Over the last few months Berg Insight has been looking closely at the smart homes market. Home automation technologies have been available for decades, but up till recently this has mainly been a niche segment either for the affluent or extreme technophiles. In the past few years the market has really taken off and is now growing rapidly.
In 2015, the installed base of smart home solutions in North America increased by 59 percent to reach 23.4 million solutions in 12.7 million homes at the year-end. This corresponds to 9.7 percent of all households and places North America as the most advanced smart home market in the world. The European market for smart home systems is 2–3 years behind North America in terms of penetration and market maturity. In 2015, the installed base of smart home solutions in the region almost doubled and reached 8.2 million solutions in 5.3 million homes, meaning that 2.4 percent of all households in the region were smart at the end of the year.
The most successful products on the smart home market include smart thermostats, security systems, smart light bulbs, network cameras and multi-room audio systems from vendors such as Philips Lighting, Honeywell, Belkin, Nest, Ecobee, MyFox, Sonos, Canary, Netatmo and D-Link. Major vendors of comprehensive whole-home smart home systems include a mix of energy-, security- and communication service providers and home automation specialists such as Vivint, ADT, Comcast, Control4 and AT&T in North America and Verisure, eQ-3, RWE, Deutsche Telekom and Loxone in Europe.
The smart home market is still in its infancy and many smart home ecosystems are underdeveloped and products are often complicated to use. Attractive use cases, interoperable devices and well implemented user interfaces are needed in order to accelerate the market. Smart home devices must be easy to set up and use, as well as make users’ lives easier, more enjoyable, safer or more efficient in order to become truly successful and appeal to a mass market. Smartphone apps are today the main user interface of many smart home solutions. In the future, users are however unlikely to be willing to launch a number of individual apps to be able to use their connected devices. The combination of cross platform compatibility and a voice driven user interface has the ability to connect and control a wide range of devices and services using simple voice commands. Amazon’s Alexa service has quickly become popular and shows the value of smart home solutions to a broader audience. Furthermore, Apple’s HomeKit has built-in support for Siri, the company’s voice driven digital assistant. Berg Insight also anticipates that Google and Microsoft will push their Google Now and Cortana services as a foundation for controlling connected devices and services.
The author of this blog is Johan Svanberg, Senior Analyst at Berg Insight
