Smart Homes and Home Automation is the fifth consecutive
report from Berg Insight analysing the latest developments
on the connected home markets in Europe and North
This report in the M2M Research Series provides you with
250 pages of unique business intelligence including 5-year
industry forecasts and expert commentary on which to base
your business decisions.
Highlights from the fifth edition of the report:
Insights from 30 executive interviews with market leading
360-degree overview of the smart homes & home automation
Summary of industry trends in key vertical market segments.
Statistical data on adoption of smart home systems in Europe and
New market forecasts lasting until 2021.
Detailed reviews of the latest initiatives launched by industry
Updated profiles of the key vendors on this market.
This report answers the following questions:
Which are the main verticals within smart homes and home
What are the main drivers behind growth in Europe and North
What are the challenges and roadblocks towards widespread
What are the business models and channels-to-market for
smart home solutions?
Which are the leading whole-home system vendors in Europe
and North America?
How are product OEMs and whole home solution vendors
What home connectivity technologies are smart home system
vendors betting on?
What is the potential market size for cellular IoT in home
How will the smart home market evolve in the next five years?
Smart homes and home automation are ambiguous terms used in reference to a wide range
of solutions for controlling, monitoring and automating functions in the home. Berg Insight’s
definition of a smart home system requires that it has a smartphone app or a web portal as a
user interface. Devices that only can be controlled with switches, timers, sensors and remote
controls are thus not included in the scope of this study. Smart home systems can be
grouped into six primary categories: energy management and climate control systems;
security and access control systems; lighting, window and appliance control systems; home
appliances; audio-visual and entertainment systems; and healthcare and assisted living
North America recorded strong growth in the smart home market during 2016. The installed
base of smart home systems in the region increased by 58 percent to reach 31.2 million at
the year-end. An estimated 5.4 million of these were multifunction or whole-home systems
whereas 25.8 million were point solutions designed for one specific function. As some homes
have more than one smart system in use, the installed base totalled an estimated 21.8 million
smart homes at the end of the year. This corresponds to 16.7 percent of all households,
placing North America as the most advanced smart home market in the world. Between 2016
and 2021, the number of households that have adopted smart home systems is forecasted to
grow at a compound annual growth rate (CAGR) of 27 percent, resulting in 73.0 million smart
homes. Market revenues reached US$ 9.9 billion (€ 9.0 billion) in 2016, an increase of 33
percent year-on-year. The market is expected to grow at a CAGR of 22 percent between 2016
and 2021, reaching US$ 27.2 billion (€ 25.0 billion) in yearly revenues at the end of the
The European market for smart home systems is still in an early stage and a few years behind
North America in terms of penetration and market maturity. At the end of 2016, there were a
total of 10.9 million smart home systems in use in the EU28+2 countries, up from 6.1 million
in the previous year. Around 1.4 million of these systems were multifunction or whole-home
systems whereas 9.5 million were point solutions. This corresponds to around 8.5 million
smart homes when overlaps are taken into account, meaning that 3.8 percent of all
households in the region were smart at the end of the year. The number of European
households that have adopted smart home systems is forecasted to grow at a compound
annual growth rate (CAGR) of 57 percent during the next five years, resulting in 80.6 million
smart homes by 2021. Market revenues grew by 69 percent to € 2.7 billion (US$ 3.0 billion) in
2016. The market is forecasted to grow at a CAGR of 49 percent between 2016 and 2021 to
reach € 20.1 billion (US$ 22.0 billion) at the end of the forecast period.
A point solution will in most cases constitute the consumer’s first smart home purchase.
Compared to whole-home systems, point solutions generated 62 percent of the combined
market revenues in North America and Europe. The most successful point solutions to date
include smart thermostats, security systems, smart light bulbs, network cameras and multiroom
audio systems. These products are marketed by incumbent OEMs such as Philips
Lighting, Honeywell, Danfoss, Belkin, Chamberlain, Kwikset and Assa Abloy; service
providers such as SFR and Centrica; and newer entrants such as Nest, Ecobee, Somfy,
Sonos, Canary, Proove, Netatmo, IKEA and D-Link. In the whole-home system market,
traditional home automation system vendors such as Crestron, Control4, Gira and Jung are
facing new competition as companies from adjacent industries have entered the market.
Communication and security service providers such as Vivint, ADT, Comcast and AT&T have
established themselves among the largest whole-home solution vendors in North America.
Major vendors in Europe include eQ-3, Verisure, RWE, Deutsche Telekom and Loxone.
Smartphone apps are today the most common user interface for smart home solutions. Users
are however unwilling to launch a number of individual apps to be able to use their connected
devices. Instead, cross platform compatible and voice driven user interfaces have the ability
to connect and control a wide range of devices and services using simple voice commands.
Several ICT industry giants are now betting on voice driven user interfaces to make it easier to
control smart home solutions. The Alexa service from Amazon has quickly become popular
and Apple’s HomeKit platform supports the company’s voice driven digital assistant Siri.
Google has recently launched Google Home powered by its digital assistant. Microsoft will
push its Cortana service as a foundation for controlling connected devices and services.
There are numerous additional players launching smart speaker products as well.
About the Authors
Johan Fagerberg is co-founder and an experienced
analyst with a Master’s degree in Electrical Engineering from
Chalmers University of Technology. He has during the past
20 years published numerous articles and reports about
Anders Frick is a Senior Analyst with a Master’s degree
in Media Technology from Linköping University and an MBA
degree in Technology Management from National Chiao
Tung University. His areas of expertise include smart homes
markets and mHealth.
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