Understanding the Connected Home Market and How It Will Develop Ron Zimmer, President & CEO Continental Automated Buildings Association October 28, 2009 New York, NY

1.Bell Canada – Chairman Martin Cullum 2.Tridel Corporation – Vice-Chair Leo DelZotto 3.Honeywell International – Vice-Chair Roy Kolasa 4.Alcatel-Lucent - Lindsay Ellis 5.BAE Systems - Steve Teubner 6.Cisco Systems, Inc. - Tony Wan 7.Direct Energy LP - David Dollihite 8.Hydro One Networks Inc. - Tom Semler 9.Leviton Manufacturing Co., Inc. - Tom Leonard CABA Board of Directors

10. Microsoft Corporation - Jonathan Cluts 11.National Research Council/Institute for Research in Construction - Dr. Morad Atif 12.Philips - Dr. Satyen Mukherjee 13.Procter & Gamble - Orly Cocco 14.Siemens Building Technologies, Inc. - Brad Haeberle 15.Trane - Gene Shedivy 16.Vantage/Legrand - Andrew Wale 17.Whirlpool Corporation - Carol Priefert 18.CABA - President & CEO – Ron Zimmer CABA Board of Directors

“The knowledge-based forum for industry leaders who advance the use of technology and integrated systems in the global home and building industry.” CABA Vision

Remote Home TV USB Storage HSS VoIP Thin Set-top Touch Panels DMA IP Camera TV Connected TV Offsite Storage Uber Set-top Modem How do we connect all of this stuff?

Realties of the Smart Home Smart Home Vision of 10 years ago: – Did not happen for the masses – Did happen for the “Rich and Affluent” – Networked box in the garage – CAT5 wiring was just starting to sell, but not for the masses – Sensor modules – Multi HVAC systems – Central touch pad (Home Controls) – Media server room with rack – Lighting, window treatments and cameras – Smart home today is main stream for the “Rich and Affluent” and extreme upper income levels

Smart home today for mass market is a connected home that has varied networks developing: - Computer, gaming and TV - Wired and wireless - HVAC programmable thermostats - Security pack from companies like ADT, GE, Honeywell, etc. - Very basic web cam systems Realties of the Smart Home continued

Advisory Board Members (6): Affiliate Members (17): Connected Home Research Council (CH-RC) Members

The Connected Home Research Council provides opportunities for research project collaboration conceived and executed by Research Council members. The resulting research reports, white papers and executive summaries are made available to Research Council members and industry stakeholders. CABA’s Connected Home Research Council (CH-RC)

CH-RC State of the Connected Home Market Study Research Study was completed in June of 2008 Divided into three ecosystems (family, entertainment and career) Web survey of over 800 North America people – Home owners - 25 and older – Responsible for managing the household Industry benchmark study 3 rd study in eight years Funded by companies who are CABA’s CH-RC members Found that a home with sensors and “smartness” never took hold for the masses due to: – Cost of system and components – Not being user-friendly

CH-RC State of the Connected Home Market Study Research continued The study did determine that entertainment is “king of the dollars” - TVs, gaming and computers connecting together in a “plug and play” environment The safe, secure and comfort areas are lagging behind in consumers minds because: - Price is higher than payback for investment - Too complicated for the non-tech person to deal with - “I already have to much technology in my home” or “I do not want my home to run my life” or “technology only complicates my life, so I don’t want any more” Complimentary Executive Summary at:

The Realities Note: Remember the consumer adoption curve. Innovators and early adaptors will purchase technology that others will not, until it becomes more mature and consumer friendly.

Connected Home Backbone Options Purchased When Current Home was Purchased, Among Homes Built 2000 or later 2008 U.S. and Canada Total Online HHS n=60 60 % Wired security system 59 % Programmable thermostat Home energy monitoring/control 18 % Centralized lighting control 12 % Built-in high-speed Internet throughout the home Structured wiring 56 % 45 % Remodel New construction House built during the last housing bubble

Family Ecosystem

Family Ecosystem continued Lack of interest because of issue around: Set up - 51%, People in the mass market are technology challenged People are overwhelmed by dealing with technology at work and home

Family Ecosystem Continued Home network phone & on-site support Wireless appliance monitor Home zone sensors Energy-saving power strip Professional home network installation Remotely administered home network repair services U.S Total Online HHs (n=319) Canada 2008 Total Online HHs (n=143) Remotely accessible door lock 42% 35% 36% 37% 39% 32% 31% Programmable thermostat 30% 25% Remote A/V equipment & home lighting control Service combines contact list for home & cell phones Maximum Total Addressable Market (TAM) for Family Mini-Concepts 36% 32% 33% 31% 35% 28% 22% 25%

If I buy or rent it, I want to watch it anywhere Home Theater Content Aggregator Media Center Home Projection Gaming Portables Media Extenders Sling Box Mobile Car A/V Slide Courtesy of Entertainment Technology USC

Entertainment Ecosystem U.S Total Online HHs (A) 2 or more computers Home Network Broadband Internet Canada 2008 Total Online HHs (C) Connected Home Foundational Technologies U.S Total Online HHs (B) n=1,849n=1,834n=649 n=1,761n=1,768n=620 n=1,829n=1,824n=628

Entertainment Ecosystem continued U.S Total Online HHs (A) U.S Total Online HHs (B) Canada 2008 Total Online HHs (C) 2% (n=60 4) 0% (n=21 1) Fiber-optic TV service TV with built-in Internet connection 3% (n=26 5) 5% (n=88) HDTV 13% (n=21 1) Media server 3% (n=60 4) 7% (n=21 1) 5% (n=61 0) 11% B (n=60 4) DVR 21% (n=60 4) 23% (n=21 1) High-definition DVD player (standalone or in other device, net) 19% (n=60 4) 18% (n=21 1) NA 24% ( n=618) Ownership of Key Multimedia Technologies NA Customized Universal remote 29% (n=60 4) 29% (n=21 1) NA Built-in home theatre/ surround sound 36% Purchased with Homes Built in 2000 or Later Total U.S. and Canada n=60

Entertainment Ecosystem Interest in Audio Entertainment Interest in Listening to Internet Radio at Home by Room Dining room Family room Living room Bedroom Kitchen Home office or den Other U.S Total Online HHs (n=282) Canada 2008 Total Online HHs (n=98) 16% 17% 24% 14% 12% 8% 27% 29% 2%1% 4%8%

What Ecosystem is most interested in Smart Home/Connected Home? Answer the Career Ecosystem This is a Ecosystem of people who work from home at least part time or telecommute They use technology differently and are more likely to be using technology in a early web 3.0 environment to solve problems 47% Works at Home Outside Regular Business Hours 52% B 43% U.S Total Online HHs (n=618; A ) Canada 2008 Total Online HHs (n=215; C ) U.S Total Online HHs (n=604; B ) 15% Self Employed 15%14%

Career Ecosystem-Work at Home QC48. Letters denote statistically significant differences among segments. Dining room Family room Living room Bedroom Kitchen Home office or den U.S Total Online HHs (n=346; A) Canada 2008 Total Online HHs (n=97; C) 22% BC U.S Total Online HHs (n=310; B) 13% 2% 43% 57% A 47% 3%2%8% 2% 4% 5% 9% B 1% 15% 20% 21% When working from home, in which room of the house do you typically work?

1. Home Networking Study 2. Digital Youth Study 3. Laundry Time 4. Digital Kitchen 5. Senior Living 6. Interactive Television & Advertising Study (IPTV) 7. Microbusiness & Small Business Managed 8. Services Needs Assessment Study 9. Going Green – Energy Efficiency 10. State of the Connected Home Market Study 11. It’s Just Magic! 12. Connected Home User Interface 13. Video Convergence CABA’s Connected Home Research Council - Successful Projects

Complimentary Research Report: