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2017 “pivotal” for mass marketing smart home technology: IHS Markit

Looking back at 2016, the smart home market made great strides in 2016 but there is still a lot of work to be done to bring smart home to the mass market.

January 2, 2017  By Blake Kozak IHS Markit

From what the industry learned in 2016, end-users still need more education on the benefits of smart home technology and the reasons why smart home truly is an investment and not a novelty or hobby.

2016 highlights:

• 80 million smart home devices shipped worldwide, 64 percent increase from 2015

• Personal assistants made strides with the launch of Google Home, Mykie from Bosch and the announcement by Wynn to install Amazon Alexa in every suite


• Comcast acquired Icontrol Converge, Alarm.com acquired Icontrol Connect and Piper

• Merger of AllSeen Alliance and Open Interoperability Consortium (OIC) from Open Connectivity Foundation (OCF)

• Apple iOS 10.2 introduced notifications for motion and door sensors. Previously notifications were limited to life safety devices and door locks – resulting in HomeKit becoming a viable DIY option for security, not just automation

• Automotive connectivity expands smart home integrations

Predictions for 2017:

• The foundation for smart home was set in the last two years. 2017 will be a year of minor business model modifications, pricing adjustments, security enhancements (prevent cyber-attacks) and getting products and solutions out in front of the consumer because lessons from past years demonstrate consumers have been slow to go out and ask for smart home. Providers must take it to the consumer to achieve greater adoption.

• 130 million smart home devices to be shipped worldwide in 2017, a 60 per cent year-over-year increase.

• Security dealers will receive a boost from professionally monitored, self-installed smart home systems. Dealers will also benefit from solutions geared toward apartment dwellers.

• Voice assistants (personal assistants) will become more commonplace, with many additional brands hitting the market. The technology will improve to incorporate multiple users and the specific lexicons required to interact with the devices will dissolve into more natural speech

• Device manufacturers and DIY platforms will place greater emphasis on real-estate and the builders market. As the technology improves, more insurance companies will adopt smart home packages

• Paywalls for advanced services and features will begin to materialize, with DIY systems that were 100 per cent free in 2016. This may include contracts to monitor appliance health and incorporate a service plan for maintenance.

• Service providers (telecoms) across Europe and Asia will see higher adoption rates compared with 2016

• Interacting with smart home, the cars infotainment system will become commonplace

• Greater emphasis will be placed on integrating appliances with open platforms, such as Wink and Amazon Alexa

Analysis for 2017

2017 will be the launch-pad year for EMEA and APAC adoption rates along with consolidation and maturity in North America. For the market as a whole, professional and DIY channels will continue to be fierce competitors, with a hybrid of the professional channel ultimately winning out at the end of 2017.

Although DIY companies such as Apple will make large strides, DIY solutions will continue to suffer from mixed reviews and high upfront costs. As a result, the non-smart home enthusiasts will opt for professional support until DIY platforms become more reliable. As the price for connected devices come down, DIY systems will benefit until the cost of back-end services and maintenance allow service providers to lower monthly subscription fees.

2017 will also be a transformational year for the user interface (UI) and hardware. Voice control will continue to impact the way in which users interact with the smart home; however, IHS Markit believes voice will not entirely replace mobile devices until voice becomes more naturally interactive.

For hardware, routers, televisions and OTT devices will take the place of the proverbial smart hub starting in 2017. Moreover, 2017 will bring more intelligent systems. IHS Markit believes that telecoms and security providers will start to deploy smart homes, not just connected security solutions such as video cameras and intruder alarms. This will lead to more use of the data that is being collected.

Retailers and other service providers will begin to offer more services around maintenance such as monitoring the usage of appliances to prevent malfunction or the automated scheduling of contractors to support failing HVAC equipment or plumbing leaks before they become a major problem.

Lastly, consumers will become more educated on smart home in 2017, which will drive revenue for all aspects of the market. This education will be driven through the media and tangible use. For example, Google Home was featured on the ABC show, Modern Family and Amazon Alexa will be used in hotel rooms and cars. Real-estate showrooms are also getting involved by showcasing smart home functionalities, while builders are pre-installing smart home in select developments – resulting in a bigger marketing push compared with previous years.

Blake Kozak is a principal analyst, smart home and security technology, IHS Markit.

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