Kris BowringSr. Director, Platform Lead

Home and Energy Management

New Business

The Connected World Consumer:Creating Relevance and Capturing MindshareFor Energy ManagementMarch 2011

Understanding The Macro-Technology Trends Influencing Consumers Today

ConsumersIncreasingly tech-savvy

and demanding experiences

ChannelsInteractive platforms that provide

connections and technology

ConnectionsHard and soft connections among devices, services,

content and people

TechnologyDevices, services and

platforms to deliver experiences and

capabilities.

Multiple Eco-Systems

Best Buy Consumer Trend Scan Results

Consumers Technology Connections Channels

User Co-Curation

GenerationalShifts

TechnologyExpectations

Source: BBY Consumer Trend Scan study 2010

Embedded Connectivity

Social OS

Connectedness has clearly become a core need for many Americans, and is increasingly seen as a core

need

Generational preferences will drive platform usage – Mass

consumer increasingly comfortable with technology

Consumers are increasingly becoming the gateway for each others’

consumption habits by finding, selecting, rating and distributing their favorite information, media, products

and experiences

Family Multi-Tasking

Products with instant connectivity and no additional contract (e-

readers) may lead to changing consumer expectations around

paying for connections

Consumers will expect multiple entry points to the Social OS to be

present in most products, services, devices and promotionsHouseholds are no longer acting

as one single consumption channel at a time, tapping

several simultaneously, even among individual household

members

As more personal devices enter the home, families are multi-tasking

even while spending time together, managing multiple information and

media tools and sources at the same time

Seamless Experience

Virtual/Physical

Crowd Support

Availability of the same services on different platforms, combined with multiple device usage and widely

available connectivity is creating an expectation of more seamless

experiences

New technology start-ups are experimenting with greater use of peer-to-peer support as a means of helping customers solve their needs

Internet and mobile technology is on the cusp of further transforming shopping for many Americans, perhaps most immediately and intensively in the electronics market

2. Utilization of multiple “Screens” as access points

4. Increased expectations for interoperability

Technology Is Becoming A Critical Dependency In Consumers’ Lifestyles

Source: © 2010 Cisco Systems, Inc,. CIU Analysis

1. More “content” supporting my lifestyle interests and needs

5. Connecting NEW with OLD creates consumer frustration

6. Lack of education & know-how to WEAVE solutions together seamlessly

3. Higher device penetration drives eco-system complexity

Yet a Proliferation of Devices Does Not Equal a Proliferation of Connected Experiences

• More devices have the ability to connect now more than ever before, yet few consumers are actually connecting them

• Consumers use home networks primarily to share internet connections and printers

• 17% connect game consoles – all other devices fall far short of this number

> 200M Connectivity-Enabled Devices now in

US HHD’s

366M connectivity-enabled devices

forecast to be sold 2010-13, not counting

PC’s and printers

<20% of Data Networked HH’s

Connect More than PC-Printer

Source: Parks Associates; Cisco IBSG

Ease is a deciding factor that drives consumers to adopt new solutionsConsumers tend not to seek out those solutions which aren’t convenient to get,

or will abandon those which aren’t convenient to use

The Experience Value Must Be Greater Than The Headache Quotient

Value of Experience > +Difficulty Complexity

8Source: Forrester Selling Digital Experiences; Cisco IBSG

CONCEPTIONI don’t even know what’s

possible

GROWING CHOICE/COMPLEXITYOver 200,000 active apps in Apple’s app store alone with a new one added each 2.5 minutes.

How do I keep up?

Consumer Barriers Industry Barriers

COMPLETIONI don’t know what to buy

COMFORT I feel stupid when I’m in

the store

CAREWho can I find to help me set it up and fix it?

EASEIf I follow the directions,

will it work?

INTER-OPERABILITYWill it work with my other stuff?

WALLED GARDENSLack of standards & interoperability

How do I move my content across devices?

CONTINOUS CHANGEManufacturer and retailer constant updates make

the purchase decision even more complex. When is it the right time to engage?

Navigating the Possibilities Isn’t Easy –A Number of Barriers Exist

9

Source: CIU Analysis, Forrester – Digital Consumer Insights; Cisco IBSG

Added Eco-System Complexity Means That Virtually All Consumers Will Need Help Solving Digital Headaches

78% of consumers

believe they will need more technology

services help in the future

Portable device

integration and interoperability

Digital media usage

downloading, streaming, and synchronizing complexities

Hardware failure

Home network configuration and security

New device/service

integration

Integration of devices, connectivity, content is critical to

the desired consumer experience.

A key point of differentiation will be in the ability to offer services that solve

these problems

Source : Parks Associates; PR CW Proof Points

Helping Consumers Understand How Energy Management Becomes A Relevant Part of Their Home System

outside the home

Content

TRANSLATE THE COMPLEX

Devices Connections

INTO THE DESIRED AND SIMPLE

“What I want to do” “How I can make it happen”Control my lights remotely

Get alerts on my phone when my power goes off

Manage my thermostat remotely

in the home

Best Buy’s Residential Energy Management Consumer Study

We Have Identified Key Consumer Insights That Influence Smart Energy Program Acceptance

• Lifestyle Drivers• Key motivations for home improvements

• Desired features for home management

• Energy Attitudes• Attitude impact on desired features for home management

• Lifestyle driver impact on desire for energy programs

• Smart Energy Programs• Appeal across Lifestyles and Energy Attitudes

A modest number of consumers (the young & wealthy in particular) are motivated by a desire to

have a more comfortable & convenient lifestyle.

This desire drives demand for remote management features. It also drives

demand for home upgrade.

There is wide-spread desire to financially and

physically protect the home. This desire drives

consumer demand for products and services that

help reduce energy consumption through

information and automated control features.

Is not a particularly strong factor in most cases but

does make a minor contribution towards the demand for smart energy

programs.

Of the three, this is the least compelling driver for energy efficiency programs

We’ve Identified Three Key Lifestyle Drivers For Acceptance Of Smart Energy Programs

Environ-mentalism

Home Safeguarding Life Maximizing

Home Safeguarding Is The Largest Lifestyle Driver For Smart Energy Programs

Most of those strongly driven by Life Maximizing desires (comfort & convenience) are also strongly motivated by Home Safeguarding concerns (home security & cost efficiency).

The None group shows greater resistance to participate in energy management programs.

They are less likely to have made home improvements and do not exhibit energy saving behaviors. They also lag in technology adoption.

36%

10%2%

49%

3%

Lifestyle Drivers (Q3/10) (among all BB HHs, n=2000, +/- 2.19%)

Home Safeguarding

Only

Life Maximizing Only

Both (HS & LM)

Environmentalism Only

None

Overall Environmentalism lifestyle is 18% of consumers, vast majority (76%) of this group fall within Home Safeguarding.

80% of Environmentalism consumers overlap with Home Safeguarding or Life Maximizing, or both

Although There Is Significant Consumer Overlap, Home Safeguarders Tend To Be Older And Less Tech-Focused

Home SafeguardingSomewhat older (fewer 18-34)Slightly lower incomes in generalSomewhat more ruralUse some CFLsMore likely to have purchased energy efficient appliancesMore likely to have installed energy efficient doors and windows, as well as weather-stripped and caulked around doors and windowsPurchased energy efficient heating/cooling systems

Life MaximizingYounger (18-44)Higher incomes ($100,000+)Larger household sizes (4+)More likely to own a second homeMore likely to live in urban areasGreater proportion live in the Pacific regionMuch greater technology adoption (universal remote control for home entertainment system, smart phone, ereaders, GPS, Blu-ray players, DVRs, security systems, etc.)

Extensive use of CFLs in homeMore likely to have multiple programmable thermostatsMore likely to have had a home energy audit

Life Maximizers Are More Likely To Make Home Improvements For Motivations Beyond Energy Efficiency & Savings

In general, “Life Maximizers” make more energy saving improvements and are more likely to cite comfort and appearance as factors as well as environmental concerns as motivation.

“Home Safeguarders” are more likely to cite cost-savings.

45%

74%76%

52%

33%

82%

77%

40%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

To make my home look nicer / more up-to-date

To save on my utility bill To be more energy efficient To be more environmentally friendly

"Life Maximizers"

"Home Safeguarders"

Energy Motivators vs. Reasons for Making Improvements (Q3/10)"Q4015. For which of the following reasons did you make that home improvement?"

(Among Those Who Made Home Improvements, n=1,491, ±2.54%)

% In

dica

ting

Reas

on

Consumers Desire Different Features in Smart Energy Programs Based On Their Lifestyle Driver And Energy Attitudes

Automation / Information

Information that helps manage energy consumption and automatic controlled

thermostat, hot water heater, lighting, etc. that help with the task.

Consumers are seeking two primary capabilities in a system or method to help them manage the security, comfort, and energy use of their home.

Remote Management

The ability to monitor and manage the home while away from home.

Most Compelling Energy Program Features Are Information With Automation And Remote Management

Highly Desire Neither68%

Highly Desire Automation-Information

Only8%

Highly Desire Both17%

Highly Desire Remote Management Only

7%

Appeal of Home Energy Management Service-Groups (Q3/10)"Q5010. How valuable would each of the following be to help you manage the security,

comfort, and energy use of your home?"(Among All BB HHs, n=2,000, ±2.19%)

Across Life Maximizers and Home Safeguarders we see consumers seeking two primary feature sets:

Automation-Information—information that helps manage energy consumption and automated appliances that help with the task.

Remote Management —the ability to monitor and manage their home when away from home.

Has strongest desire for smart

energy programs

Additionally, Consumers’ Energy Attitudes Impact Their Acceptance of Smart Energy Programs

There is a tendency to feel they have done and are doing about all they

can to be as energy efficient as possible.

These consumers aren’t necessarily satisfied with their utility bills, however.

High electric bills drive anxiety about future energy costs. These consumers are on the

look-out for products and services that reduce energy costs through

automation and information features.

Believe that new technologies will help

reduce energy consumption and costs in the future. This attitude positively influences the

demand for smart-energy programs.

Energy Optimist

Energy Worried

A relatively small group of consumers have this

attitude. They seem to have accepted the size of

their utility bill and feel there would be little

payback over time from investing in making their

home more energy efficient

Energy Satisfied

Energy Indifferent

In addition to lifestyle characteristics, attitudes toward energy usage and efficiency also influence likelihood to enroll in energy management programs.

Worried but optimistic16%

Worried and not optimistic

17%

Neither worried nor optimistic

49%

Optimistic and not worried

18%

Energy Attitudes: Optimistic vs. Worried (Q3/10)"Q3070. Do you agree or disagree with the following statements?"

(Among All BB HHs, n=2,000, ±2.19%)

Those Most Interested In Smart Energy Programs Are Driven By Anxiety Over Energy Costs And Belief Technology Can Help

Those most likely to enroll in a smart energy program are worried about rising energy prices but optimistic about technology’s ability to address the problem

The group second most likely to enroll are those that are optimistic about technology but not worried about rising energy costs

Third are those that are worried and not optimistic

An optimistic view of technology is more important than a concern

over rising energy pricesHave lowest interest in smart energy programs

All Energy Attitudes Are PresentWithin Each Lifestyle Driver

47%

69%64%

21%

49%

58%

52%

18%

30%

49%45%

4%

14%

30%

24%

6%

Home Safeguarding Life Maximizing Environmentalism None

Energy Optimist

Energy Worried

Energy Satisfied

Energy Indifferent

Life Maximizers have a higher percentage of Energy Optimists and Worried attitudes, coupled with their greater level of technology adoption, it makes them a key target for Smart Energy Programs that enable automation and remote management

Examples of Smart Energy Programs Tested: How likely would you be to enroll in this program?

Util

ity C

ontr

ol • Allows electricity provider to make minor adjustments to your thermostats & other appliances during times of high energy demand

• You are able to over-ride them if you desire.

Info

rmat

ion

& M

anua

l Con

trol • A program that allows

you to monitor how much electricity your home is using at any given time

• You could better manage your home’s electricity consumption by turning off/down/up the systems using the most energy A

utom

ated

Con

trol • A program that installs,

at a modest price, devices that automatically adjust themselves to optimize your home’s electricity consumption.

• The devices would automatically learn your family’s schedule and keep your home comfortable when people are home but save money when they are not.

25%

25%

28%

29%

29%

30%

34%

36%

31%

31%

22%

30%

27%

22%

27%

19%

Remote Management

Remote Management + Security

Evaluation + Discounts

Maintenance + Fee & Tech Tune-up

Automated Control

Utility Control

Maintenance + Fee

Information + Manual Control

Very Likely Neither Likely nor Unlikely Unlikely

Overall Consumer Reaction To Smart Energy Programs

n≈500 per program concept

The desire for automation-information and remote management features in home control systems drive preferences in Energy Management programs.

Energy Attitudes Desired Features Desired Energy Programs

Home Safeguarding

Key Motivation: Financially & physically protect my home

#1 Energy Worried#2 Energy Optimist Automation & Information - Information + Manual

Control

Life Maximizing

Key Motivation: Desire for a more comfortable & convenient lifestyle

#1 Energy Optimist#2 Energy Worried Remote Management

- Automated Control- Remote management +

Security

Environmentalist #1 Energy Optimist#2 Energy Worried Automation & Information

- Utility Control- Evaluation + Discounts

- Maintenance + Fee

This Multi-Layered Consumer View Can BeA Key To Shaping Relevant Smart Energy Programs

We Have Much More To Share….

• What are the benefits that should be emphasized to persuade consumers that energy management is important and relevant to them?

• What are the key motivators of energy management behaviors and programs, and what incentives are most likely to influence participation?

• What are the most compellingenergy management programs to address consumers’ lifestyle needs?

• How can manufacturers, retailers, utilities, and agencies deliver the energy management message in a manner that resonates with consumers?

Our recent Best Buy study addresses the issues of residential energy management from a consumer benefits and barriers perspective:

Thank You!

kristen.bowring@bestbuy.com