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Smart home market set for 13% CAGR
- June 19, 2023
- Steve Rogerson
The global smart home market is set to see a 13% CAGR from $68.83bn in 2022 to reach $183.47bn in 2030, according to Market Xcel.
The smart home market is driven by several factors, including increasing consumer awareness and demand for convenience, energy efficiency, higher living standards, and automation of security and entertainment. Additionally, advancements in artificial intelligence (AI) and machine-learning (ML) technologies, coupled with the growing adoption of voice assistants and other connected devices, have aided growth.
The market comprises a wide range of products and services, including smart home automation, lighting, thermostats, security, appliances and entertainment. These products are typically sold through online marketplaces, specialty retailers and home improvement stores.
Smart home products typically leverage IoT technology and sensors to collect and analyse data about the home environment, and use this information to adjust and optimise lighting, heating, ventilation, air conditioning, security and entertainment.
In an era marked by technological advancements and a growing concern for safety, the demand for home security and monitoring has witnessed a significant upsurge worldwide. This could be attributed to the rising crime rates and instances of burglaries that have created a heightened awareness of the need for effective home security.
Moreover, increased awareness regarding the need for security measures through documentaries and TV shows to prevent crimes has boosted the market. For instance, in 2022, according to data from home improvements retail store B&Q, sales for security cameras increased 1000% in the week following the release of the show The Watcher, which recorded 125 million watch hours.
Another growth driver is the increasing adoption of voice assistants. With the growing popularity of smart speakers such as Amazon’s Echo and Google Home, voice assistants such as Alexa, Google Assistant and Siri are becoming popular in smart homes. These voice assistants offer users a convenient and hands-free way to control their smart home devices, as well as provide access to information and entertainment services.
As voice assistants become more integrated and sophisticated, they are also able to interact with a wider range of devices and services, such as smart thermostats, security systems and music streaming services. This trend is expected to continue, with voice assistants becoming increasingly important in smart homes, and with more companies entering the market to compete with established players such as Amazon and Google.
For example, in 2023, Amazon launched a line of Echo products that are voice-assistant devices backed by AI for managing home appliances such as lighting and speakers. Amazon reported the demand for Alexa-enabled devices increased almost 35% year-to-year.
AI and ML are increasingly being used to enable smart homes to learn and adapt to the needs of their occupants, allowing for greater automation and personalisation. For example, smart home devices can use AI to analyse data such as occupancy patterns, weather conditions and energy usage to optimise heating and cooling systems, lighting, and appliances.
Additionally, AI-powered virtual assistants can provide personalised recommendations and reminders and automate routine tasks such as shopping or ordering groceries. As AI and ML technologies advance, they are expected to become increasingly integrated into smart homes, enabling a more seamless and intuitive user experience.
The online distribution channel is experiencing the fastest growth because, first, online platforms provide convenience and accessibility for consumers. With just a few clicks, customers can explore a wide range of smart home products, compare features and prices, and make purchases from their homes. Secondly, online distribution offers a broader reach and global availability.
The wireless segment is expected to witness significant growth. Wireless technologies offer numerous advantages, including easy installation, flexibility and scalability. With wireless connectivity, smart home devices can communicate seamlessly without the need for complex wiring. Additionally, wireless technologies enable interoperability and integration between different devices and systems, allowing for the creation of comprehensive smart home ecosystems.
The increasing adoption of wifi and Zigbee further fuels the growth of the wireless segment, as they provide reliable and efficient communication for a wide range of smart home applications.
Covid-19 has had a mixed impact on the market. On the one hand, the pandemic accelerated the adoption of smart home products as people spend more time at home. The pandemic also led to an increased demand for remote monitoring and management, as more people work from home.
On the other hand, the pandemic disrupted supply chains and manufacturing processes, leading to a shortage of key components, and delaying the launch of new products. Additionally, the economic downturn and job losses have reduced consumer spending and slowed growth. However, as the world recovers from the pandemic and the economy stabilises, the smart home market is expected to bounce back and continue its growth trajectory.
The conflict between Russia and Ukraine could impact the market as disruption to the supply chain leads to delays in product launches and shortages of key components. Additionally, the conflict could lead to a reduction in consumer spending and investment.
The global smart home market is highly competitive, with numerous established players and new entrants vying for share. To remain competitive, many players are investing in research and development to produce innovative smart home technology.
For instance, Schneider Electric introduced Schneider Home in January 2023. This energy management system consists of a linked electrical panel, smart electrical outlets, a high-power solar inverter, home batteries for renewable energy storage, and an EV charger, all of which can be managed using an app.