The December 18, 2019, announcement of Project Connected Home over IP could be the moment the smart home market has been waiting for. The smart home market is in a state of competitive turbulence, and as the market continues to expand over the next few years, the more intense the turbulence may become without a consistent framework for interoperability.

Project Connected Home over IP, or CHIP, aims to smooth out some of that turbulence, and provide smart home device, network, and software interoperability to consumers. CHIP intends to remove the barriers between walled gardens. It seeks to make the smart home more collaborative and (slightly) less competitive. CHIP is backed by some serious firepower – Amazon, Apple, Google, the Zigbee Alliance – so the only possible outcome is success, right?

Not exactly. After analyzing CHIP after the announcement, it is still not clear to Strategy Analytics – and likely smart home companies and consumers – exactly what happens next. With the size of the corporate egos in the room and the smart home market continuing its march towards the mass market, it is going to be very interesting over the next year to see how consumer technology behemoths work together with smaller companies. The press releases covering CHIP point to December 2020 for the next major announcement.

What is clear, however, is that the smart home market is becoming very large and very diverse, and CHIP or something like it is looming large as a necessity. Prices for devices are falling, especially easy-to-install-and-use smart plugs, smart bulbs, and cameras. A huge range of devices are available to consumers from more outlets than ever, and smart home deployments outside the US are starting to ramp up.

However, without a collaborative standard and common infrastructure, companies are realizing the smart home could become irreparably fragmented. The complications resulting from fragmentation can sometimes be contained, as Google arguably has with Android.

But the smart home market is an exponentially more diverse market than mobile device market, which is essentially a two-horse race between Google’s Android and Apple’s iOS. Our April 2019 report details 46 smart home platforms, for example. CHIP is not the only initiative to create a universally-available protocol for the smart home. Several other technology consortia have had efforts underway for years: Zigbee, Z-Wave, Open Connectivity Foundation (OCF), Thread, Bluetooth and Bluetooth Low Energy, and Wi-Fi, among others.

CHIP, however, is among the first to prioritize IP, the dominant protocol of the internet and by far the most common network layer in use today. Using IP as the base protocol opens many more doors to expanding smart home device and software interoperability and improving the security of smart home solutions.

Why is CHIP important? As the market expands, and consumers purchase and deploy more devices in their homes, the more complex smart home networks become. If smart lighting can’t easily connect to door or motion sensors, or security cameras can’t communicate with smart locks, smart home adoption will slow, if not come to a screeching halt. Companies have done a much better job recently of streamlining initial setup of their devices. What gives consumers fits and frustration is in getting devices from different brands to work with one another.

This is where CHIP comes in to, ostensibly, save the day. CHIP’s primary goal is to remove these headaches consumers often experience with their smart home devices, especially with regards to devices from different brands not easily interoperating with one another, or not interoperating at all.

A universal smart home standard, or at least a standard that is less proprietary, is incredibly important as smart homes begin to evolve into intelligent homes. Basic home automation is now table stakes. How well companies are able to build service- and solution-centric business models that create value for consumers will dictate companies’ success in the smart home market. That success will require an infrastructure to be built first.

Is CHIP the final answer for the smart home? Perhaps, though the fight has just begun and a lot could happen over the next few years. Zigbee’s primary competitor Z-Wave sees the writing on the wall; on the heels of the CHIP announcement, Z-Wave unveiled a major change to its business model with the intent of making Z-Wave a critical component of the infrastructure for the intelligent home. Other protocols are likely to follow suit, or risk being left behind or worse, left out.

Even if CHIP or a CHIP successor does not succeed, its lasting impact may be in being the catalyst for gathering smart home companies around an ever-larger table, and kick starting the conversation about how to resolve interoperability issues that have vexed consumer electronics companies and their customers for years.

If it does succeed, it will usher in the era of the intelligent home and set the stage for the next generation of solutions, services, and devices.