IoT Wars: Smart Buildings vs. Smart Homes

Waging War within the IoT

Truth be told the Internet of Things (IoT) has a dirty little secret that it’s hiding from the world. Under the cloak of darkness, there is a clandestine war brewing between IoT’s heavyweights: The consumer smart home and commercial smart buildings. Who will reign supreme?

In today’s post, we’re going to endeavor to find out. We’ll take a deeper look at the specific characteristics that make up a consumer smart home and industrial smart building, while also reviewing how each market segment impacts businesses and consumers alike.

Let’s dive in.

Consumer IoT

So before we can jump into the connected home, let’s first take a look at consumer IoT as a whole. The consumer Internet of Things – as the Computer Business Review (CBR) defines it – … "is the Internet of Things that relates to connected devices aimed at the consumer market.” OK, that’s sort of helpful. Let’s expand a bit more to provide a fuller picture of what we mean by consumer IoT.

Let’s first think about the Internet of Things in general terms – the billions of connected devices that will merge our digital and physical worlds. As the CBR puts it, consumer IoT includes the connected devices geared toward the consumer. So what do they mean, specifically? Well, consumer IoT includes the Fitbit-like wearables, “smart” coffee makers, widgets and gadgets that we’d pick up at Best Buy or on Amazon for personal convince. It is within this consumer-driven world that a smart home lives.

The Smart Home

The smart home is coming to a neighborhood near you. Maybe even your own home. Don’t think so? You might be surprised at just how connected our homes already are. What is a smart home, exactly? According to CNET, a smart home is:

A home that is equipped with network-connected products (i.e. “smart products,” connected via Wi-Fi, Bluetooth or similar products) for controlling, automating, optimizing functions such as temperature, lighting, security or entertainment, either remotely by a phone, tablet, computer, or a separate system within the home itself.”

If you have recently installed a Nest thermostat or purchased the surprisingly not so smart Amazon Alexa, your home has already entered the smart home world. Congratulations, you’re an early adopter! You’re now part of what some analysts are predicting to be a smart home market value of $21 billion by 2020.

How does this smart home market prediction compare to that of industrial smart buildings?

Industrial IoT

The Industrial Internet of Things (IIoT), or the Industrial Internet as General Electric likes to call it, is the digitization of our physical world through harnessing sensor data, machine-to-machine learning, and big data analytics. Using these three pillars the Industrial Internet of Things is slated to make offices, warehouses, manufacturing lines, and industrial plants smarter and more efficient.

Commercial Smart Buildings

Slated to morph into a $25 billion market by 2021, commercial smart buildings are certainly on the rise. I’ve said it before and I’ll say it again it’s not just us saying this: the like of Cisco, GE, IBM, they’re all touting the Industrial Internet of Things.

So, what makes a commercial smart building smart? Let’s find out.

Whether it is a manufacturing line, commercial warehouse, or corporate office building, there are three main components to a commercial smart building. The first is sensor implementation. With the rapid drop in sensor price organizations now have the capacity to place data gathering sensors throughout their entire building infrastructure (think, lighting, machines, HVAC systems, etc.). The second smart building component is data storage, and the third is data analytics. If you’re collecting trillions of bytes of data from a building’s infrastructure (vis-à-vis your thousands of newly installed sensors) you’ll need a place to store and analyze it. These are the components that are the foundation of any commercial smart building.

So who’s slated to win this battle royal between smart homes and commercial smart buildings?

Smart Buildings vs. Smart Homes: Who Wins?

If we are to only take the predicted market value of these two markets (smart homes at $21 billion and industrial smart buildings at $25 billion) it certainly seems that industrial smart buildings are favored to win the war.

The sheer number of U.S. households is a whopping 125 million versus a measly 5.6 million commercial buildings, according to the U.S. Energy Information Administration (EIA). While commercial buildings pale in comparison, the EIA pegs that commercial energy use represents over 53% of total US. energy usage. Therefore, the energy savings potential alone could very well sway the pendulum.

Driving the mass-market adoption of 125 million homes is a tall order. Especially when compared to the total commercial building market.  As more businesses make the move to smarter building operations free market competition soon follows. Thus, driving the greater adoption among business in an effort to gain a competitive edge.

Time will only tell how the smart home vs. smart commercial building war will play out. I certainly have my money on commercial smart buildings. And not just because I live and breath this world daily. In my humble opinion, the combining forces of higher operational investment capacity and free market competition mechanics will foster the rapid adoption of commercial smart buildings over smart homes.

Bottom-line, the next five years will reveal whether smarter commercial buildings will, in fact, lead the charge of IoT adoption.

Cash In, Cash Out: Smart Buildings and Your Money

What are Smart Buildings?

Smart buildings, smart cities, smart everything. At every turn, it seems that more and more “things” are smarter at an ever-quickening pace – including buildings. Historically serving a sole purpose – keeping the elements where they belong; outside – today’s buildings are far more purposeful.

So, what is a smart building? Are we talking about the Jetson-esque buildings of Orbit City, with hundreds of Rosie-the-Maids running around your office? Not exactly, but close.

Today’s advancements in technology are allowing for greater interconnectedness between building systems. It’s through this connectedness of facility systems (think, HVAC, lighting, security, access control, etc.) that’s the basis of a smart building.

The Building Efficiency Initiative offers a great definition of what a smart building is and can do:

At the most fundamental level, smart buildings deliver useful building services that make occupants productive (e.g. illumination, thermal comfort, air quality, physical security, sanitation, and much more) at the lowest cost and environmental impact over the building lifecycle…Smart buildings use information technology during operation to connect a variety of subsystems, which typically operate independently so that these systems can share information to optimize total building performance.”

Let’s take a deeper look at that makes this all happen.

Sensors Everywhere: The emergence of the IoT workhorse

What's driving this integration of building systems? Say hello to my little friend, the mighty little sensor. Seriously. Even though sensor technology has been around for decades, the reduction in price is fueling wider adoption. Just take a look at the below figure from GE. Since 2004 sensor prices have declined by some 62%. Moreover, sensor prices are predicted to drop by another 24% by 2020. So over the course of sixteen years, sensor prices will have dropped a whopping 86%! That's some serious bang for the buck.

Smart Buildings and Sensor Technology

It’s this drastic price reduction in sensor technology that is powering (no pun in intended) the Internet of Things (IoT) and in turn the advent smart buildings. And we’re not just talking new construction here. The lower prices of sensors foster their placement virtually anywhere; including within existing building fixtures, HVAC vents, doors, windows, the list goes on.

Well that's cool, right? We can put sensors everywhere. Where’s the value, you ask?

Let’s find out.

What’s the value of a Smart Building?

Great, we can now afford to have little sensors in every nook and cranny of our facility. Should we care? I mean, simply having some sensors lodged into our building’s crevasses doesn’t necessarily scream investment opportunity. Or does it?

Let’s take a closer look at how sensor integration can bring value to our facility (and moreover our bottom-line).

Smart Building Operations: Reducing Costs

Building operations is not a cheap business. Per the U.S. Department of Energy, the annual energy costs for U.S. commercial/industrial buildings is an astounding $400 billion. Spread across the 5.9 million commercial/industrial buildings in the U.S., we’re talking about energy bills upwards of $70,000.00 per building. Those dollars and cents add up pretty quickly, don’t they?

So how can a smart building’s sensor infrastructure help in reducing these costs? When you consider that HVAC and lighting make up 59% of commercial building energy use, proper energy management is key. In fact, this is where an advanced monitoring system can help shed real dollars from your energy bill. And this isn't simply fluffed hyperbole, here. Per a study conducted by Texas Instruments, advanced HVAC and lighting controls (i.e. sensors) can cut energy use by 40%. (Oh, by the way, that’s just savings from sensor control. Upgrading lighting technologies from dated fluorescent fixtures to LED will reduce those costs even further).

Reduce Energy Costs - Smart Building

Improving Productivity

The implementation of sensor technology not only drives cost reduction, it can improve productivity. Embedding sensors within your building infrastructure provide greater granular control. This granular control gives facility managers the capability to optimize their building systems. As such, system optimization is the cornerstone to uncovering non-energy benefits. Including increased employee productivity. In fact, the same Texas Instruments study found that optimizing control systems can contribute to a 3% increase in employee productivity. This productivity increase is attributed to better thermal comfort and more appropriate lighting conditions.

What’s referred to as task tuning – the ability to granularly control a lighting fixture and optimize its output for a particular task at hand – has a profound effect on worker productivity. This actually reminds me of an example from a colleague of mine. The story goes a little something like this:

Working with an aluminum manufacturer in the Southeast U.S. my colleague had just wrapped up a new LED lighting upgrade on their client’s manufacturing floor. During a follow-up call to see how the new lighting system was working, my colleague was happy to hear the new LED fixtures and control system were delivering the promised energy savings as originally spec’d.

My colleague then asked if there were any other benefits of the lighting system that the client found. At that point, the client was all too happy to share some exciting news. By optimizing the lights over the sheet cutting workstation the employees saw a 2% reduction in aluminum waste. What's the big deal? Well for this client a 2% decrease in scrap aluminum was so signficant it actually dropped their project payback from 1.75 years to an amazing 3 months! Now if that’s not a direct non-energy benefit of a smarter building system, I don’t know what is.”

Deeper Insight: The more you know, the better you can manage

The old adage you can’t manage what you can’t measure directly applies to building operations. Luckily you can now collect and analyze more through a Building Management System (BMS). The mere fact you can now use sensors to measure what was once unmeasurable is a game changer. Gathering data on a lighting, HVAC, security, or an access control system unlocks significant business value. Consequently, smart buildings have the ability to tell a larger story - from space planning to occupancy based optimization.

The fact that 30% of energy in a building is used inefficiently or unnecessarily also gives reason to pause. Diving into these areas to determine where and how this energy is wasted is part of the larger story a smart building can tell. With deeper data analytics you can now pinpoint wasted kilowatts down to the machine.


The power of data collection and analysis is the real value of a smart building. There will be a point when the energy sponge has been squeezed dry and productivity is maxed out. As a result, it will be up to the smart building’s analytical brain to push the envelope even further to unlock additional business value.

Smart Buildings of the Future

Pinpointing how your facility not only uses energy but lives organically provides untold value to your business. Least not of which is how to improve operations, productivity, and efficiency. As the Internet of Things advances the power of a smart building will only increase. What we think of as groundbreaking today will simply be a footnote in five years time. Tomorrow’s smart buildings will be a Jetson-esque reality. Your desk will know who you are and how you like your lighting and temperature – no matter where you sit or what office you’re in. And little robots will swing by to serve you lunch…far-fetched you say? Well, robots are already running fast-food joints.

At the end of the day, it will be quite fascinating to see what the smart building of tomorrow will look like. For now, there is certainly enough "dumb" buildings that we need to bring up to speed and make smart.