Smart Home Growth Rates Indicate 2019 Will Be a Significant Year

As the calendar turns, all eyes in the tech sector are on the smart home. For years now, prognostications have suggested the smart home industry is ready to take a major leap forward. In 2018, significant progress was finally made. Ultimately, this has paved the way for an even bigger year in 2019.

Smart home industry Smart home industry
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The Growth of the Smart Home

“In2017, 433.1 million smart home devices were shipped worldwide, growing 27.6% from the previous year,” BusinessWire explains. “Looking ahead, IDC anticipates a compound annual growth rate (CAGR) of 18.5% as the market balloons to 939.7 million devices shipped in 2022.”

Five years ago, just 13 percent of American households had some sort of smart technology integrated into their homes. In 2019, it’s anticipated that at least 38 percent of American households will have entered the market. When compared to the UK, the US is predicted to have an 11 percent higher penetration rate.

At the end of the day, growth in the smart home industry will always be predicated on two things: innovation and adoption. In order for the industry to continue moving forward, there has to be a steady and long-term commitment towards the development and implementation of new technology that customers – i.e. homeowners – find useful. Without new technology, there’s no consumer-side appeal.

But innovation without adoption isn’t enough to push the industry forward. Customers have to be willing to adopt the technology and integrate their homes (which are highly personal and private spaces).

Ultimately, innovation should feed adoption and adoption should feed innovation. It’s this convenient cycle that has pushed the smart home industry forward over the past decade and will continue to do so into the near future.

Major Smart Home Tech Trends

As the smart home industry scales, a few innovations, in particular, are expected to catalyze the growth. These include:

  • Next-level security. “The reality is that security is fundamental. Your consumers must feel that their devices not only work flawlessly, but also secure your private data,” explains Sam Salem, Senior Director at Jabil, a products solutions company. For adoption to move in tandem with innovation, security will have to become a bigger factor. Customers must feel that they’re safe to bring new technology into their homes.
  • Better integration. One of the biggest points of friction in the smart home sector over the last few years has been the challenge of integrating siloed technology. Smart homeowners may have five or six different solutions in the house, but they aren’t integrated (nor do they have the ability to communicate). In the coming year, look for better, smoother integration. Z-wave is one of the leading technologies, allowing homeowners to sync smart motorized shades with security systems, thermostats, and more. Other similar technologies will experience growth as well.
  • AI voice assistants. This past year has been huge for AI voice assistants. From Google Home to Amazon’s Alexa products, millions of people now have voice assistants inside their homes. In the coming 12 to 18 months, tech companies will emphasize emotional AI. In other words, these devices will soon be able to tell more about an individual’s emotional state by the tone and inflection of their voice. And as these assistants learn the personalities and moods of their users, the experience will become even more powerful.
  • Smart entertainment. Smart TVs were once a huge talking point. And though it seems like the conversation around them has been quieted by other smart gadgets, the reality is that smart entertainment is still a huge factor. The IDC research shows that smart TVs, digital media adapters, and IP-connected video devices will continue to deliver a CAGR of 8.3 percent between now and 2022. Furthermore, these devices will capture roughly three-quarters of the dollar value of the entire smart home market (in terms of average sales price).

What Does the Future Hold?

Nobody knows what direction the smart home industry will take (at least in terms of specific innovations and trends). However, one thing is clear: growth and expansion are coming. This isn’t a fad that will fizzle out. The smart home is the future of America and businesses,consumers, and investors alike have no choice but to pay attention.




About the Author

Ankur Shah
Ankur Shah is the founder of the Value Investing India Report, a leading independent, value oriented journal of the Indian financial markets. Ankur has more than eight years of equity research experience covering emerging markets, with a focus on India and South East Asia. He has worked as both a buy-side investment analyst for a global long/short equity hedge fund and a sell-side analyst for an emerging markets investment bank. Ankur is a graduate of Harvard Business School. You can learn more about his latest views on global markets at the Value Investing India Report. -- He can be emailed at AnkurShah47@gmail.com