Although still a bourgeoning market, the smart home is no longer just for hobbyists or techies, and device manufacturers and service providers are looking to take these technologies to the masses. They will accomplish this by focusing on what customers know and understand, which includes video cameras, smart speakers, thermostats and home gateways.
Just 9 percent of broadband households had a smart home device in 2017
The global smart home market was worth $18 billion last year and is forecast to reach $28 billion in 2018. Leading the growth in this market are connected appliances, smart speakers and connected lighting. The global installed base of these products reached 361 million devices in 2017, which means the penetration rate for smart home devices reached 9 percent of broadband households globally in 2017. The installed base of smart home devices is expected to expand to about 560 million devices by the end of this year.
Video surveillance for the smart home can become a gateway for other connected devices in the home in two ways. First, rank-and-file consumers already understand the value of security cameras better than they understand connected lighting or other devices, which can be perceived as novelty purchases. As such, the learning curve for consumers is less steep. Second, adding video security in the home is a sign of consumer trust, signaling their tacit acceptance of the possible lack of privacy that comes with the installation of smart, connected devices. Smart home video surveillance will also stimulate consumer curiosity and willingness to learn about smart home technology, inevitably leading to more adoption.
More than 22 smart speakers have been launched so far in 2018. In total, there are more than 56 companies either already offering a smart speaker, or planning to offer one next year. Furthermore, smart speakers are now being embraced by some of the top players in audio, such as Bang & Olufsen, Harman, Bose and Sonos -- all of which have already launched, or plan to launch, smart speakers by the end of this year. Other companies are also getting more involved in smart speakers, such as Netgear, Deutsche Telekom, Samsung, Facebook, Insignia (Best Buy) and Motorola. The Microsoft Cortana smart speaker, and another new entry from Nokia, are also rumored to be set for release in 2019.
Thermostats and radiator valves have had a major influence on the smart home market. The global installed base for thermostats reached 26 million in 2017. Although smart thermostats have a smaller installed base than video cameras,, they are likely to be installed in more homes, considering the fact that many homes are likely to require two or more cameras, but are unlikely to need more than one thermostat.
Routers and gateways from service providers
Routers and gateways with embedded voice assistants and smart home radio-frequency technology will gain more traction in 2019. Deutsche Telekom made progress this year with its Speedport Smart router -- soon to be on its third generation with smart home features enabled --and Comcast launched its xFi Advanced Gateway, with smart home capabilities for its gigabit broadband subscribers. Consumers using these service-provider gateways is inevitable, but we continue to see this adoption pushed out, because the time to market can be long and rollouts are often limited at the start. As a result, IHS Markit expects that this year and next year there will be a major influx of service providers announcing limited releases of routers with smart home functions.