International. Despite a turbulent 2020, the smart home market is poised for exceptional growth as the industry aims to bring intelligence to "not-so-smart" smart homes, according to research group Omdia.
Expansion beyond traditional retail channels and traditional use cases, such as security, will be achieved through partnerships and new technologies, ranging from the Matter protocol to Wi-Fi/radar detection and edge-based systems that are deeply integrated into homes and buildings.
As a result of this new approach, the global smart home market, with an estimated value of US$60.8 billion in 2020, is projected to exceed US$178.5 billion in 2025, representing a compound annual growth rate (CAGR) of 24.1% from 2020 to 2025. In terms of penetration, Omdia estimates that 19% of broadband households globally had a smart home device in 2020, up from 10% in 2017.
"Just a couple of years ago, the smart home market seemed to have reached the peak of adoption due to the complexity, cost, and 'walled gardens' that were discouraging broader market penetration," said Blake Kozak, senior principal analyst at Omdia. "But by seizing opportunities outside of proprietary solutions and use cases, the industry has fostered growth in new channels that are helping to postpone the inevitable industry slowdown.
"Once they suffer from tunnel vision, brands are taking a purpose-driven approach based on innovation, collaboration and focus, which has led to the development of new channels such as home and apartment builders. From a technology perspective, Matter, while delayed until mid-2022, remains the cornerstone of the new smart home paradigm that will facilitate the spread of devices and services to a new customer base."
New channels for the smart home
Smart apartments and single-family home builders will have the biggest impact on the smart home for years to come, especially in the U.S. In 2020, 2.4 million smart devices were shipped for smart apartments worldwide, which is projected to increase to 64.7 million annual device shipments in 2025, at a compound annual growth rate of 59.5%. In terms of the installed base, Omdia estimated that there were around 5.07 million smart apartment devices installed worldwide, increasing to 149.8 million installed base by 2025.
For home builders in the U.S., Omdia estimates that about 1.08 million new single-family homes were built in 2020, of which about 49,000 had smart home features installed during construction. Omdia estimates that this equates to more than 600,000 smart home devices installed during home construction in the U.S. in 2020. By 2025, there will be about 13 million devices installed annually with the construction of new homes in the U.S.
Although home builders and multifamily homes have been on the smart home radar for many years, these two channels weren't much pursued by smart home brands or service providers until mid-2020. Now, globally, these two channels are projected to be combined for more than 75 million smart home device shipments by 2025, or about 15% of total smart home shipments by that year.
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