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Smart House - US - April 2009

This report explores the market for smart home products. To date, many consumers have only dabbled with smart home products. Although they may have established a wired or wireless home network, utilized Windows Media Server or Apple Airport Express to play music or media over a network on another connected device, or added dimmers and basic lighting controls, they have been intimidated by or priced out of the market for whole house systems.

This report explores how to engage and educate consumers about new technologies relating to multiple smart house segments, including: automation devices, energy savings systems and products, security and home monitoring products and services, and entertainment products for whole-house audio/video. Analysis and insights include:

  • Market drivers and opportunities for innovation for energy management and control, home automation, distributed audio/video entertainment and the market as a whole
  • Innovation among leading companies and newer, specialists in the arena
  • Advertising and promotion strategies and/or themes
  • Consumer opinions and behavior, including data on who has purchased or is willing to pay for specific smart home-related technologies
  • Cluster analysis to identify the consumer groups most likely to find these products and/or services attractive

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Consumer survey data
          • Abbreviations and terms
            • Abbreviations
              • Terms
              • Executive Summary

                • Key points
                  • Stars are aligning for the smart home
                    • A smart home is a green home
                      • A smart home is well monitored
                        • A smart home has accessible media
                          • Mass-market retailers take aim at the category
                            • Cloud computing beneficial to the market
                              • A market of innovators
                                • Non-traditional advertising and marketing rules
                                  • Consumers want to know their energy footprint
                                    • Technomenities desired but purchases lag
                                      • Home networks can be used more effectively
                                        • Strong interest in using home security systems for more than intruders
                                          • Youngest adults want to be on the cutting edge
                                            • An opportunity for lesser-known brands
                                              • Online blacks and Hispanics most willing to pay for smart home products
                                              • Insights and Opportunities

                                                • Demography favors products that help monitor the elderly, kids, pets
                                                  • Figure 1: Presence of children in the household, by age of householder, 2008
                                                • Creating “smart” ambassadors and evangelists
                                                  • Future-proofing and service opportunities
                                                    • Home economics—saving money on energy
                                                      • Facts and figures, not hyperbole
                                                        • Cloud-based services and phone-based OS
                                                          • Flexible solutions
                                                            • The “wow” factor
                                                              • The television as a communication platform
                                                                • Look Ma, no wires
                                                                  • Fewer products in the home
                                                                    • Partnerships between hardware, communications, and software providers
                                                                    • Inspire Insights

                                                                      • Water Conservation
                                                                        • The trend:
                                                                          • The opportunity
                                                                            • Tightening Up on a Power Diet
                                                                              • The trend:
                                                                                • The Sci-Fi Era
                                                                                • Competitive Context

                                                                                  • From the high end to the low end
                                                                                    • The high end: Home builders and professionally installed systems
                                                                                      • Structured wiring on the decline, home theater rising
                                                                                        • Figure 2: Ethernet and wireless transmission speeds, April 2009
                                                                                        • Figure 3: Home technologies installed in new homes, 2003-08
                                                                                      • The low end: Portable solutions
                                                                                        • The emergence of the phone app as a smart home device
                                                                                          • Will media servers and/or recorders end up in the cloud?
                                                                                          • Market Drivers—General

                                                                                            • Prevalence of home networks
                                                                                              • Figure 4: Household communications equipment ownership, trended, 2002-08
                                                                                            • Home media servers
                                                                                              • Figure 5: U.S. household home server adoption, 2005-12
                                                                                            • Enabling technologies make connectivity easier and cheaper
                                                                                              • Figure 6: Enabling home automation protocols/technologies, 2009
                                                                                            • The “wow” factor
                                                                                                • Figure 7: Profile of U.S. “Connected Home” consumers, 2008
                                                                                              • Home ownership
                                                                                                • Figure 8: Number of U.S. households that own their home, 2000-07
                                                                                                • Figure 9: Home occupancy, by ownership or rental, 2007
                                                                                              • Economic downturn shakes consumer markets
                                                                                                • Economy faltering
                                                                                                  • Figure 10: U.S nominal GDP and inflation-adjusted GDP percent change, 2000-14
                                                                                                • Consumer electronics sales sagging
                                                                                                  • Figure 11: U.S. consumer electronics sales, 2004-09
                                                                                                • Glimmer of hope—many will spend on homes despite economic downturn
                                                                                                  • Figure 12: Willingness to spend on home in current economic environment, by age and household income, January 2009
                                                                                              • Market Drivers—Energy Costs & Efficiency

                                                                                                  • Energy costs
                                                                                                    • Figure 13: U.S. average retail prices of residential electricity, at current prices, 2003-10
                                                                                                    • Figure 14: U.S. average retail prices of residential electricity, at inflation-adjusted prices, 2003-10
                                                                                                  • Aging electricity infrastructure
                                                                                                    • Smart meters
                                                                                                      • Figure 15: U.S. households with smart meters, 2006-12
                                                                                                    • Federal and state incentives to invest in the smart grid
                                                                                                      • Consumer concerns about the environment continue to grow
                                                                                                        • Figure 16: Attitudes toward environmental concerns, October 2008
                                                                                                        • Figure 17: Environmental behaviors, by age, October 2008
                                                                                                        • Figure 18: Personal commitment to reducing energy consumption, by age, January 2009
                                                                                                      • Growing green can trump value
                                                                                                        • Figure 19: Willingness to invest in energy conservation products, by household income, January 2009
                                                                                                    • Market Drivers—Home Safety & Security

                                                                                                      • Low-cost DIY options
                                                                                                        • Sales of security equipment rising rapidly
                                                                                                          • Figure 20: Sales of home security systems, 2004-09
                                                                                                        • Crime
                                                                                                          • Figure 21: Property crime rates per 1,000 households, 2000-07
                                                                                                          • Figure 22: Concern about home security, by age, January 2009
                                                                                                        • At-risk seniors
                                                                                                          • Figure 23: Concern about elderly friends and relatives, by age, January 2009
                                                                                                        • Households with young children
                                                                                                          • Figure 24: Presence and age of children, by age of householder, 2008
                                                                                                        • Pets
                                                                                                          • Figure 25: Cat and dog ownership, by age, race/Hispanic origin, household income and presence of children, January-November 2007
                                                                                                          • Figure 26: U.S. pet ownership, 2001 and 2007
                                                                                                      • Market Drivers—Entertainment

                                                                                                        • Content driving the need for fast wireless networks
                                                                                                          • Leveraging growth in wired/wireless home networks
                                                                                                            • Figure 27: Wired vs. wireless networks in the home, 2003-08
                                                                                                          • Home networks as entertainment centers
                                                                                                            • Figure 28: Number of devices connected to home network, by device, August 2008
                                                                                                            • Figure 29: Ownership of devices for watching online video on the home television, by age, January 2008
                                                                                                            • Figure 30: Mean number of networked and total devices in the household, by product type, January 2009
                                                                                                          • Income affects total products owned but has less impact on how many are networked
                                                                                                            • Figure 31: Mean number of networked and total devices in the household, by product type and household income, January 2009
                                                                                                          • Network hardware that adds distribution functionality
                                                                                                            • HP MediaSmart Server
                                                                                                              • Figure 32: HP Media Server
                                                                                                            • Apple TV
                                                                                                              • Figure 33: Apple TV
                                                                                                            • Slingbox
                                                                                                              • Figure 34: Slingbox
                                                                                                            • Changing media habits and content everywhere
                                                                                                              • Figure 35: Weekly hours spent watching video, by media, November 2008
                                                                                                              • Figure 36: Weekly hours spent listening to audio, by media, November 2008
                                                                                                              • Figure 37: Interest in viewing online video on the home TV, by age, January 2008
                                                                                                            • Stored media content
                                                                                                              • Figure 38: Content storage on a PC, by age, November 2008
                                                                                                              • Figure 39: Content storage on an MP3 player, by age, November 2008
                                                                                                            • Leveraging investment in the living room flat screen
                                                                                                              • Figure 40: Screen size and spend on most recent TV purchase, by acquisition date, February 2007-March 2008
                                                                                                          • Distribution Channels

                                                                                                            • Specialist designers/installers
                                                                                                              • Figure 41: Type of home technologies offered by home builders, 2003-08
                                                                                                            • Home security
                                                                                                              • Figure 42: Top 10 home security and installation companies, by residential customers, 2007
                                                                                                            • Authorized dealers and specialty retailers
                                                                                                              • Figure 43: Top hybrid CE specialty retailers, by residential installation revenue, 2007
                                                                                                            • Most consumers uncomfortable installing complicated electronics
                                                                                                              • Figure 44: Comfort with installing electronics, by gender, January 2009
                                                                                                            • Mass-market retailers
                                                                                                              • Best Buy
                                                                                                                • Home Depot
                                                                                                                  • Amazon.com
                                                                                                                    • Walmart
                                                                                                                      • Target
                                                                                                                      • Brand Qualities—Innovation and Innovators

                                                                                                                          • Energy control and home automation
                                                                                                                            • Lutron
                                                                                                                              • Zensys/Z-Wave Alliance
                                                                                                                                • ZigBee Alliance
                                                                                                                                  • General Electric
                                                                                                                                    • Google
                                                                                                                                      • Control4
                                                                                                                                        • Security and home monitoring
                                                                                                                                          • Skylink
                                                                                                                                            • Hawking Technologies
                                                                                                                                              • Kwikset
                                                                                                                                                • Senstic
                                                                                                                                                  • Entertainment
                                                                                                                                                    • Sling Media
                                                                                                                                                      • Apple
                                                                                                                                                        • Microsoft
                                                                                                                                                          • Windows Media Center has a hold on consumers aged 18-24
                                                                                                                                                            • One in eight online respondents have used Windows Home Server
                                                                                                                                                              • Figure 45: Familiarity with Windows home automation software, by age, January 2009
                                                                                                                                                          • Advertising and Promotion

                                                                                                                                                            • Overview
                                                                                                                                                              • Advertising—Home security and monitoring
                                                                                                                                                                • Figure 46: Brinks: Intruder breaks in on girl whose parents are out, 2008
                                                                                                                                                                • Figure 47: Brinks: Intruder breaks in on couple’s first night, 2008
                                                                                                                                                                • Figure 48: Brinks: Woman thinks date is early but it’s really a burglar, 2008
                                                                                                                                                                • Figure 49: Time Warner Security: Non-stop monitoring and 24-hour emergency service, 2009
                                                                                                                                                            • Interest and Penetration

                                                                                                                                                              • Energy—Consumers want to know their energy footprint
                                                                                                                                                                • Figure 50: Interest in products that will report energy consumption, by age, January 2009
                                                                                                                                                              • Energy product penetration is low; interest moderate
                                                                                                                                                                • Figure 51: Purchase interest in energy-saving products, January 2009
                                                                                                                                                              • Technomenities: Desire is there but purchases not happening yet
                                                                                                                                                                • Figure 52: Purchase interest in technomenities, January 2009
                                                                                                                                                              • Entertainment: Connected home still has a way to go
                                                                                                                                                                • Figure 53: Purchase interest in entertainment products, January 2009
                                                                                                                                                              • Security and home monitoring—Potential beyond monitoring for intruders
                                                                                                                                                                • Figure 54: Purchase interest in security and home-monitoring products, January 2009
                                                                                                                                                            • The Decision-makers

                                                                                                                                                              • High-priced item purchase decisions tend to be made jointly
                                                                                                                                                                • Figure 55: Main or joint decision-maker for high-cost household purchases, by gender, January 2009
                                                                                                                                                              • Youngest adults least likely to make buying decisions, most likely to want smart homes
                                                                                                                                                                • Figure 56: Main or joint decision-maker for high-cost household purchases, by age, January 2009
                                                                                                                                                            • Selected Home Technology Ownership

                                                                                                                                                              • Ownership profile
                                                                                                                                                                  • Figure 57: CE hardware ownership, by household income, race/Hispanic origin and presence of children, June 2007-September 2008
                                                                                                                                                                • Ownership by type of residence
                                                                                                                                                                  • Figure 58: Household ownership of consumer electronics, by type of residence, June 2007-September 2008
                                                                                                                                                              • Attitudes and Motivations

                                                                                                                                                                • Youngest adults on the cutting edge
                                                                                                                                                                  • Figure 59: Attitudes and behaviors regarding technology, by age, January 2009
                                                                                                                                                                • Higher-income households research unfamiliar brands
                                                                                                                                                                  • Figure 60: Attitudes and behaviors regarding technology, by household income, January 2009
                                                                                                                                                              • Cluster Analysis

                                                                                                                                                                  • Smarties
                                                                                                                                                                    • Who they are
                                                                                                                                                                      • Opportunity
                                                                                                                                                                        • The Reserved
                                                                                                                                                                          • Who they are
                                                                                                                                                                            • Opportunity
                                                                                                                                                                              • The Obtuse
                                                                                                                                                                                • Who they are
                                                                                                                                                                                  • Opportunity
                                                                                                                                                                                    • Cluster characteristics
                                                                                                                                                                                      • Figure 61: Smart home clusters, January 2009
                                                                                                                                                                                      • Figure 62: Attitudes related to smart home products, January 2009
                                                                                                                                                                                      • Figure 63: Smart home product/service currently owned or interested in purchasing, by clusters, January 2009
                                                                                                                                                                                      • Figure 64: Smart home product/service currently owned, by clusters, January 2009
                                                                                                                                                                                      • Figure 65: Interest in purchasing smart home products/services, by clusters, January 2009
                                                                                                                                                                                    • Cluster demographics
                                                                                                                                                                                      • Figure 66: Smart home clusters, by gender, January 2009
                                                                                                                                                                                      • Figure 67: Smart home clusters, by age, January 2009
                                                                                                                                                                                      • Figure 68: Smart home clusters, by HH income, January 2009
                                                                                                                                                                                      • Figure 69: Smart home clusters, by Hispanic origin, January 2009
                                                                                                                                                                                    • Cluster methodology
                                                                                                                                                                                    • Custom Consumer Groups

                                                                                                                                                                                        • Energy-saving products
                                                                                                                                                                                          • Figure 70: Purchase interest in energy-saving products, by custom consumer groups, January 2009
                                                                                                                                                                                        • Technomenities
                                                                                                                                                                                          • Figure 71: Purchase interest in technomenities, by custom consumer groups, January 2009
                                                                                                                                                                                        • Entertainment products
                                                                                                                                                                                          • Figure 72: Purchase interest in entertainment products, by custom consumer groups, January 2009
                                                                                                                                                                                        • Security and monitoring
                                                                                                                                                                                          • Figure 73: Purchase interest in security and home-monitoring products, by custom consumer groups, January 2009
                                                                                                                                                                                      • Race/Hispanic Origin

                                                                                                                                                                                        • Online blacks and Hispanics more willing to pay for automation
                                                                                                                                                                                          • Energy-saving products
                                                                                                                                                                                            • Figure 74: Willingness to pay to own energy-saving products, by race/Hispanic origin, January 2009
                                                                                                                                                                                          • Technomenities
                                                                                                                                                                                            • Figure 75: Willingness to pay for technomenities, by race/Hispanic origin, January 2009
                                                                                                                                                                                          • Entertainment products
                                                                                                                                                                                            • Figure 76: Willingness to pay for entertainment products, by race/Hispanic origin, January 2009
                                                                                                                                                                                          • Security and home monitoring
                                                                                                                                                                                            • Figure 77: Willingness to pay for security and home-monitoring products, by race/Hispanic origin, January 2009
                                                                                                                                                                                        • Appendix: Other Useful Tables

                                                                                                                                                                                          • Networked printers in the home
                                                                                                                                                                                            • Figure 78: Mean number of networked and all printers in the household, by household income, January 2009
                                                                                                                                                                                        • Appendix: Trade Associations and Research Firms

                                                                                                                                                                                          Companies Covered

                                                                                                                                                                                          • Amazon North America
                                                                                                                                                                                          • Apple, Inc
                                                                                                                                                                                          • Belkin Corporation
                                                                                                                                                                                          • Best Buy stores (USA)
                                                                                                                                                                                          • Circuit City (US)
                                                                                                                                                                                          • Cisco-Linksys, LLC
                                                                                                                                                                                          • Comcast Corporation
                                                                                                                                                                                          • Consumer Electronics Association
                                                                                                                                                                                          • Creative Technology (USA)
                                                                                                                                                                                          • Custom Electronic Design & Installation Association
                                                                                                                                                                                          • D-Link Corporation
                                                                                                                                                                                          • Dell Inc.
                                                                                                                                                                                          • Flickr
                                                                                                                                                                                          • Gateway, Inc
                                                                                                                                                                                          • General Electric Company
                                                                                                                                                                                          • Google, Inc.
                                                                                                                                                                                          • Greenfield Online
                                                                                                                                                                                          • Hewlett-Packard Company
                                                                                                                                                                                          • Home & Garden Television
                                                                                                                                                                                          • Home Depot (USA)
                                                                                                                                                                                          • IEEE Computer Society
                                                                                                                                                                                          • LaCie
                                                                                                                                                                                          • LG Electronics Inc (USA)
                                                                                                                                                                                          • Logitech Inc.
                                                                                                                                                                                          • Lowe Worldwide
                                                                                                                                                                                          • Microsoft USA
                                                                                                                                                                                          • National Broadcasting Company, Inc. (NBC)
                                                                                                                                                                                          • Netflix, Inc.
                                                                                                                                                                                          • NETGEAR, Inc.
                                                                                                                                                                                          • Panasonic Corporation of North America
                                                                                                                                                                                          • Research In Motion (USA)
                                                                                                                                                                                          • Skype Technologies S.A.
                                                                                                                                                                                          • Smarthome, Inc
                                                                                                                                                                                          • Sony Corporation of America
                                                                                                                                                                                          • Target Corporation
                                                                                                                                                                                          • The DIRECTV Group Inc.
                                                                                                                                                                                          • The New York Times Company
                                                                                                                                                                                          • Time Warner Inc.
                                                                                                                                                                                          • TiVo Inc
                                                                                                                                                                                          • Tweeter Newco
                                                                                                                                                                                          • U.S. Bureau of the Census
                                                                                                                                                                                          • Walmart Stores (USA)
                                                                                                                                                                                          • X10 Wireless Technology, Inc.
                                                                                                                                                                                          • YouTube, Inc.

                                                                                                                                                                                          Smart House - US - April 2009

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