The popularity of smart home technology and devices has prompted new developments in how the market is reshaping itself. While over 34 million households worldwide adopted a smart home device for the first time last year, new home growth is starting to give way to the integration of additional technology with the devices consumers already own and use. Popular devices like the Nest and Ring are becoming basic household items, but consumers are now looking for ways to keep the rest of the home connected.
Alexa . . . Integrate My Smart Home
In North America for example, the clear dominant leader in the global smart home market, new smart home adoption has already begun a small decline. True smart home adoption means having more than one or two devices that serve a singular purpose; lower hardware prices, the advent of subscription services, and a want for added convenience have inspired homeowners to build their own smart home ecosystems. As a result, the explosion in smart home investment in the past few years aimed at building a captive smart home user base means manufacturers and service providers are shifting toward delivering offerings that can be integrated into existing smart homes or to deliver pricing and services that can entice smart home users to replace or upgrade their current investments.
At the forefront of this development are voice-controlled operators, most notably Google Home and the Amazon Echo suite. One-third of all smart home devices sold this year will be of the voice-controlled variety, and will become the foundation upon which these ecosystems are constructed. Smart home device shipments will increase to 1.2 billion units in 2024, up from 280 million in 2018, while total smart home revenue is forecasted to increase from US$77.5 billion in 2018 to over US$230 billion over the same time period. In addition, vendors such as Tencent and Alibaba have established an increased presence in Asia Pacific, with this region outperforming the North America market in five years.
The Future Still Looks Bright
Despite the decline in both North American consumer revenue as well as with new adoption, smart home service providers are set up well to continue the momentum and demand generated thus far.
The usual suspects, Google and Amazon, will look for smaller acquisition targets over the next year to expand support of their flagship devices. To increase ease of integration, smart home devices and installation services will become even more affordable and have greater DIY capability — making the technology more attractive to casual, less savvy buyers. Look for vendors across a number of industries (home appliances, security, safety) to bring their smart technology to the table and partner more closely with smart home Original Equipment Manufacturers (OEMs) to widen the overall platform.