High financial costs and a lack of coherent marketing have left smart home technology products – such as internet of things (IoT)-enabled central heating thermostats, smart lighting and home security – out of reach of the majority of home owners, according to a report from IoT sector analysts Beecham Research.
In its latest study, Smart Home Market – Current Status, Consumption Trends and Future Directions, Beecham said those people who could afford or were prepared to buy IoT products for the home were not yet sold on the benefits.
Consumers said they considered that home comforts and easy living were the main incentives to invest, whereas home IoT businesses tended to market practical applications first.
Coupled with a general lack of awareness of poorly marketed smart home products and their benefits, worries about data privacy and a lack of interoperability between various IoT products, the nascent market was in danger of being held back unnecessarily, said Beecham.
“A basic lightbulb is more than 20 times cheaper than its smarter counterpart,” said Olena Kaplan, senior analyst and report author. “But evidence shows that consumers are willing to pay a premium price if they understand the value of the more expensive product.”
“The crucial question is whether the smart bulb, or any smart home product, offers sufficient benefits for consumers to justify the price tag,” she said.
As a result of these ‘speed bumps’, Beecham warned that some forecasts of growth around the IoT were unrealistic. Nevertheless, Kaplan still looked forward to a compound annual growth rate (CAGR) of around 34% between now and 2020, by which time the home IoT market could be worth more than $16bn.
The report identified businesses such as Amazon, which has just launched its Echo smart home hub to UK consumers, as an example of those moving in the right direction on smart homes, offering entry products that managed multiple things at a reasonable price.
Other businesses, including British Gas, were moving down this route as well, said Kaplan. Besides central heating, Hive offers a smart power socket, motion sensor and window and door sensors, while its competitor, Google’s Nest, is moving into IP security cameras and CO₂ alarms.
Partnerships between IoT businesses will be a key driver for the smart home over the next few years, said the report. For example, insurance companies may sell monitoring devices as integral elements of their policies, or offer retail discounts on IoT technology that could protect consumers from having to make a claim.
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Utilities companies, home security providers and telcos were also beginning to see the opportunity to partner with product companies to deliver new services, said Beecham.
“As initiatives to encourage the adoption of smart devices proliferate, the partnerships offering specific financial advantages or benefits will show a stronger uptake. These partnerships will also drive the shift from product to subscription or cloud-based service offerings,” said Kaplan.
The report also noted that take-up of home IoT products varied widely worldwide, with the US much more advanced than Europe due to a more proactive attitude towards consumer devices and, arguably, a healthy paranoia around home security.