We have been watching over the past year or so as interest in, and demand for, connected home technologies have started take off.
[Editor’s note: For more on the connected home, see our infographic: “What The Connected Home Can Do For You“]
Although home energy management (HEM) and connected-home technologies have been around for years, public awareness really ramped up with the launch of the Nest learning thermostat in 2011. Designed with an eye toward consumers and marketed with the flair only Apple alum could achieve, Nest brought a new level of awareness to smart home devices.
To date, however, Nest has made more of an impact on imagination than on the market: DespiteNest’s much-hyped $3.2 billion acquisition by Google earlier this year, the company has sold about 1 million thermostats in the past three years — less than 1 percent of the number of U.S. households.
That’s not to say that there’s no market for the connected home. On the contrary, there is an ever-growing roster of products to manage your home energy use, and companies offering a menu of services to their customers. And Juniper Research, a UK-based market-analysis firm, recently published a market forecast for the next five years of smart home technology, and predicts that globally $72 billion will be spent by 2018 on connected home services and equipment — largely spent on the entertainment side of the market.
Jonathan Collins, an analyst at ABI Research, explained that although the market for home automation technology has been around for more than a decade, in the early days the technology was out of reach of almost all homeowners.
“It used to be a high-end, extremely luxury market — think MTV Cribs,” Collins said. “And then it was DIY at the other end, which made it lower-cost, but posed just as high a barrier” because of the technological savvy DIYers needed to install home automation technology in the early 2000s.
That’s been changing as internet connectivity has increased and accelerated. With the rise of cloud-based service providers like Tendril, AlertMe, Alarm.com, EnergyAware (makers of Neurio, which we profiled last year), and many others, have made it easier to connect various products and services for more comprehensive management of your home.
There is an ever-growing laundry list of connected-home technologies on the market, but according to Collins, it started with entertainment — think of multi-room music systems like the Sonos. As the technologies have evolved, home automation now reaches every room of the home. Here are some of the many other services that home automation technology provides:
- Controlling locks on doors and windows
- Managing lighting throughout the home
- Fire and carbon monoxide detectors
- Motion detectors
- Smart thermostats
- Intelligent lighting
- Solar panels
As the market grows, so does the number of companies offering home automation as a service. Across a number of industries — telecommunications, retailers and home security, to name just three — companies are using their existing relationships with their customers to expand the products and services they provide.
Among the firms dipping their toes into the home automation market across these industries are Comcast, AT&T, Lowe’s, Staples, ADT, Honeywell and many others. And while the products and services vary, these solutions at the core offer remote control by way of your smartphone for any or all of these aspects of the home.
“Energy efficiency and security plays have been the first avenue for service providers to try to entice new consumers,” explained Nitin Bhas, Principal Analyst at Juniper. “Cost-saving and peace-of-mind make for an attractive proposition, but most current systems still require active participation (and therefore effort) on the part of the consumer. When we start to see more intelligent systems, I believe the market will really begin to take off. In terms of the connected home market as a whole however, entertainment services are currently leading the way.”
Convenience and simplicity are the watchwords for many of the most popular connected home offerings so far — energy efficiency and cost savings are only starting to make an appearance in the benefits of home automation. Smart thermostats like the Nest are certainly raising awareness of this aspect of home automation, and as smart, responsive lighting takes a bigger role in the market and homeowners can monitor their solar panels in real-time, the connection between home automation and energy- and cost-savings will become more apparent.
That’s already the case to a bigger extent in Europe, Collins from ABI Research explained. In the United Kingdom, British Gas launched its Hive Active Heating solution in September 2013 and already claims 50,000 homes as subscribers. Across Europe, Colliins said that energy management figures much more broadly in home automation than it currently does in the U.S., partly because of utilities like British Gas that are promoting the technologies.
“If you’re getting your home control or smart-home starter kit from your cable company, you’re going to link it to your TV behavior,” Collins said. “If you get it from your energy company, you’re going to look at it from an energy use perspective.”