The smart home internet of things (IoT) market exploded when Amazon launched its Alexa-powered devices about two years ago. Since then, there has been no sign of slowing. The market is expected to reach more than $192 billion by 2023, up from just $41 billion in 2018, according to a new report from IHS Markit.
Lighting, smart speakers and connected major home appliances are among the fastest growing device types. IHS Markit said the U.S. led countries in 2018, about 35% of the market, with China coming in second with an 18% share.
“The brilliance of the smart home is that it can be molded to suit the requirements of any kind of consumer, from the strictest demands of power users to the simplest automation needs of dabblers,” said Blake Kozak, principal analyst for IHS Markit. “Irrespective of consumer tech-savviness, the smart-home market has bourgeoned into a consumer technology heavyweight, eager to move beyond the basics of security and single-family homes and into uncharted opportunities. However, these uncharted opportunities are coming with concerns about privacy and the technology’s readiness for primetime. The remainder of 2019 and start of 2020 will be a pivotal time for the smart-home market as companies and service providers fine-tune their strategies and reposition to compete with the smart home juggernauts — as well as newcomers looking to upend the status quo.”
Companies such as IKEA are making a major smart home push as well as the bigger companies that are already involved such as Google, Amazon and Comcast with its Xfinity platform.
Some of these companies have transitioned from one platform such as Google’s Works with Nest program to other platforms that may offer greater rewards. Amazon recently started targeting its Ring products for the small-medium business segment. Comcast has also increased its focus on smart home devices as an add-on service to its entertainment business, and other companies like Centrica are focusing on energy services along with the smart home.
Privacy remains a concern
While this growth is good news for those playing in this market, privacy continues to be a problem. Recent research from North Carolina State University found that IoT devices are not secure enough.
IHS Markit agrees that more progress is needed to address privacy concerns and advises technology providers to take steps to improve security moving forward.
“Rapid innovation often breeds speculation and mistrust,” Kozak said. “Because of that, smart-home companies should be as transparent as possible regarding data usage. They also should focus on edge-based processing, which reduces the need for cloud-based computing systems that send private data over the internet. The smart home should also make greater efforts to comply with standards and regulations for sectors such as security, healthcare and senior care. By having more standards and regulations in place, innovation in the smart home will be less a source of anxiety for consumers and instead become a cause for optimism and a fulcrum for peace-of-mind.”