The smart home had another fabulous year of growth in 2018, with Futuresource estimating that shipments increased by 39% last year.
This category of consumer electronics is now worth over $ 12 billion globally and shipped over 100 million devices in 2018. Industry is tackling big challenges like interoperability, but it’s still lagging behind address issues that affect consumers and deter mass adoption, such as data security.
Improved interoperability and ease of use can be counted among the most significant successes in the industry, and voice assistants have been the key to advancements in this area. Smart speakers have become the seamless hub that directly controls a myriad of devices and appliances in the home. The rapid adoption of smart speakers is also important for the entire industry as they are a common first step for consumers in the smart home ecosystem.
See also: What is a smart home?
This year, it’s hard to find a smart home device that doesn’t work with Amazon Alexa or Google Assistant. The widespread use of voice assistants in the home has occurred as the major smart home use cases remain broadly unchanged: monitoring, diagnostics, remote control and automation, which have promised (and most importantly delivered) convenience and security for consumers who have installed Cloud – connected security, air conditioning, lighting and electricity in their homes.
Where next? The industry sees AI as the next big thing. More than controlling the devices in their home, consumers will be surrounded by technology that learns their routines and moods and adapts accordingly. Another development path is to continue to integrate connectivity into more areas of the home, from living room and bedroom furniture to kitchen and bathroom.
Futuresource believes there will be plenty of room for growth in the established key categories of security, air conditioning, lighting and power. We estimate that only 4% of households globally have smart home devices (excluding smart entertainment and smart speakers). The saturation rate is higher in the United States (19%) and Western Europe (6%), but even in these markets the trail is long.
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Security and surveillance is the most established area of the smart home, and in the United States, saturation is expected to exceed 50% this year. This is due to two key subcategories: smart security cameras and video doorbells, which are now spreading success to other parts of the world, with video doorbell shipments more than doubling in Europe in 2018.
Air conditioning is the second most successful area of the smart home. Fourteen million smart thermostats shipped in 2018, including more than two-thirds to the United States and Europe. China, the main market for smart devices, including smart air conditioners, has potential for smart thermostats, not least because unit prices are about half that of the United States and Europe.
Lighting is less established than security and climate control, but growing faster than either category. It also sells for lower unit prices and bundles well in retail with smart speakers, which has led to a new wave of smart lighting that doesn’t require hubs or bridges.
Despite rapid growth and strong forecasts (a compound annual growth rate of 38%, or CAGR, through 2022), smart lighting has lost its status as the fastest growing smart home category it has ever seen. it held in 2017, for the benefit of the power supply, which includes smart plugs. and switches. Smart plugs are a simple and relatively inexpensive way to turn any home into a smart home and remotely control any electrical device through a smartphone or voice assistant.
The success of smart electricity is a symptom of one branch of smart home development: sedentary use cases permeating new areas of the home aided by falling unit prices. CES is the ideal place for major players to present their new connected devices. It’s also the right place to see what possibilities AI can open for the industry in 2019.
Filipe Oliveira is a Senior Market Analyst at Futuresource Consulting.