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Smart home products are out on the market, but unfortunately most consumers have no idea where to buy them.
Only 30% of U.S. households are aware of where to buy smart home products or services, according to a recent Parks Associates survey. That figure should cause concern among manufacturers of these devices.
Of those in the survey who did know where to make a purchase, 40% said they would prefer to do so from retail outlets. Meanwhile, 31% chose a smart home security provider such as ADT, 23% chose an Internet service provider such as Comcast's Xfinity Home, and 12% opted for a pay-TV provider such as DirectTV or Dish Network.
The survey also found that 24% of U.S. households intend to buy smart lighting solutions by the end of 2016. BI Intelligence, Business Insider's premium research service, expects smart lighting solutions to be one of the top smart home solutions in the next few years thanks to the short replacement cycle for light bulbs and the relatively cheap price tag on connected bulbs.
Many U.S. consumers are also replacing their incandescent and CFL light bulbs, which have short life spans, with LED bulbs that are more energy efficient and last much longer. BI Intelligence expects consumers to purchase the slightly more expensive smart LED bulbs because they let users control the lights remotely.
BI Intelligence estimates that 9.7 million connected LED bulbs will be shipped to U.S. homes this year, and that number will increase at a 53% CAGR to 50 million by 2020.
At its current state, BI Intelligence believes the smart home market is stuck in the 'chasm' of the technology adoption curve, in which it is struggling to surpass the early-adopter phase and move to the mass-market phase of adoption.
There are many barriers preventing mass-market smart home adoption: high device prices, limited consumer demand and long device replacement cycles. However, the largest barrier is the technological fragmentation of the smart home ecosystem, in which consumers need multiple networking devices, apps and more to build and run their smart home.
John Greenough, senior research analyst for BI Intelligence has compiled a detailed report on the U.S. smart home market that analyzes current consumer demand for the smart home and barriers to widespread adoption. It also analyzes and determines areas of growth and ways to overcome barriers.
Here are some key takeaways from the report:
- Smart home devices are becoming more prevalent throughout the US. We define a smart home device as any stand-alone object found in the home that is connected to the internet, can be either monitored or controlled from a remote location, and has a noncomputing primary function. Multiple smart home devices within a single home form the basis of a smart home ecosystem.
- Currently, the US smart home market as a whole is in the "chasm" of the tech adoption curve. The chasm is the crucial stage between the early-adopter phase and the mass-market phase, in which manufacturers need to prove a need for their devices.
- High prices, coupled with limited consumer demand and long device replacement cycles, are three of the four top barriers preventing the smart home market from moving from the early-adopter stage to the mass-market stage. For example, mass-market consumers will likely wait until their device is broken to replace it. Then they will compare a nonconnected and connected product to see if the benefits make up for the price differential.
- The largest barrier is technological fragmentation within the connected home ecosystem. Currently, there are many networks, standards, and devices being used to connect the smart home, creating interoperability problems and making it confusing for the consumer to set up and control multiple devices. Until interoperability is solved, consumers will have difficulty choosing smart home devices and systems.
- "Closed ecosystems" are the short-term solution to technological fragmentation. Closed ecosystems are composed of devices that are compatible with each other and which can be controlled through a single point.
In full, the report:
- Analyzes the demand of US consumers, based off of survey results
- Forecasts out smart home device growth until 2020
- Determines the current leaders in the market
- Explains how the connected home ecosystem works
- Examines how Apple and Google will play a major role in the development of the smart home
- Some of the companies mentioned in this report include Apple, Google, Nest, August, ADT, Comcast, AT&T, Time Warner Cable, Lowe's, and Honeywell.
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