IHS Markit: Obstacles to smart home growth
According to a recent research note from IHS Markit analyst Tim Hewitt, lack of awareness is hampering the growth of the smart home market.
Hewitt states that the security providers and telecoms have experienced good growth in the North American market, particularly as early adopters take an interest in smart home solutions. However, that growth is not necessarily sustainable and mass market adoption may be more elusive.
“The initial uptake of smart home systems by early adopters was in line with expectations, but existing market barriers became more significant, as companies tried to expand beyond early adopters,” says Hewitt.
An IHS Markit Remote Monitoring Report suggests that the connected remote monitoring market in the Americas will grow from 5.5 million subscribers in 2015 to 11.5 million in 2020 — an annual compound growth rate of 15.9 per cent.
“While this growth in this segment is strong, the traditional side of remote monitoring is experiencing a decline, as consumers migrate toward connected products. For many service providers, the growth in connected systems is not providing substantial top-line subscriber growth, but it does help counter the decline in their traditional security business,” says Hewitt.
Among the obstacles to mass market growth for smart home products are:
• Consumer awareness not growing swiftly
• Fragmentation due to closed ecosystems and devices
• Device and service reliability issues in some cases due to overly complex systems
However, Hewitt points out that there are some potential positive outcomes due to Apple’s entry into the market, helping to grow consumer awareness of connected home products as a whole.
“Consumer research reveals there is a lot of consumer desire and enthusiasm for smart-home devices and systems. In fact, surveys show that half of consumers in North America plan to purchase smart home devices within the next year, but these types of findings can also lead to overambitious projections for consumer adoption,” warns Hewitt.
“The reality is that most consumers have been hesitant to spend their hard-earned money in a market still striving for stability and reliability. Monitored security systems have been able to circumvent the high initial cost of smart-home solutions, using an ongoing fee-based business model to spread out costs over time, and attach smart home products to ongoing services consumers deem valuable.”