA2022, Europe's largest home appliance exhibition held over five days from the 2nd (local time) in Berlin, Germany. Han Jong-hee, Vice Chairman and CEO in charge of the DX (Device Experience) division, personally declared, "This year is the first year of SmartThings popularization." The intention is to operate Samsung's home appliance business through the SmartThings system that connects and integrates home appliances, attracting attention with expressions like 'hyper-connectivity.'

The goal of SmartThings Energy is 'AI savings' and net zero homes. AI provides users with electricity usage data to avoid the progressive rate sections where electricity bills can increase up to sevenfold, and ultimately aims to complete a 'net zero home' that generates electricity at home to supply appliances. Samsung aspires to make home appliance energy self-sufficient simply by installing Samsung SmartThings.

Models are posing at the Samsung SmartThings Energy booth installed in Samsung Electronics' independent pavilion 'City Cube (also known as Samsung Town)' at Messe Berlin, the venue for IFA 2022. (Photo by Samsung Electronics)

The problem is that it could act as a factor for product price increases. Since it is a system that connects all Wi-Fi-enabled home appliances, if variables such as increased data usage arise, maintenance costs could increase. Regarding this, Yang Hyesoon, Vice President of Samsung Electronics' Home Appliance Business Division, said at a local press briefing, "We have developed an 'AI Saving Mode' for Wi-Fi-equipped appliances to induce energy savings, and as new algorithms continuously emerge, we will operate by upgrading existing products," adding, "We will defend prices in a way that does not raise the prices of Wi-Fi-equipped products."

There are also doubts about the feasibility itself. It has been questioned whether it is possible to avoid the progressive rate section only by controlling all home appliances inside the house with a single SmartThings system. According to Samsung Electronics, they plan to address the issue through HCA, a consortium of 13 global home appliance companies including LG Electronics, Electrolux, and Haier. Choi Yoon-ho, HCA representative, also stated at a domestic press briefing on the 3rd (local time), "We will achieve energy savings results starting next year." According to Samsung, lighting is currently linked with about 3,000 products from 300 brands. They said that if the standard called 'Meter' becomes widespread, many more devices can be linked. This is interpreted as an attempt to solve the problem by increasing the number of linked devices.

There is also the issue of reduced product performance. Samsung Electronics explained that if a washing machine is set to save about 70% energy, the washing time increases by about 20 minutes. Although this is a controllable aspect depending on the user's lifestyle, some view it as uncertain how actual marketing results will turn out. Samsung did not provide a clear answer on this matter at the press briefing.

There are also concerns about how effectively service expansion can be achieved from a marketing perspective. In particular, if the payment system is not linked, consumers might have to open the app one by one to check energy-saving data. It was also pointed out that panel replacements due to customer change of mind rather than damage are not uncommon. Regarding this, Vice President Yang said, "When investigating the replacement cycle of bespoke panels, it was found that in Korea, the replacement cycle is fast enough that people want to replace them after five years of purchase, mostly replacing metal and stainless steel panels, and dents caused by moving were identified as the cause," adding, "We judged that replacing only some surface defects of such products is a form of resource saving."

Due to the characteristics of Korea, where the spread of solar power facilities is not smooth, there are concerns that while 'AI Saving Mode' might be feasible, realizing 'net zero homes' could be difficult. Samsung also partially acknowledged this, stating that the initial target market would be Europe. Since they have technology capable of saving 10% more energy than Europe's highest energy efficiency rating 'A' with 'A-10%' technology, there is a possibility of a scenario such as 'first smooth landing in Europe - then targeting Korea.' Vice President Yang said, "Net zero homes are systems that produce and consume solar energy at home simultaneously, so naturally, the focus is on houses rather than apartments," and added, "In some Korean houses, if solar power facilities are installed, this system can be operated."

This content was produced with the assistance of AI translation services.