Research shows continued growth in smart home market

Parks Associates looks at where the industry is going at CES
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Friday, January 20, 2017

DALLAS—Approximately 26 percent of U.S. broadband households today now own a smart home device, up from 19 percent at the end of 2015, according to new Parks Associates’ research that was announced at its CONNECTIONS Summit at CES in January.

“That is a pretty significant increase, and that is notable because if you look at the lifestyle adoption, it is moving from early adopters to early majority so that transition is interesting,” Tom Kerber, Parks’ director of IoT strategy, told Security Systems News. “Any single category of product is not in the range, but collectively that it has moved past 20 percent is a milestone.”

Stuart Sikes, Parks’ president, noted during the summit that in the last two years, smart home device ownership has more than doubled. “We estimate companies will sell almost 55 million smart home devices in 2020,” he said. “Smart home companies are focused on expanding their product footprint, offering new value propositions to consumers, and creating new opportunities to monetize their IoT platforms.”

Kerber added, “Half of homes will have a connected product by 2020, and that is a going forward number, but the transition from premium to mid-tier in multiple product categories is really driving the volume across many of these product categories. Eventually it will go into the value tier, where most of the volume is, and that will drive it beyond 2020.”

Having its Summit at CES allows Parks researchers to see the latest developments and trends in the smart home market.

One of the top trends today is the use of voice “and the integration of voice into many different products and solutions,” said Kerber. “When Amazon Alexa came out Vivint and Alarm.com were some of the first players to announce integrations and they did that last year at CES. This year there were hundreds of products announcing an integration with Alexa, so we are seeing the need to provide that type of simple user interface across multiple categories of products.”

Another big trend at CES and in security today is analytics and AI.

“The security space is focused on audio or video, but across the smart home space with all of these connected products there’s all that sensor data that is valuable,” Kerber explained. “I met with IBM, which is focused on what they call cognitive computing, so taking all of this data, ingesting it and trying to capture learning from it, create algorithms to allow it to reason—that type of capability—is a huge trend that is still in its infancy. But, there are pockets where it’s really coming into fruition and I think security and audio and video analytics is one of those. Everyone is working aggressively to expand their product capability based on analytics.”

In the IoT space, Kerber said that a big issue today is interoperability. With so many in the IoT space opening up their communication layer, “What that does is reduce the friction, so now you can gain access to the Zigbee or Z-Wave library and then write to that, so once you have that level of openness it makes it easier to create connecting bridges and more interoperable solutions,” Kerber explained. “Those announcements are significant, even though we won’t see the results for a year or two. Everyone recognizes that everyone will be out there and coexisting, so figuring out how to work together is key.”

With all of these open systems and connected devices, cybersecurity is top of mind for everyone in the industry, said Kerber, who noted that Parks research shows significant increases in concern over the past few years about cybersecurity, which he said “could impact the industry moving forward.”