Global smart home market to see strong growth
LONDON—The global smart home M2M market, which was at $19.5 billion in 2015, is set to grow to $96.5 billion by 2020, at a CAGR of nearly 35 percent, according to a recent study from global research firm Technavio.
The smart home M2M market in the Americas, valued at $10.1 billion in 2015, is expected to reach $41.3 billion by 2020, growing at a CAGR of 32.43 percent.
“Presence of enhanced global connectivity (LTE) across the world is one of the major reasons driving the global smart home M2M market during the forecast period,” Technavio lead analyst Abhishek Sharma told Security Systems News. “As of January 2016, there were almost 480 LTE commercial and 116 LTE-A commercial networks globally to support higher data services requirement.”
Sharma said that telecom operators have been rigorously investing to enhance the functionality of these networks in order to meet the increasing data traffic. “Increased and improved household broadband connections for ubiquitous connectivity is propelling the market growth,” he explained. “In addition, increased adoption of IoT devices in households is fueling the market growth.”
Increasing government initiatives such as aggressive roll-out of smart metering solutions in many regions of the world, including the U.S. is also a factor. In 2014, U.S. electric utilities installed 58.5 million smart metering infrastructure systems out of which 88 percent of the installations took place in the residential sector, according to Technavio.
The market research firm also found that the adoption of smart consumer-end appliances such as smart refrigerators, smart TVs, home surveillance cameras, and microwave ovens is rising globally. Sharma noted that reduced prices of smart lighting controls and thermostats have enabled the market to grow rapidly during the forecast period.
“For instance, due to the increased demand for smart home convenience, the light controls market generated revenue of about $1.2 billion and the automated thermostats market generated around $1 billion in 2014 in the U.S. and Western Europe,” he noted. “Other factors propelling the market growth would be high demand for remote controlling of home devices, elderly care, pet care, and continuous monitoring to avoid theft incidents.”
Home automation is also driving this growth as it provides a great deal of convenience to end-users in an era of mobility, said Sharma.
“This feature significantly reduces electricity bills by saving energy sources when not required. Home automation provides inter-communication among the smart devices to enable intelligent decisions,” he said. “For instance, Samsung provides a smart home system with all the home appliances interconnected to each other. These appliances can be operated through remote controls.”
With the increased awareness on smart home solutions, sales of smart sensors, thermostats, and plugs reached approximately 30 million in 2014 and will reach around 80 million by 2018 globally, according to Technavio.
“Home automation has a positive impact on the real estate business as well, as customers show increased interest toward automated homes,” Sharma explained. “Remote surveillance via home devices such as smart cameras and smart TVs is gaining momentum to ensure home security.”
Currently, smart TVs account for a 49 percent share of the U.S. and Canada market. The share is expected to increase over the next few years with smart TVs offering the added functionality of a computer.
The study forecasts that home automation will continue to significantly reduce energy costs. By 2020, the energy management and climate control systems segment is forecasted to generate revenues of more than $19 billion. The market for energy management is driven by wireless Internet penetration and the growing awareness of cloud services among consumers. Also, with the emergence of technologies such as ZigBee and Wi-Fi, the prospects for growth in this market segment will have a positive outlook. Furthermore, factors like the recent decrease in the prices of monitoring and control devices will fuel the adoption of energy management and climate control systems among corporate customers.
“It is expected that approximately 25 percent of the households globally will have energy management systems installed, while around 38 percent of the households are expected to have monitored security systems,” said Sharma.
All is not golden in the smart home world, though, as the research found that 50 percent of smart home device owners worldwide consider interoperability “a major issue to be resolved,” said Sharma.