Understand the current smart home market and opportunities within the category in the US. This report examines what consumers want from smart home tech and why, alongside opportunities for brands and marketers to best serve consumer demands. Below, we provide the topics analysed and offer handpicked insights from the report.
Topics Analysed
- Economic factors that impact the smart home market.
- Smart home key players and competitive strategies.
- How Matter and generative AI will impact the smart home landscape.
- Smart home device ownership, purchase intent and important features.
- Reasons to buy smart home devices and barriers to purchase.
Tech Market Overview
Tech spending is back on its pre-pandemic track after a surge in 2021, as consumers invest in their homes for health, comfort, and entertainment. Hardware is leading the way forward, driving growth with new devices and upgrades. Forecasted for tech hardware is a 5.4% CAGR from 2022-27. This is higher than the CAGR for total consumer spending over the same period.
Smart Home Consumer Trends
For consumers, smart for smart’s sake only goes so far; tangible benefits of smart devices matter most to consumers. Mintel’s independent research finds that home safety leads listed reasons to invest in a smart home, with moms driving this trend. In line with this trend of security, consumers are seeking data security (eg against hackers) when purchasing or having already owned a smart home device.
The appreciation of the home persists post-pandemic, as over half of consumers take pride in their homes, and half prefer to stay in than go out. Those who already consider their homes a “smart home” overwhelmingly state that their smart tech makes their home more comfortable. These factors considered together indicate the need to communicate the comfort value that smart home technology can bring to the home.
- Top reason for buying smart home tech: 51% of consumers that consider buying smart home tech state home security as a reason.
- Smart homes and comfort: 78% of smart home tech owners agree that their devices make their homes more comfortable.
Opportunities in the Smart Home Market
Many consumers hope that more brands offering a lower cost range will enter the smart home market, indicating an opportunity for innovation here. For example, Roku leveraged its place in the market and partnered with Wyze to produce a low-cost line of devices and a security service, and initial reviews are positive.
Smart home messaging often features urban/suburban families, leaving other consumer segments out and making it difficult for them to see the smart home devices fitting into their lifestyles. To reach more customers, brands should tailor their approach to specific target markets, such as pet owners who may be more focused on monitoring their animals than energy savings.
For a comprehensive list of opportunities in the smart home market, buy the full report. You can also browse our catalogue of technology market research.
Companies and Products Covered
Companies: Amazon, Google, Apple, Samsung, and Roku, to name a few.
Products: Amazon Prime, YouTube TV, Apple HomeKit, Google Home, Ambient Dev Home Kit, Samsung SmartThings, Amazon Echo, Chromecast, Google Nest, and more.
Expert Analysis from a Technology Specialist
This report, written by Jenni Nelson, a leading technology analyst, delivers in-depth commentary and analysis to highlight current trends in the smart home market and add expert context to the numbers.
2023 will be a transitional year for smart home tech. Matter is shifting the landscape, paving the way for new entrants and forcing top brands to retool their offerings and strategies for market share. Although at least a few years out, developments in generative AI and its implementation into smart home devices mean consumers will not only be able to control home devices remotely, but that devices will learn owners’ habits and initiate functions automatically, alleviating the need for issuing commands. When that time comes, consumers will judge it on the same standards they do today – what are the long-term benefits and do they outweigh the initial cost?
Jenni Nelson
Analyst, Tech, Media and Entertainment
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Overview
- What you need to know
- This Report looks at the following areas
- Definition
- Market context
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Executive Summary
- Top Takeaways
- Consumer trends
- Consumers look for long-term dividends, especially for big-ticket items
- Smart for smart’s sake only goes so far, tangible benefits matter most
- Barriers to adoption can be overcome as most believe smart devices do improve lives
- Desire for comfort is common, how smart home tech helps is less obvious
- First-hand experiences with smart home tech can spur further interest
- Consumer lifestage, residence type, other factors shift priorities for the home
- Competitive strategies
- Amazon, Google and SmartThings aim for scale
- Despite profit losses, Amazon doubles down on Alexa
- Google pursues a better UE with fastest-yet router and redesigned app
- SmartThings distinguishes itself via ease-of-use and sustainability
- Apple stays focused on phones and Macs, yielding smart home ground
- Market predictions
- Figure 1: Smart home outlook, 2023-28
- Opportunities
- Matter shifts the landscape
- Ecosystem fences are a thing of the past
- AI innovation is happening, but will take time before it’s on the market in valuable ways
- Lower-cost brands will appeal to cost-conscious consumers
- Identify legitimate use cases for particular consumer segments
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Market Value Indicators
- Consumer tech spending continues to grow, smart home tech to benefit
- Figure 2: Total US consumer expenditures and fan chart forecast for technology hardware, at current prices, 2017-27
- Matter and generative AI usher in the next phase in smart home tech
- Figure 3: Matter: Making the smart home a more connected, comfortable, and helpful place, 2022
- Consumer tech spending continues to grow, smart home tech to benefit
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Market Drivers
- Inflation improves but remains high, leaving less room for non-essentials
- Figure 4: Consumer Price Index change from previous period, 2021-23
- Consumer confidence remains low, indicating consumers remain cautious
- Figure 5: Consumer Sentiment Index, 2021-23
- Housing market slumps at the start of 2023
- Figure 6: NAHB Housing starts and housing market index, 2022-23
- Inflation improves but remains high, leaving less room for non-essentials
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Key Players and Competitive Strategies
- Brands stick to existing strategies and incorporate Matter
- Despite losses, Amazon stays the course for Alexa infiltration
- Google aims to improve the user experience with a new router and app
- SmartThings stands out with ease-of-use and sustainability
- Apple stays focused on phones and Macs, ceding ground to competition
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Market Opportunities
- Matter will be a way into the market for smaller brands
- Leverage generative AI to drive innovation
- Opportunities for AI-home robots for home security, domestic chores
- Figure 7: Amazon Astro Instagram post: the household robot for home monitoring, 2021
- Cost-conscious consumers need not be left out of the market
- Figure 8: Instagram post: Roku indoor camera SE setup, 2022
- Expand marketing, identify use cases for less obvious consumer segments
- Figure 9: Ring home security direct mail marketing, 2022
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The Smart Home Consumer – Fast Facts
- As smart tech becomes standard and rapidly evolves, the bar for what is “smart” gets raised
- There are untapped consumer segments yet to be targeted in a relevant way
- Security is key, but just one benefit consumers want
- Economic uncertainty has consumers holding off, but Matter and Roku will change some minds
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Smart Home Incidence and Characteristics
- Consumers’ perception of smart home ownership holding relatively steady
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- Figure 10: Smart home incidence, 2020-22
- Look beyond current customers to identify new use cases
- Figure 11: Smart home incidence, by key demographics, 2022
- Focus on control over automation
- Figure 12: Reasons why residence is a smart home, 2020-22
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Smart Home Device Ownership and Purchase Interest
- Find opportunities for consumers to trial bigger ticket items
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- Figure 13: Ownership of smart home devices, 2022
- Communicate long-term value for bigger ticket items
- Figure 14: Interest in smart home devices, 2022
- Appeal to consumers based on their type of residence
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- Figure 15: Interest in smart home devices, by type of residence and homeownership status, 2022
- Give moms a (mental) break
- Figure 16: Interest in smart home devices, by gender and parental status, 2022
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Reasons to Buy and Barriers to Smart Home Devices
- Show consumers how smart home tech impacts their lives in genuine ways
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- Figure 17: Reasons to buy smart home devices, 2022
- Focus on a combination of benefits rather than one specific function
- Figure 18: Reasons to buy smart home devices – TURF analysis, 2022
- Show renters the benefits of smart home tech, even when maintenance isn’t their responsibility
- Figure 19: Top reasons to buy smart home devices, by type of residence and homeownership status, 2022
- Market to who is responsible for household tech purchases
- Figure 20: Top reasons to buy smart home devices, by parental status and gender, 2022
- Show how benefits outweigh the cost
- Figure 21: Reasons not to buy smart home devices, 2022
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Important Smart Home Device Features
- Encourage consumer participation in securing their own data
- Figure 22: Important smart home device features, 2022
- Work with tech influencers to build awareness and credibility simultaneously
- Figure 23: Important smart home device features – TURF analysis, 2022
- Synonymize brand with security
- Figure 24: Important smart home device features, select items, by gender, 2022
- Encourage consumer participation in securing their own data
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Home Characteristics and Attitudes
- Demonstrate comfort rather than imply it
- Figure 25: Personal residence characteristics and attitudes, 2022
- Pride of place transcends residence type and status
- Figure 26: Personal residence attitudes – Houseproud, by residence type, 2022
- Dispel the perception that reliable internet home-wide is a requirement for smart home devices
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- Figure 27: Reliable wireless internet everywhere in home, by key demographics, 2022
- Those with reliable internet more likely to be houseproud
- Figure 28: Personal residence characteristics and attitudes, by internet reliability, 2022
- Offer tiered customization programs online and with partners
- Figure 29: Personal residence attitudes – Future plans, by age, 2022
- Demonstrate comfort rather than imply it
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Attitudes toward Smart Home Technology
- Communicate long-term benefits
- Figure 30: Perception of benefits from smart home technology, by smart home device ownership/interest, 2022
- Brand trust remains vital
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- Figure 31: Trust in smart home technology, by smart home device ownership/interest, 2022
- Leverage current customers for cost-saving testimonials
- Figure 32: Attitudes toward cost of smart home technology, by smart home device ownership/interest, 2022
- Avoid smartness just for smartness sake, offer real convenience
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- Figure 33: Attitudes toward smart home convenience, by smart home device ownership/interest, 2022
- Communicate long-term benefits
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Appendix – Data Sources and Abbreviations
- Data sources
- Sales data
- Forecast
- Consumer survey data
- Marketing creative
- Abbreviations and terms
- Abbreviations
- Terms
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Appendix – The Consumer
- TURF methodology
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- Figure 34: Reasons to buy smart home devices – TURF analysis, 2022
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- Figure 35: Important smart home device features – TURF analysis, 2022
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