When you think of a futuristic, fully automated home, you might picture several household gadgets working in harmony, like in The Jetsons or Back to the Future. But Gartner Research predicts that by 2020, there will be approximately 25 billion IoT-enabled devices, millions of which will likely be used to help consumers automate their homes. And Icontrol Networks reports that consumers across demographics (especially millennials and Generation Xers) are excited about owning a “smart home.”
A smart, or connected, home is defined as one where the lights, heating/ventilation/air-conditioning (HVAC), security alarm and other household devices can be automated and remotely controlled by a smartphone, tablet or computer. The key drivers in smart home adoption are home security, energy efficiency, entertainment, convenience/productivity, connectivity and health monitoring.
While Internet connectivity in homes and smartphones seem to be the driving forces in consumer adoption of smart home devices, it is the devices’ ability to work in sync with each other and improve the consumer experience that will ultimately drive mass-market home automation. By 2020, the percentage of global households with Internet access is expected to touch 69%, according to data from the UN’s ITU agency, and global smartphone penetration is expected to reach 75%.
According to research from Statista, in 2020, the value of the global smart home market will reach $43 billion, nearly triple its value in 2014. Given enhanced consumer interest in home automation, we expect to see a ripple effect on the many devices and technologies involved. In the race to dominate the IoT, companies are doing everything they can to stay ahead of the game. For example, Samsung announced at last year’s CES that 90% of the products it manufactures will be able to connect to the Internet by 2017. Below, we outline the key technologies and players in the smart home space.
Security
Home security has emerged as the key driver in smart home adoption. Icontrol Networks conducted a survey and found that over 90% of respondents said that home and family security would be a top reason for them to purchase a connected home or adopt a smart home lifestyle. Most smart security products are consumer-installed and -monitored devices, a category which currently accounts for only 2.3% of the market, but one that Citibank estimates will command a 34% market share in five years. Consumers want enhanced features with home security monitoring that conventional systems do not provide. Instant updates, high-quality video and ease of installation make smart security more popular.
Read more about smart home security in the second in our series of Connected Homes reports.
Appliances & Entertainment
About 46% of consumers say that entertainment is an important factor in smart home adoption—and 5% even say it is their number one reason to purchase a smart home system. Most leading firms in the smart home appliances and entertainment segment have established themselves in the market on the basis of their popularity and expertise over many years of manufacturing and selling home and consumer electronics. Currently, in terms of revenue and product portfolio, Samsung seems most likely to emerge as the market leader in this segment. Samsung’s Family Hub refrigerator was a hot topic at CES this year, as was LG’s connected 4K TV, which is thinner than a smartphone. Read more about smart appliances and entertainment in the third in our series of Connected Homes reports.
Energy Management
According to Statista, the global energy management segment was worth $898.9 million as of 2014, and is expected to touch $5.4 billion in 2020. Connected homes are expected to provide homeowners with long-term cost savings on energy consumption, although the prices of connected-home products are generally higher than those of their conventional counterparts. The potential cost savings provided by installing energy-efficient devices in a home is the largest driving force in smart home adoption, after personal and family security. Using a smart thermostat, for example, can save the average US homeowner 12%–15% on heating and cooling costs, says Nest, the maker of the most popular smart thermostat. Other smart energy management devices include smart lights; smart fans and ACs; smart meters; smart switches, plugs and outlets; and smart smoke/carbon monoxide alarms. Read more about smart energy management in our fourth Connected Homes report.
The Players
The smart home industry is marked by a unique, strategic collaboration between the IT giants and a number of startups that develop popular smart devices. Apple, Google, Samsung and Microsoft are companies whose smart home products are perhaps more popular because consumers are highly aware of their brands than because the companies have particular expertise in home automation. These four players have made tactical ventures that give them a competitive advantage over their traditional home automation counterparts. Read more about these companies’ forays into smart homes in our first Connected Homes report.
As the smart home market develops further, the evolution of an all-compatible platform will determine which smart home devices take the lead in the race. Of course, consumer desire will be a key driver, but network and platform interoperability is important, as no one wants to have to use a separate controller for each device. At CES 2016, we saw this evolution develop as Panasonic introduced the Ôra smart home platform, which integrates all smart home end points into a single smart living experience. IoT companies are making an effort to include more devices under a popular protocol’s umbrella of compatible products, and IoT security companies are providing customers with tools to help them secure their connected homes.
For more on smart homes, check out our five Connected Homes reports: What Happens When Your Home Is Smarter Than You?, Smart Home Security, Smart Home Appliances & Entertainment, Smart Energy Management and the Connected Home Series Wrapup.
