Smart Home Devices Market to Grow 31 Percent Year Over Year, Says IDC Report
International Data Corporation report says smart speaker and other smart home devices sales will grow at quick clip over the next five years.
The worldwide smart home devices market is expected to grow 31 percent year over year in 2018 to 643.9 million shipments, according to the International Data Corporation (IDC) Worldwide Quarterly Smart Home Device Tracker.
The entire smart home market — comprised of smart speakers, video entertainment products, connected lighting, smart thermostats, and home monitoring/security products — is forecast to be nearly 1.3 billion devices by 2022 with a five-year compound annual growth rate (CAGR) of 20.8 percent.
The fastest growing category with a five-year CAGR of 39.1 percent, accounting for almost 100 million units in 2018 and 230.5 million by 2022, will be smart speakers such as the Amazon Echo and Google Home.
“While dedicated smart speakers with built-in voice assistants will be prevalent throughout the forecast, we’re already seeing a notable shift in this market,” says Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers.
“Many new types of devices, both inside and outside the home, now include built-in voice assistants. Not only do these help to increase the number of touch points available to end users, but it also helps each assistant to grow by expanding reach and gaining a deeper understanding of what, when, and how users approach various tasks.”
Smart Home Privacy Concerns Abound
Privacy and security for smart home devices remains one of the key inhibitors to adoption, as evidenced in IDC’s recent Consumer IoT Survey. However, IDC maintains a positive outlook for the market as the convenience of smart home devices frequently outweighs concerns.
“Security and privacy are top of mind for most consumers when considering deployments of smart home devices,” says Adam Wright, senior research analyst for IDC’s Consumer IoT Program.
“In addition to having adequate security solutions in place when bringing devices to market, vendors must also respond to consumers’ concerns by properly educating them about these safeguards and raising awareness about the benefits of sharing data that can ultimately provide better devices, services, and experiences over time.”
Video entertainment products are comprised mostly of smart TVs and digital media adapters, such as Google’s Chromecast, Apple TV, Fire TV, and Roku’s devices.
Acting as the center of the living room, this category is poised for growth and is forecast to reach 457.5 million units by 2022 with a five-year CAGR of 10.9 percent.
For many brands and consumers, this category is expected to serve as the gateway into the smart home ecosystem and as such IDC anticipates immense competition both in content and in price when it comes to this category.
Home monitoring/security devices, ranging from door/window sensors to door locks and IP cameras, are expected account for 19.4 percent of the smart home market by the end of 2022.
While the category faces great potential with a five-year growth of 27.3 percent, it also remains targeted at a somewhat limited subset of consumers, specifically homeowners, as most products still do not offer a lot of value for consumers living in apartments.
Siri, Cortana, and Bixby are also expected to establish widespread availability, although none of these assistants will challenge the position of Google or Amazon in terms of unit shipments.
While there will be a sizeable portion of the market that will not run on any of these platforms, IDC expects the market for these smart speakers to be largely relegated to China where incumbents like Xiaomi and Alibaba have already captured a large share.
Connected lighting, thermostats, and other products will round out the smart home market, providing users with a complete ecosystem of products and services to control and monitor their homes.
Combined, these categories are expected to grow with a five-year CAGR of 26.9 percent with lighting products (e.g. Philips Hue) accounting for almost one-third of the shipments.
Thermostats, while popular in North America, will face more muted growth in the rest of the world as many countries do not employ the use of central HVAC systems and therefore do not require a dedicated thermostat.
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