The smart home industry has undergone steady growth over the past five years, but we still aren’t anywhere near maximum market adoption. There’s ample room for expansion and many experts anticipate technological advancements in 2017 to spur growth.
The State of the Smart Home Industry
According to Statista, revenue in the smart home market totaled $10.432 billion in 2016, which represents a year-over-year growth rate of 44 percent. In 2017, the projection is for revenue to equal roughly $14.649 billion. That’s a year-over-year growth rate of 40 percent. In 2017, nearly 10 million new households are expected to enter the smart home market, which will equal a total of 41.5 million households.
With a market volume of more than $10 billion in 2016, the United States is clearly the largest market in terms of revenue. The next closest competitor is China, which possesses a market size of just $1.184 billion. But when you study the potential of smart home technology – and the industry as a whole – it’s clear that we haven’t even cracked the tip of the iceberg.
“At its current state, we believe 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,” senior business analyst John Greenough says.
Currently, many barriers to entry exist. Greenough points to high prices, long device replacement cycles, limited consumer demand, and technological fragmentation (which makes it anything but easy for homeowners to choose, install, operate, and maintain a smart home).
However, despite all of these barriers, the anticipation is that the industry will find a way to overcome and reach its full potential. In fact, many believe that 2017 could be the year that catapults the industry to mass-market adoption.
Three Tech Trends to Watch in 2017
People can talk about prices, replacement cycles, demand, and fragmentation all they want, but the first key to driving growth in market adoption is getting the technology right. In 2017, it looks like we’re finally getting there. Here are some specific smart home tech trends businesses, investors, and consumers are keeping their eyes on.
1. Growth in Smart Light Sales
The unique thing about the smart home technology industry is there are two distinct tiers. There are products that any middle-class family can afford to purchase, and then there are those that only the elite can afford. It’s this former category of products that has more demand and will undergo more growth.
At the heart of the “affordable” category is smart light technology. There’s a lot of competition in this niche and the benefits are clear and tangible. Top brands involved in this area include Phillips, Cree, GE, and dozens of smaller companies.
“The basic concept of smart light bulbs is that over time, the light bulbs will begin to understand your regular lighting schedule,” Security Baron explains. “They will get to know when you typically turn on the lights and when you turn them off.”
With many smart light options available for less than $100, this is one area that could enjoy explosive growth in the coming months. It will also serve as an important gateway product to more expensive “investments” that could drive the industry forward even more.
2. Smart Appliances Become Mainstream
A lot of households have experimented with various smart home technologies in the past. These include things like smart lights, smart thermostats, and remote surveillance cameras. However, very few households have been brave enough to invest in smart appliances – which is where the full potential of the industry is realized. This could change in 2017.
This could be the year that appliances finally become mainstream. This includes washers and dryers, refrigerators, icemakers, ovens, and even microwaves! As previously suggested, price will be a determining factor in this niche, but it appears that larger brands are finally establishing economies of scale that will allow them to reduce price points in these categories.
3. Better Visuals and Finishes
One area in which the smart home technology industry is lacking is in aesthetically pleasing finishes. Many products are functional and effective, but they simply don’t have the visual appeal that homeowners demand from products that are displayed inside the home. Look for this to change in the coming months, as brands start to pay more attention to developing new finishes. One larger interior design trend will be matte finishes.
“Matte finishes will slowly replace stainless steel in 2016 and 2017,” home staging consultant Danielle Procopio says. “Don’t worry, they will still blend in with existing appliances such as stainless or black and white, but it will help the homeowner save money by transitioning their appliances over time instead of having to buy everything all at once.” Look for this trend to carry over to smart appliances and other prominently displayed products.
Only Time Will Tell
There’s been a lot of speculation in this industry. Ultimately, there’s no way of accurately predicting what will happen. However, there are clearly pain points that advanced technology can help homeowners overcome. The key is for businesses to band together and eliminate barriers to entry that have allowed the industry to stall for a number of months.
For the last decade, industry experts have always anticipated large amounts of growth when a new year arrives. However, thanks to growth in the actual technology, it appears that 2017 actually does hold some promise. But as they say, only time will tell.
Edited by Alicia Young