Smart Homes, which many expected to return as soon as the global health crisis was over, is still elusive as we approach the last quarter of the year. European geopolitics are in the midst of their worst crisis since World War II, and investors are facing one of their most difficult years in recent memory. However, opportunities are the other side of a difficulty.
The geopolitical, social, and economic difficulties of today are giving the burgeoning smart home industry even more advantages. But as of late last week, the market is also gaining from a big advance in technology. Now let’s get started.
What Is Upsetting The Smart Home Industry?
Mobile Work
Remote employment is here to stay, even though the global health crisis is hopefully receding in the distance. A June 2022 Gallup Poll found that almost 70 million American employees, or 56% of the full-time workforce, are able to work remotely. Only 20% of them work totally on-site, compared to 50% who work hybrid shifts (both remote and on-site). With just 6% of respondents saying they prefer to work exclusively on-site, it is anticipated that long-term, fully remote employment in the United States will stabilize at roughly 300% of what it was in 2019. This is a worldwide phenomena. 56% of international businesses are entirely remote or hybrid.
Rates of Interest
house prices rose dramatically as a result of the remote work trend, but they are now beginning to decline since the cost of buying a new house is rising due to increased interest rates. Over the past year, the average 30-year mortgage rate has increased by more than 120%. In order to avoid paying a bigger monthly mortgage payment for a house that is even less of a home, many people will have little choice than to remodel their current residence. They may now invest the funds that would have been used to buy and furnish a new house in making their present one smarter.
Energy Prices
The news is dominated by inflation, yet as Europe experiences its biggest energy crisis since World War II, increases in energy prices are more startling than increases in supermarket checkout receipts. For instance, the average monthly wholesale price of energy in Italy increased by a startling 700% from €67.65 per megawatt-hour in January 2019 to €543.48 in August 2022. As the size of the potential cost savings increases, higher energy costs make smart home energy management equipment substantially less costly.
Demographics
Globally, the population is aging much more quickly than in the past because people are living longer and producing fewer children. The percentage of persons over 60 in the globe will nearly double from 12% to 22% between 2015 and 2050, and in 2020, the number of individuals over 60 outnumbered children under the age of five. Smart home technology can help make senior in-home care safer and less emotionally upsetting than forcing them into a care facility, which is in limited supply.
Putting everything together
- Many people are staying home more often.
- Most people choose to make improvements to their current homes instead of moving up to new ones.
- Everyone is trying to find methods to use less energy.
- Seniors and those who provide care for them require more from their homes.
Tech Trends for Smart Homes
Though it operates via Wi-Fi, supports all major control systems, and serves as a kind of common language for smart home gadgets, an IP-based, open-source standard is arguably the most important development in smart house technology this year. Matter is an open-source, royalty-free home automation connectivity standard that was once known as Project Connected Home over IP (CHIP). It was first announced on December 18, 2019, and version 1.0 of the specification was released on September 30, 2022.
Samsung SmartThings (SSNLF), the Zigbee Alliance, Apple (AAPL), Alphabet (GOOG), and Amazon (AMZN) worked together to create Matter. This results in simpler setup and integration for users, fewer marital quarrels, and fewer things being returned. Ikea, Infineon (IFNNY), Kroger (KR), Latch (LTCH), LG (LGLD:LSE), Lutron, Nordic Semiconductor (NDCVF), NXP Semiconductors (NXPI), Schneider Electric (SBGSY), Silicon Labs (SLAB), and Texas Instruments (TXN) are more members of the partnership.
Understanding the Future of the Smart Home Market
The smart home industry, which was estimated by Mordor Intelligence to be worth $79.13 billion in 2021, is projected to increase to $313.95 billion by 2027, with a compound annual growth rate (CAGR) of 25.3%. In 2021, Grandview Research estimated the market to be worth $62.7 billion, and it predicts a CAGR of 27% from that year through 2030. The average American spent $1,200 between May 2021 and May 2022 on home technology, with 75% buying a smart home device, 65% buying a smart home security device, and 46% buying a smart TV. Overall, 44% of respondents claimed to have spent more money on home technology this year than previous.
The market is divided into two categories: product types and geographic regions.
- Convenience and Lighting
- Connectivity and Restrictions
- Energy Control
- Security for home entertainment
- Smart Home Devices
HVAC is one of the most rapidly expanding segments of the smart home industry, mostly due to new government efficiency rules that require the replacement or upgrade of old systems. New minimum energy efficiency criteria will be required for all new home central air-source heat pump systems sold in the US as of next year; the previous standards were effective in 2015.
According to Grandview Research, the smart kitchen will have the fastest growth in the smart home, with a CAGR of 30.5% between 2021 and 2030. This growth will be fueled by smart appliances including automated composters, water purifiers, smart freezers, and other smart cooking/food prep equipment. Even though the kitchen may be expanding the fastest, security and surveillance will command the largest revenue share in 2021, accounting for 31% of the total.
The Market Environment
The market for smart homes is relatively competitive, with a few key competitors monopolizing it. These players consist of:
To complement its Ring and Alexa line of smart home goods, Amazon, one of the initial Matter Alliance participants, just unveiled the Astro house robot, which is presently only accessible by invitation. This year, Ring added the Always Home Cam drone, which can be activated manually or by other Ring alarm devices and can learn a flying route around the house.
One of the most dominating players is the Sensi smart thermostat from Emerson Electric (EMR), which is utilized in both residential and commercial buildings. On October 5, it was disclosed that the firm is in discussions with Blackstone Inc. (BLK) to sell a portion of its assets related to the commercial and residential solutions sector for a price ranging from $5 billion to $10 billion, depending on the specifics of the deal.
A whole range of smart home solutions are available from Honeywell International (HON), ranging from temperature controls and air quality monitoring to full house security and safety, including leak detection,
Latch, a publicly listed member of the Matter Alliance, is one of the only pure plays in this sector despite being a modest company with a market valuation of under $150 million.
A member of the Matter Alliance, Schneider Electric SE provides a variety of energy management options for managing temperature, power use, and home security.
Samsung, a founding member of Matter, provides a SmartThings app that links to its smart appliances (such as stoves, refrigerators, TVs, robotic vacuums, washers, and dryers) as well as a wide range of linked appliances and voice assistants made by other businesses.
Like Samsung, the enormous industrial behemoth Siemens (SIEGY) has a smart home app that integrates with its smart home gadgets.
Technology advancements are making houses safer, more effective, comfortable, and pleasurable while also saving homeowners time and money. With the introduction of Matter, the DIY smart home market will gain from simpler installation and integration, less angry calls to help desks, sanity-saving measures, and perhaps even the preservation of a few marriages.
