Home Automation Market Poised for Explosive Growth

While the smart home industry has been years in the making, more open approaches, partnerships and falling hardware costs are driving adoption.

home automation and juniper

Home automation hardware, sold as stand-alone units rather than as part of a subscription package, will exceed 300 million in 2020, according to a report from IT analytics firm Juniper Research.

This represents growth of more than 1,000 percent from an estimated installed base of 28 million units in 2015, the report noted.

While the smart home industry has been years in the making, more open approaches, partnerships and falling hardware costs are driving adoption, while media and retail efforts are aiding in raising consumer awareness.

"The principal barriers remain a lack of education, cost concerns and issues with complexity," Steffen Sorrell, senior analyst with Juniper Research, told eWEEK. "We say education because many consumers remain unaware of the smart home concept, while of those that are aware of it, a large proportion are unconvinced of the benefits of the smart home. The fact that additional hardware must be purchased where units still carry a premium, as well as the fact that the consumer still has to know their system before they buy into it: which devices work with which and so on."

The dominant home automation business model will not veer toward subscriptions until sufficient hardware is in place to build smart services on top, and major smart home players looking to reach the global market are failing to address local market demands, hampering their progress.

"North America is a stronger market for smart home security products than Europe. Meanwhile, Europeans tend to be more concerned with reducing energy consumption," Sorrell said. "In terms of expectations, the ability to control devices remotely from the smartphone has a limited appeal because that is trying to solve a problem that did not really exist in the first place."

He noted that when many devices are able to share information and react accordingly, then problems are solved; and it's no longer simply a case of replacing a physical switch with a virtual one.

"Essentially, it's about creating a seamless experience; it's one of the reasons why voice control is gathering traction as a control method over the smartphone and tablet," Sorrell explained.

Sorrel said the companies best poised to take advantage of market trends are companies that are able to secure sales approaches through multiple channels—that is to say, not only online, but also through retail outlets as well as through various service providers, like utilities or insurance companies.

"In the first instance, consumers need to be able to touch the products and see them functioning—you can't do that with online only," he explained. "Even as a service provider, it's not easy to sell the smart home to your customer base, as Verizon and co. have found."