Smart home market potential

At the end of 2012, 2.7 million homes worldwide are estimated to be using an extensible home-automation software platform provided by a service provider. This service provider could be a telco, cable operator, electric or gas utility, security company, or retailer. Including single-purpose solutions such as the Nest learning thermostat (believed to have been shipping at a rate of 40,000 to 50,000 devices per month as of January 2013), Belkin’s WeMo line of smart plugs and lighting controls, and the multitude of IHDs on the market, this number could be closer to the 8 million mark. Considering that these platforms could be expanded to permit control of other devices and systems and adding into the mix smart appliances — which are expected to start shipping in greater numbers in 2014 or 2015 — 200 million homes worldwide could be using some kind of smart home technology by 2018.

The entrance of service providers raises awareness about this market, but is not definitive proof that the smart home is a mainstream market. Putting aside’s security dealer network (estimated to have accounted for some 1.4 million homes at the end of 2012), the next biggest service provider is security giant ADT, one of the first companies to offer a monthly managed offering. By the end of 2012, the number of commercial and residential subscribers to its “Pulse” product was said to be around 190,000. Even so, a significant announcement about home automation technology occurs almost daily, with new players preparing to enter the market and incumbents revamping existing solutions.

In September 2013:

  • Staples — a huge office-supply chain and the latest retailer to offer connected-home products — unveiled Staples Connect, which will launch in November.
  • British Gas launched Hive Active Heating to extend its remote heating solution to hot water systems.
  • Nest revealed that it will launch an API interface in 2014 that will allow it to pair with other third-party creations.

The figure below presents a conservative and optimistic forecast for the number of connected smart homes from 2012 to 2018.

Smart homes: Worldwide market forecast, 2012 to 2018

Screen shot 2013-10-15 at 4.51.55 PM

Source: Craig Foster, GigaOM Research