According to a new research report by Berg Insight, the number of new smart home installations worldwide was 0.44 million in 2010. Growing at a compound annual growth rate (CAGR) of 65 percent, this number is expected to reach 5.38 million by 2015. The total revenues will simultaneously grow at a CAGR of 32.8 percent from US$ 2.3 billion in 2010 to almost US$ 9.5 billion in 2015.
Smart homes and connected home technologies have been around for decades, but up till recently, this has been a niche segment either for the very affluent or extreme technophiles.
“Things are changing for this industry due to a perfect confluence of market, regulatory, strategic and technology trends”, according to the report’s lead analyst Alan A. Varghese.
“First is the pull from consumers in the mobile age, who desire to use products such as iPhones and iPads to control their lifestyles through user-friendly interfaces. The regulatory drivers come from governments, whereby countries and utilities are mandated to better control the generation, distribution and consumption of power in residences. The strategic push comes from new entrants such as broadband providers who are already inside consumers’ homes and are looking for the next opportunities to increase ARPU, reduce churn and become complete solution providers. Finally the technology piece is coming together with increasing focus on interoperability, even as the cost of modules, chipsets, and software is trending down”, says Varghese.
There is an increasing shift in smart home technology adoption from custom and luxury residences to mainstream and production homes. Whereas only 0.1 percent of mainstream homes had any form of automation in 2010, almost 4 percent will have that by 2015. Furthermore, since new housing construction is in a slump worldwide, vendors are focusing their attention on retrofit of existing housing stock, and easy-to-deploy technologies such as wireless. Berg Insight finds that this market will soon be crowded with dealer-installers from traditional industries such as security service providers, as well as new entrants such as broadband, wireless and utilities service providers, so finding the right partnerships, business models and pricing is key to success.