The global smart home market size is expected to grow from USD 78.3 billion in 2020 to USD 135.3 billion by 2025, at a CAGR of 11.6%. The growth of the market is driven by various factors, such as the increasing number of internet users, rising consumer disposable income in developing economies, the growing importance of home monitoring in remote locations, growing need for energy-saving and low carbon emission-oriented solutions, the rapid proliferation of smartphones and smart gadgets, expansion of smart home product portfolio by a large number of players, growing concern about safety, security, and convenience among the general population.
The Internet of Things (IoT) has gained popularity among residential consumers owing to the benefits achieved by connecting household products to the internet. The IoT connects products, software algorithms, services, and end-users, enabling a smooth flow of data and making real-time decisions. It has proved its efficiency and has enhanced the quality and consistency of automation systems. Several large-, mid-, and small-scale companies worldwide are highly investing in the IoT industry. With most of the businesses shifting their traditional practices toward IoT, it is expected to reach numerous application areas such as lighting, HVAC, security, healthcare, and entertainment.
The growth of the smart home market is expected to be significantly driven by the increasing consumer preference for video doorbells, voice-assisted technologies (such as Alexa and Google Home), and surveillance systems. The growth in the adoption of consumer IoT is attributed to the increasing penetration of the internet, the growing usage of smartphones, and the expansion of social network platforms. The continuous increase in the number of internet users across the globe is expected to boost the growth of the overall IoT market owing to the growing adoption of internet-enabled smart devices such as radio frequency identification (RFID), barcode scanners, and mobile computers.
Smart home systems are widely dependent on device interconnectivity standards, communication protocols, and network technologies. The entire operation of smart home products depends on the interoperability of all the devices. The smart home ecosystem includes the hardware, software, and service segments. For the efficient and reliable functioning of every single product, the smooth and collective operation of all three segments is highly essential. The malfunctioning or disconnection of any of these three may lead to several complications for the homeowners, in terms of cost and technical complexities. It is, therefore, a major challenge for the smart home solution providers to eliminate the risks of device malfunctioning and ensure their smooth functioning.
The COVID-19 pandemic has severely impacted the growth of the global smart home industry. Global sales are expected to decline by 5-10% in this fiscal year, depending upon the progression of the virus spread. The impact of COVID-19 on major markets such as the US and China has been adverse, as supply chain disruption in China has resulted in a decline in demand for smart home systems in China. The market in the US is expected to witness higher growth in comparison to other countries in the Americas.