The global market for smart homes is set to take off, with the industry looking at 1revenue growth to exceed 17% over the next six years, reaching $52 billion by 2020. The market for smart homes in Asia alone is expected to top $9 billion. In 2012, Asia accounted for 19% of global smart home industry revenues. China is expected to lead market demand in the region.
According to M&M, a global research company, the development of the Asian smart home market will be driven by key economic and demographic fundamentals -- rapid growth in population and urbanization, the development of new cities and economic zones, and the rise of a wealthy Asian middle class. Other drivers in the growing popularity of smart homes include an increasing desire for eco-friendly buildings, the need for energy saving devices, and the indispensability of information and communications technology that are now part of daily life. The introduction of advanced technologies to reduce the costs of running a home, such as home fuel cells, is also attracting new consumer interest. Asia’s growing middle class and the rise in income and wages across the region should sustain the industry’s high growth rates and demand for smart home technology for the foreseeable future. The fact that all of these market forces are being supported by regulatory initiatives by the region’s governments should help further boost the spread of smart home technologies.
These strong fundamentals are in turn spawning a rapidly growing market that industry experts divide into seven major segments: security controls, access controls, lighting controls, entertainment systems, energy management systems, home health care systems, and heating-ventilation-air conditioning (HVAC) controls. Add to this a vibrant services market made up of installation and repair, and customization and renovation, and the market potential is enormous.
But all of this is also having a ripple affect across traditional industries, by stimulating the development of new forms of technologies and electronic devices in such products as washing machines, refrigerators, air conditioners, vacuum cleaners, smart TVs, and other consumer appliances that will feature as standard products in smart homes. These devices are being connected by Wi-Fi and other technologies to enable users to monitor and operate them remotely, either via the Internet or mobile devices.
What this means is that cable operators and broadband service providers will have a major role to play in the smart home market, since they already have existing billing relationships with consumers. Being able to bundle smart home features into existing services will bring certain market advantages against new entrants. Companies such as Apple, Google, and Microsoft could also be in a good position to play a major role in the smart home market, say analysts.
One company gaining an early foot in the Chinese market is Intel, which recently established a $100 million innovation center in China for smart equipment. Intel will also be collaborating with Chinese smartphone maker Xiaomi and Internet giant Tencent on smart home technology. At a recent forum, Intel demonstrated the Xioami Box, which allows consumers to transmit content from various devices to televisions using Intel processors.
The use of tablets will be a key feature in smart home technology. Another technology leader, iControl Network, has partnered with Netgear to develop a seven-inch Android tablet, called Security Touch Screen, which enables consumers to fully automate their homes with the touch of a button. The tablet features 2x2 Wi-Fi technology that provides long-range, reliable connectivity for home automation and security networks. According to Netgear, the tablet is the centerpiece of next generation smart homes, giving users the power to do almost anything -- from disarming security systems to turning on lights, locking doors, and checking traffic.
Analysts caution, however, that the industry faces several market restraints going forward. One of these is the high upfront investment required to integrate various smart home technologies. Another challenge is convincing customers of the perceived value versus costs. Competition is currently from both intra-industry and inter-industry players, with the Asia market dominated by major American and European companies, with home grown Asian companies playing only a marginal role. But the lack of unified industry standards could impede the market’s full potential.
1. Source: Markets and Markets (M&M)