Get ready for smart home growth

By Sheila Moorcroft

Smart home technology markets are set to grow. They include applications in security / home monitoring and access, smoke detection, energy efficiency, integrated entertainment, people / health monitoring – and more to come. With Google’s latest investment, competition is hotting up as more and more entrants fight for a growing opportunity.

What is changing?

Google’s acquisition of Nest, which makes intelligent smoke alarms and is aiming for the ‘conscious home’, signals a change of gear in smart home technologies and markets. Smart home systems and technologies were also the talk of the Consumer Electronics Show this year. Sales in the UK via an electronics chain were up 50% over the Christmas period. And market forecasts are looking optimistic, although they vary significantly. Juniper Research suggests a market of $71 billion by 2018, up from 33 billion in 2013. Strategy Analysis has a similar forecast of $72 billion by 2017. Others suggest $35 billion or $52 billion by 2020. All are agreed that the direction is up, and fast.

And it is a potentially crowded field. The spread of Wi-Fi, broadband, and cable TV, the growth of smart phones and the success of Apps provide one set of entrants. Security firms, control systems, utilities, appliance manufacturers another.

Implications

Convenience, reassurance, concern about relatives and personal health, plus austerity and cost cutting are all potential drivers of the smart home market. Although, consumers are not necessarily rushing to connect their homes, a range of new gadgets may help. One gadget has been described literally as a ‘light bulb moment’, courtesy of Philips’ Hue light bulb, which, via a smart phone app, can transform the look and feel of a room through its lighting. The TV is likely to become one of the main hubs of the smart home. Globally, 66 million smart TVs were sold in 2012, rising to 141 million in 2015, and now make up over one quarter of UK TV sales. Our homes become smart by default.

But there are obstacles. Industry experts estimate that the Internet of Things (IoT)– an extension of the smart home where everything is connected – is about where the Internet was in the 1990s, and will take a while to develop. Ease of use, interoperability, design will all play a role. Again forecasts of the extent of the IoT vary: Cisco estimates 50 billion connected devices (and not just phones and PCs) by 2020; IDC suggests 200 billion. Security, however, is a shared and growing concern. Recent hacks of baby monitors, fridges and TVs all indicate a growing vulnerability. The Federal Trade Commission’s action against the manufacturer of the baby monitor is a wake-up call to the industry to address security effectively. Google is not guaranteed success with its investment, but its acquisition indicates a new scale and potential for interoperability. Nest’s founders, ex-Apple employees responsible for the iPod in 2007, may help Google succeed here where it failed at phones. It also signals the growing competition for those in or investing in the market.

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