Moving Beyond the First Smart Home Wave

A growing recognition exists among stakeholders that the smart home market has reached a plateau, amid reports of a bump in sales due to COVID-19-related stay-at-home orders. Put another way, the first wave of smart home adoption has reached the shore, and the second wave is still out there. The first wave has been filled for the most part by tech-savvy early adopters. Nevertheless, millions of people have purchased smart devices, and double-digit penetration rates for certain smart home product categories are evident. For example, voice activated speakers like Amazon’s Alexa live in roughly 22% of US homes based on Guidehouse Insights’ calculations, and this category is growing. By comparison, smart plug penetration hovers around 3%.

Still, the market is fragmented with many smart products stuck in silos and unable to interoperate with devices from competing manufacturers. Moreover, setting up smart devices can be frustrating despite marketing promises of plug-and-play ease. The smart devices market could be larger, but potential adopters face hurdles such as privacy concerns, higher prices compared to less intelligent products, and unclear value propositions.

Smart Home Vendors Work to Reach Potential Customers

Smart home vendors are aware of the hurdles that potential customers face, and they are working to overcome barriers and push that second wave of adoption forward. Vendor efforts include the following:

• Google has launched a new software development kit called Local Home SDK that promises to help device manufacturers improve the reliability and responsiveness of their products.
  
• Intellithings, an Israeli startup, is working on greater personalization for smart homes via its occupancy automation sensor called RoomMe.
  
• Software startup Kraftful aims to improve the usability of smart home products by focusing on ways to rapidly simplify the user experience and drive mass adoption, according to company CEO Yana Welinder.
  

GaN Systems CEO Jim Witham believes people should rethink the smart home by focusing on meeting the real, human needs of occupants and providing wider accessibility to the technology. A white paper produced by GaN Systems outlines this mindset: “Smarter homes and communities are being driven by both technology advances in hardware and AI, as well as by the significant environmental and economic changes present at both individual and systemic levels … 5G networks, more intelligent and invisible devices, and new technologies of energy generation and efficiency will then all need to work together to make this a future that is possible and accessible for all.”

Witham has a point. For the smart home market to expand, an emphasis should build upon not only cool technologies but also the needs of consumers who want healthy, simple, and sustainable homes. Adopting this strategy should make the second wave of smart home adoption move a bit faster.