Market Insight

Smart Home Trends to Watch - 2018

February 27, 2018

Blake Kozak Blake Kozak Principal Analyst
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The global smart home market is expected to increase by nearly 250% in terms of unit shipments from 2017 to 2019. This significant increase will be the result of manufacturers and service providers altering their selling strategy, from device-first to solution–first. This means that rather than trying to sell, for example, a simple thermostat, these channel players will start engaging more in-depth with consumers in order to offer solutions and ecosystems of products that are not only compelling but also indispensable. To achieve this combination of compelling and indispensable, these ecosystems will be more horizontal. For example, rather than just selling a thermostat, service providers will sell warranty and maintenance services, as well as real-time energy saving statistics and tips. Moreover, hubs will no longer have linear functionality. Instead, hubs will have features such as video surveillance, smart speaker capabilities, security sirens, and potentially home Wi-Fi.

Video surveillance becomes ‘social’

The first trend to watch closely is home video surveillance. Video sharing and video analytics will soon be a minimum requirement for any device manufacturer or service provider, especially in North America. In Europe and Asia, this trend will be subdued until at least 2020. For video sharing, neighborhoods and communities will share video feeds in order to provide alerts for loitering individuals (potential burglary threats) or for anything that is out of place, including a parked vehicle with license plates that do not match those typically seen in the area.

Advanced features are commonplace

Video analytics primarily applies to facial recognition and audio processing. Thanks to facial recognition, many intruder alarm systems will soon be disarmed by a person simply walking into a room. Video analytics will also provide advanced filtering of video recordings, and mobile phone alerts of flags or trees blowing in the wind will be an annoyance of the past. And while this feature has been available for several years, consumers will be able to do a “Google search” of a video recording to find specific elements within a given video, such as a particular person, animal, or sound.

Use cases will prevail over privacy concerns

As more cameras deploy machine learning, privacy concerns will spike, especially as these systems learn more about daily life. However, privacy concerns will become less prevalent in certain use cases. For instance, it will be feasible for a camera solution to gain access to photos on a mobile device to help automate a database for facial recognition purposes. For manufacturers of smart home technology, cameras and video doorbells are becoming more advanced, and it will be imperative to have a product line that includes a 4K camera as well as analytics that can perform facial recognition, human detection, and object detection for package security. Moreover, LTE cameras will also gain traction as suppliers look to rural areas and countries with constrained bandwidth to increase sales.

Displays and voice changing interactions in the home

Digital assistants will expand rapidly into new form factors over the next 12 months. Digital assistant technology is currently embedded in appliances, robots, lamps, smoke detectors, and speakers, but digital assistants will find a home in many other devices as well. One such device is the light switch. IHS Markit expects that light switches, light bulbs, and light fixtures will commonly become embedded or integrated with digital assistants such as Google Assistant or Amazon Alexa. Moreover, there will be an influx of smart displays, such as Echo Show and the new Lenovo screen. Voice is also moving to other unique places in the home, including the shower and faucets, as with Delta and Kohler. This is a likely progression of water control in the home, as faucets have moved from handles to touch and now voice. As consumers become more and more accustomed to interacting with appliances using voice, it makes sense to also control other aspects with voice, thus removing the need to touch anything in the kitchen other than the food that is being prepared.

Key takeaways and predictions:

Consumers are starting to see more value in lighting controls. This is particularly evident outdoors and with advanced light switches that integrate motion/occupancy detection, temperature sensors, and voice control. This will lead to a more contextually aware home that can hear and sense occupancy to better operate thermostats (energy control), in addition to other features that will lead to a truly smart home.

Multiple features are converging into single devices. The years 2018 and 2019 will mark the rise of all-in-one devices that combine smart speakers, cameras, hubs, lighting, and Wi-Fi. Examples include Sengled Smart Lamp Speakers, Honeywell, Toshiba, Amazon Echo Plus, Hogar Controls, and many more.

Combing home Wi-Fi and home automation functionality will continue to disrupt the do it yourself (DIY) market. Expect more routers and gateways to embed not only protocols such as ZigBee and Z-Wave but also provide cyber protection from network attacks and botnets. In short, whomever controls the Wi-Fi will control the home.

Expect further expansion of company strategy: device manufacturers and service providers will begin facilitating concierge services and additional value-added offerings beyond just devices. At CES in 2017, suppliers were enhancing product lines. CES in 2018, however, saw more enhancements but also companies looking to expand their reach. For example, companies are aiming to penetrate into security, automotive, neighborhood protection, and concierge services (ecosystem enhancements). And though interoperability is critical and remains a top buzzword, many suppliers and service providers are showing signs of circling the wagons.

The car will play a larger role for smart homes, from alarm monitoring providers to device specialists such as Chamberlain MyQ and voice control such as Alexa. Moreover, Samsung will push Bixby into cars and households. Likewise, Toyota could integrate Alexa into certain cars in 2018.

In-home delivery will be a focus for many smart home device and service providers. This will require the expansion of ecosystem devices to include door locks, cameras, and even garage door controls. Since a few barriers to in-home delivery include privacy and animal control, expect reverse camera analytics to alert delivery personnel of in-home occupancy prior to home entry or garage door integrations.

Analytics at the edge will become more prominent. This means analyzing video content and other metadata at the device-level will become the preferred method, rather than relying on the cloud and datacenters.

Knowledge is power. Fewer smart home systems (especially those that are professionally installed) will require the consumer to know about scenes or recipes. Although clunky at first, the platform will utilize machine learning to automatically set these scenes based on patterns.

At least one major insurance provider in the US will launch a proprietary smart home offering in 2018 focusing on smoke/CO detection, security and water leaks, with additional neighborhood features regarding housing and community scores—beyond just subsidizing water leak sensors.

Advancements in aging–in-place will see huge increases and will include Bluetooth-based mobile PERS and time-piece interfaces (watches) making aging-in-place and senior-care less invasive and more enjoyable.

Expansion of single-brand ecosystems. There will be far fewer specialized device manufacturers in 2018 and 2019, which will help consumers by reducing the need to combine different brands to create a
“Frankenstein” smart home. Instead, device manufactures will offer a complete spread of automation devices for consumers—from thermostats and security sensors to blinds/shades and video cameras. 

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