KEY POINTS

  • Smart home devices are becoming more prevalent throughout the US. We define a smart home device as any stand-alone object found in the home that is connected to the internet, can be either monitored or controlled from a remote location, and has a noncomputing primary function. Multiple smart home devices within a single home form the basis of a smart home ecosystem.
  • In total, we estimate the number of smart home devices shipped will grow from 83 million in 2015 to 193 million in 2020, representing a compound annual growth rate (CAGR) of 18%. Our forecast includes all smart appliances (washers, dryers, refrigerators, etc.), smart home safety and security systems (sensors, monitors, cameras, and alarm systems), and smart home energy equipment, like smart thermostats and smart lighting. It does not include what BI Intelligence refers to as remotes, which include smartphones, tablets, PCs, smartwatches, connected TVs, and nontraditional remotes. 
  • We are optimistic that connected light bulbs will be one of the first products to overcome these barriers. The cost of a connected LED light bulb has dropped over the past two years. Today, connected LED bulbs cost $15 on average vs. $8 for nonconnected LED bulbs. We expect connected bulb prices to keep dropping to the point at which they're only marginally higher than nonconnected bulbs. We believe these factors will make connected light bulbs the entry point for consumers to purchase more connected home products. 
  • Currently, the US smart home market as a whole is in the "chasm" of the tech adoption curve. The chasm is the crucial stage between the early-adopter phase and the mass-market phase, in which manufacturers need to prove a need for their devices.
  • High prices, coupled with limited consumer demand and long device replacement cycles, are three of the four top barriers preventing the smart home market from moving from the early-adopter stage to the mass-market stage. For example, mass-market consumers will likely wait until their device is broken to replace it. Then they will compare a nonconnected and connected product to see if the benefits make up for the price differential.
  • The fourth — and largest — barrier is technological fragmentation within the connected home ecosystem. Currently, there are many networks, standards, and devices being used to connect the smart home, creating interoperability problems and making it confusing for the consumer to [...]