One of the most daunting tasks for any platform or device vendor in the smart home market is identifying which type of company offers the best opportunity for long-term success – security providers, multiple service operators (MSOs), smart home specialists, do-it-yourself (DIY) smart-home systems or utilities.
Security providers currently dominate the North American market, and will continue to do so throughout 2021; however, their share of installed smart home systems are forecast to drop from 60% in 2014 to 50% in 2021, as other providers offering smart-home products expand into more consumer segments. According to the IHS Smart Home Intelligence Service, the DIY smart home system segment share of smart home systems will rise from 11% to 17% between 2014 and 2021. This segment is gaining momentum through retail channels, with an estimated 114,000 new systems in 2015.
Multiple system operators (MSOs) experienced a growth slowdown in 2013 and 2014, due to the saturation of early-adopter consumers. Growth will increase again in 2016, as MSOs use marketing campaigns to generate more interest in smart-home services in the wider consumer market; however, pressure from the DIY segment in 2020 and 2021 will cause MSO growth to slow again.
Utilities will also begin to carve out a section of the market, but they will not provide more than 4% 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, self-monitoring will challenge the central monitoring station paradigm over the next five years. This paradigm shift will 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 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 we cannot ignore the effect that non-subscription self-monitoring products will have over the next five years.
Terminology Notes: A service provider is a company where traditional security is the primary business line. MSOs include telecom, broadband, cable and satellite TV/internet providers (e.g., AT&T, Comcast, DirecTV and Time Warner Cable). Smart home specialists are companies that specialize in high-end home-automation systems that are typically professionally installed and have high levels of consumer engagement in the system-design process (e.g., Control4, Crestron and Savant). DIY smart home systems companies provide off-the-shelf smart-home solutions, typically marketed for DIY installation (e.g., Samsung SmartThings, Wink, and Lowes Iris). Utilities provide a smart-home systems directly to consumers and should not to be confused with utilities that incorporate existing smart-home systems into demand-response systems.