Last year consumers worldwide bought a total of 663 million smart home devices, and the number is forecast to hit 1.94 billion in 2023, surpassing smartphone’s unit sales of 1.86 billion, according to a new study by Strategy Analytics.
The smart home demand is driven by lower device prices, compelling user applications and services, improved user experience and rapid technology development.
Among the popular smart devices are smart speakers, security cameras, smart light bulbs, smart door locks, digital thermostats, gateways and sensors.
The fastest growing product category in 2018 will be smart speakers like Amazon Alexa and Google Home. It is estimated that 69 million units will be sold in 2018, growing 109% from 33 million in 2017.
Smart light bulb such as Philips Hue is expected to be the second fastest growing category (47%), followed by connected smoke detectors (29%), smart door locks (27%), smart gateways (25%) and smart security cameras (25%).
Other smart home devices including sensors, smart switches and plugs, thermostats, controllers and digital health devices will see a 19% growth.
“The emergence of the smart home as a popular concept in recent years has led to a wealth of new device opportunities for vendors and technology developers,” says Bill Ablondi, Director of Strategy Analytics’ Smart Home Strategies advisory service.
“The smart home device landscape is still in its formative stage and multiple players are fighting to establish a presence. The scale of future demand suggests that there are huge opportunities for vendors which are able to take the lead in improving how people manage and organize their homes,” Ablondi adds.
The report concludes that successful smart home device vendors should identify which barriers to adoption they need to address to unlock growth, which bundles of products and services will resonate with consumers, and toward which segments of the market they should focus their resources.
Smart Home Market Size to Reach US$155 Billion Globally
Consumer spending on smart home devices, systems and services totaled $84 billion in 2017, up 16% from US$72 billion in 2016, according to Strategy Analytics.
The spending will total US$96 billion in 2018, and will grow 10% annually to reach US$155 billion in 2023, Strategy Analytics predicts.
North America will account for 41% of total spending or US$40 billion, followed by the Asia-Pacific region at US$26 billion and Western Europe at US$17 billion.
New offerings from big brand tech firms such as Amazon, Google (Nest), ADT and Samsung are driving adoption in North America. In Europe, UK-based Centrica Connected Homes’ Hive along with Deutsche Telekom’s Magenta Home, Germany’s eQ-3 and the Netherlands Enco’s Toon are stimulating market demand.
In Asia-Pacific, China’s Xiaomi, Korean service provider LG U+, Japan’s iTSCOM and Panasonic, as well as Origin and Telstra in Australia are powering the market.
“The market continues to mature,” says Ablondi. “Consumer awareness is rising, prices are coming down, and the technology is becoming more intuitive. Yet, there is still a high degree of fragmentation, with numerous firms competing for smart home consumers. Who will ultimately succeed in capturing growth in this market remains unclear.”