Source: www.hiri.org, October 2021

From Wi-Fi-enabled speak­ers to video door­bells and light­bulbs con­trolled via mobile apps, our dai­ly lives are becom­ing smarter and more inte­grat­ed. So, it only makes sense that the con­ve­nience of smart-home tech would be inte­grat­ed where we spend most of our time: our homes.

Smart-home tech­nol­o­gy is a boom­ing indus­try — one worth an esti­mat­ed $58.5 bil­lion in 2020 and fore­cast­ed to exceed $179 bil­lion in 2025. To ana­lyze the key play­ers, trends, and chan­nels in this mar­ket, Omdia com­piled a 2021 State of the Smart Home report for the Home Improve­ment Research Institute.

The report defines the market’s scope to include all devices that have dig­i­tal con­nec­tiv­i­ty and act as part of a smart home. This includes point­ing devices lim­it­ed to Blue­tooth®, as well as devices that are part of a com­plete ecosys­tem of devices with machine-to-machine con­nec­tiv­i­ty. Devices are also defined as smart if they can be dig­i­tal­ly commanded/​controlled.

That’s a lot of ground to cov­er. Thank­ful­ly, we’ve bro­ken down the 2021 State of the Smart Home and are here to deliv­er some cru­cial take­aways with the help of Omdia Senior Prin­ci­pal Ana­lyst Blake Kozak:

  1. In 2020, the con­sumer elec­tron­ics device cat­e­go­ry was the largest in the Amer­i­c­as region. Con­sist­ing of smart speak­ers, con­nect­ed major home appli­ances, and con­nect­ed health devices, this cat­e­go­ry was worth about $11 bil­lion and rep­re­sent­ed 59% of smart-home device rev­enue. The sec­ond-largest cat­e­go­ry in 2020 was cli­mate con­trol, worth about $4 bil­lion.

    Kozak says touch­points are a major rea­son for the pop­u­lar­i­ty of these cat­e­gories. Depend­ing on the lev­el of automa­tion, a con­sumer may not have to inter­act with a device if the automa­tion is based on motion, occu­pan­cy, or the bright­ness of a room, for exam­ple. ​“The lev­el of inter­ac­tion with a device and per­ceived val­ue plays an impor­tant role,” he said.

  2. Omdia found that retail was the most pop­u­lar chan­nel in 2020, rep­re­sent­ing 88% of smart-home device ship­ments in the Unit­ed States. How­ev­er, Kozak pre­dicts that the biggest upcom­ing oppor­tu­ni­ties out­side of retail lie with­in the mul­ti­fam­i­ly and home­build­ing indus­tries.

    ​“We esti­mat­ed that the num­ber of apart­ments in the U.S. with smart devices will increase from about 930,000 in 2020 to 11.9 mil­lion in 2025,” Kozak said. Sim­i­lar­ly, sin­gle-fam­i­ly home­builders are expect­ed to begin offer­ing smart-home devices as stan­dard, rather than as part of an upgrade pack­age.

    As smart-home tech­nol­o­gy becomes more ubiq­ui­tous, get ready for a pos­i­tive impact on addi­tion­al channels.

  3. Cer­tain mega­trends could influ­ence the smart-home mar­ket in 2022.

    For exam­ple, wire­less inter­op­er­abil­i­ty stan­dard Mat­ter could have a pos­i­tive impact on the DIY retail mar­ket, because it aims to sim­pli­fy buy­ing smart-home prod­ucts and will pre­sum­ably make things sim­pler for installers and man­u­fac­tur­ers. The­o­ret­i­cal­ly, con­sumers will be able to buy any smart-home device with the Mat­ter logo and have it work with whichev­er plat­form they choose, elim­i­nat­ing the need to install dozens of apps in order to onboard devices. This means that increased dis­rup­tion and oppor­tu­ni­ty could arise from adja­cent seg­ments.

    ​“Mat­ter could have the biggest impact for adja­cent mar­kets like home­builders, mul­ti­fam­i­ly prop­er­ty man­agers, and insur­ance com­pa­nies,” Kozak said.

  4. Over­all, COVID-19 con­tributed to a smart-home mar­ket slow­down in 2020, dri­ving a shift from pro­fes­sion­al ser­vices to e‑commerce and DIY solu­tions. How­ev­er, there is an oppor­tu­ni­ty for pan­dem­ic-dri­ven smart prod­ucts to emerge, such as more touch­less tech­nolo­gies, accord­ing to Kozak.

    ​“Both Arlo and Alarm​.com intro­duced touch­less video door­bells. Although these prod­ucts already offered peo­ple detec­tion, these brands took it one step fur­ther to allow home­own­ers to be noti­fied with­out the need to push the door­bell.

    ​“I believe we will see sim­i­lar tech­nol­o­gy with door locks, where ultra-wide­band could be deployed and replace Blue­tooth for a bet­ter and more accu­rate expe­ri­ence.”

    Kozak also believes that due to the resur­gence of COVID-19 vari­ants, many busi­ness­es have delayed return­ing to offices, mean­ing more peo­ple are still at home than ever before, which could lead to more air qual­i­ty sen­sors and smart ther­mo­stat purchases.

  5. Look­ing for­ward, 2021 and 2022 will like­ly be record years for prod­uct announce­ments.

    In addi­tion to well­ness-relat­ed inno­va­tions, Kozak believes these upcom­ing break­throughs will focus on secu­ri­ty, voice, radars, and energy/​water man­age­ment. Just last year, an entire­ly new cat­e­go­ry was cre­at­ed by pair­ing dig­i­tal assis­tant tech­nol­o­gy (such as Alexa and Google Assis­tant) with secu­ri­ty devices, includ­ing video door­bells.

    ​“Cre­ativ­i­ty is an inte­gral part of any smart home,” Kozak said. ​“For the con­sumer, this means cre­at­ing scenes and automa­tion that fit their needs.”

HIRI would like to extend a huge thanks to Kozak for his input. To access the full 2021 State of the Smart Home report and to get more details about where the mar­ket is head­ed in the com­ing years, be sure to become a HIRI mem­ber.