We recently reviewed the latest trends in the market for smart home products and services. This is what we found:
- Navigant Research predicts that global revenue from residential IoT devices will increase to $67.7 billion in 2025 — from $7.3 billion in 2015.
- Gartner also predicts that by 2022, an average home will have 500 connected devices.
- According to CB Insights, since 2012, home automation startups have raised $468M across 56 deals
- 90% of consumers say security is one of the top reasons to purchase a smart home system (iControl)
- 70% of respondents said they are excited about the potential cost savings from energy efficiency and monitoring (iControl)
- According to a 2014 survey by Lowe’s, 78% of respondents ranked Energy Management as top features for smart home
- Revenue in the smart home market will likely come more from the data generated and the services proposed to the inhabitants rather than from devices only
- Argus Insights found that consumer demand for connected home products slows dramatically in first half of 2015 and continues rapid drop off. This shows that the smart home market is driven more by supply than demand, and more importantly that there needs to be real value in what the market has to offer
- Today’s consumers want devices that solve real, everyday problems. Right now, most consumers see smart home as a nebulous term without a clear value proposition
Overall, although the market for smart home products and services has exploded in recent years, residential connectivity has not yet become mainstream, and beyond the early adopters, excitement around the smart home is fading.
What will truly allow the home of the future to take off, is an offer that is pertinent for the average consumer and that has a true value proposition. An offer of marginal increased convenience is not enough; there needs to be visible added value (gain of time or efficiency for example) to drive people to take the extra step and really take interest in this market. Early adopters have gotten what they need, and now products are not compelling enough for the average consumer.