Home Automation Market

Home automation basically refers to the centralization of five main functions: security, lighting & entertainment, energy & utility management, and motorization. These functions can be remotely controlled with the help of a connected platform using a wide range of applications. The main drivers of the global home automation market are growing preference to a luxurious lifestyle, increasing awareness of security & safety concerns and rapid adoption of smartphones. This has led to the adoption of stringent regulations and security standards to be followed by manufacturers. Z-Wave Alliance has introduced a new certification program that demand manufacturers to implement the strict security mechanisms in the development process. The primary challenge for the home automation market is the disparity of technologies as most of the companies have their own proprietary solutions. However, players have started to develop partnerships and alliances along the value chain of the home automation market to counter this problem. For instance, Amazon has reportedly agreed to acquire smart home company Ring for more than $1.00 billion. Ring is best known for selling its security cameras, connected doorbells, and floodlights, while Amazon introduced its own line of smart home solutions last fall with the Amazon Cloud Cam and Amazon Key.

Over the past 12 months, the largest movement in the smart home was the arrival of voice assistants. Voice assistants have gone from a niche area to the preferred way for many users to control their smart homes. The ease of integration made available by major voice assistant providers has helped their grown usage in smart homes. Every vendor has developed its own smart home development kit. For instance, Apple has a platform called Homekit, which allows developers to create applications that can be used by Apple devices, Siri and Apple Watch for smart home control.

Type Segment

Based on the automation type, the global home automation market is segmented into custom automation, mainstream automation, Do-it-Yourself (DIY) automation and managed home automation services. The Do-it-Yourself model is economical but requires technical expertise and custom automation is expensive. Hence, consumers prefer managed services option which involves a telecom operator or the broadband company providing monitoring, lighting, air conditioning, and security alert system solutions. In 2017, this segment contributed 35.2% to revenue generated by the global home automation market.

Application Segment

On the basis of application, the home automation market is segmented into lighting, safety & security, Heating Ventilation & Air Conditioning (HVAC), entertainment, energy management, and others. Among these, the entertainment sector is anticipated to grow with the highest CAGR due to the growing popularity of digital content (video, music, and pictures) coupled with rising adoption of voice assistant services provided by companies such as Google, Amazon, Apple, Microsoft, and others. There is a vast array of solutions including interactivity, multi-screen usage and service personalization provided by Spotify, Hulu, and others. Players such as Google and Apple also offer multi-device cloud-based solutions.

Technology Segment

By technology, wireless systems are expected to dominate the home automation market is projected to have the highest rate of 14.0% in the forecast period. Wireless home automation is gaining traction as it withstands the issues encountered by power line wiring. For instance, using radio frequency wireless systems, wiring difference gets negligible. Moreover, installation becomes easy by plugging the right device into the right outlet.

Based on the geography, the home automation market is segmented into five regions: North America, Central & South America, Asia-Pacific, Middle-East & Africa, and Europe. North America had the highest market share in 2017 and is anticipated to withstand the highest growth rate in the coming years. The demand for domestic energy management systems and the growing trend of green homes in the US have contributed largely to the North America home automation market. The Asia-Pacific region is also poised to grow with a double-digit CAGR in the forecast period owing to the stringent regulations implemented by various regulatory agencies in this region. For instance, China has a five-year plan targets for energy efficiency projects which will eventually boost the usage of home automation solutions.

The major players in the global home automation market include Siemens AG, Crestron Electronics Inc., Control4 Corporation, Zigbee Alliance, ABB, Nest Labs, Google Inc., Apple Inc., AT & T, Vantage Controls (Legrand) and others. Telecom and security companies have a foothold in the home automation market because they already have their existing connectivity and wiring infrastructure in the home. Prominent players have always been focusing on innovation in terms of quality, technology and price to gain a competitive advantage. For instance, Apple sliced into the home automation market by releasing Homekit- a home automation platform to develop applications for Apple devices.