The smart home technology and associated IoT gadgets are finally moving out from the labs to consumers’ homes. According to Forrester, the installed base for the said technologies is expected to grow at a five-year CAGR of 42% between 2017 to 2022.
Clearly, the consumer interest is significant, especially for goods in certain categories. Smart TVs were a “hit” with European consumers in 2016, with sales rounding up to 17.38 million across different manufacturers.
Prioridata report also indicates a significant market demand for:
- Gateway gadgets (Amazon Echo, Google Home) with a 134% increase in revenue between Q2 2016 and Q2 2017.
- “Smart” home appliances (fridges, robo-cleaners, washing machines etc.) exhibited a +349% global revenue growth within the same time period
- Advanced home security systems (“smart locks”, control panels etc.) grew by 78% in revenue.
Different consumer segments – Baby Boomers, Gen X and Millennials – are equally vested in “smartifying” their premises, though oftentimes for quite different reasons:
- 61% of older homeowners prefer smart technology as a mean to monitor and save on utility costs.
- 52% of Gen X consumers claim to be interested in increased home security.
- 39% of Millennials admit that they want smart gadgets because those are “cool and trendsetting”.
What’s Further Driving Smart Technology Adoption?
The smart home market is largely driven by the growing demand for convenience, resources saving and improved personal safety. When it comes to the latter, Millennials’ interest may be just as large as Gen X’s. A recent survey indicates that 75% of millennials are interested in buying an additional personal safety device under certain circumstances such as late working hours or due to living in an unsafe location.
Further on, millennials (aged 27-36) are now increasingly becoming first-time homeowners, and 38% of them settle for a property with some “smart” features or have installed the technology post-purchase. Additionally, 58% of their peers are interested in doing the same.
Another survey indicates that 72% of millennials would agree to pay $1,500 (£1,115) for a “smart” home and 42% would be willing to shell $3000 (£2,230) or more on top.
While the smart technology is steadily growing in appeal, it has also been reaching the plateau of adoption in certain regions. Business Insider indicates that in the US, smart homes have been stuck in the “chasm” of the adoption curve – the technology has already secured a good number of early-adopters, yet struggles to move to the mass-market phase of adoption.
The Current Challenges of Smart Home Adoption
While some consumers feel excited to invest in “smart” gadgets, they are counterweighted by a significant group of reluctant peers. The commonly cited barriers for further adoption are as follows:
High device prices and long device replacement cycles shoo away some consumers from purchasing smart gadgets. Most admit not seeing enough everyday value in investing in a “smarter” counterpart of a traditional appliance.
Lack of device interoperability. Currently, most manufacturers adhere to different standards for connectivity and data exchanges. Oftentimes, consumers have no way to assemble their own ecosystem of connected devices from different brands, as those will not function in conjunction. The industry still lacks unified standards that manufacturers should develop collaboratively. Until this issue is solved, smart home adoption will still occur at a slower pace.