According to a recent report from market research firm IHS, security providers, which currently dominate the North American smart home market, are expected to see their share of installed smart home systems drop from 60 percent in 2014 to 50 percent in 2021, as other providers expand into more consumer segments.
The DIY smart home system segment share of the market will rise from 11 percent to 17 percent over the same time period. Blake Kozak, principal analyst for security and building technologies at IHS, said the segment is gaining momentum through retail channels, with an estimated 114,000 new systems in 2015.
IHS said that multiple system operators (MSOs), such as large cable and telecommunications firms, experienced a growth slowdown in 2013 and 2014, due to the saturation of early-adopter consumers. However, growth is expected to increase again in 2016 as MSOs use marketing campaigns to generate more interest in smart-home services in the wider consumer market; but pressure from the DIY segment in 2020 and 2021 will cause MSO growth to slow again.
In addition, Kozak said that utilities will also begin to carve out a section of the market, but they will not provide more than 4 percent of systems by 2021, even as they begin to partner with smart-home devices and systems alongside demand-response programs. There are already projects in the United States where customers may enroll a smart thermostat into a demand response program, in order to save money and help energy providers control load.
Most smart-home products have an ongoing cloud-based service element to enable remote interactivity with in-home devices and the dynamic creation of scenarios that change the way various devices interact with each other. Despite the current domination of these types of products, IHS believes self-monitoring will challenge the central monitoring station paradigm over the next five years. This paradigm shift is expected to not only bring a change in the way systems are monitored, but also in how police respond.
Two of the primary reasons for this market shift, according to Kozak, are advances in technology and a reduction in false alarms. Smartphones are an example of a technology advancement that lets users receive alert messages and video directly from their security systems, anywhere in the world. DIY systems that are properly installed with video verification will lead to fewer false alarms to police departments, compared to professionally monitored systems, because all that matters is visual verification and the ability of the caller to report a crime in progress.
Of course each type of company comes with its own unique challenges and opportunities. As a participant in the smart-home market looking for long-term success, analyzing and evaluating each company type is critical – but Kozak said companies cannot ignore the effect that non-subscription self-monitoring products will have over the next five years.
