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Smart home revenues see 32.8% CAGR

Posted: 07 Jul 2011 ?? ?Print Version ?Bookmark and Share

Keywords:smart home? market? connected home?

According to a research report by Berg Insight, the number of smart home installations worldwide was 0.44 million in 2010. Growing at a compound annual growth rate (CAGR) of 65 percent, this number is forecast to reach 5.38 million by 2015.

With the rise in the adaptation of the technology, the total revenues for smart home systems is also seen to grow at a CAGR of 32.8 percent, from $2.3 billion in 2010 to almost $9.5 billion by 2015.

Although smart homes and connected home technologies have been around for decades, it has been a niche segment either for those who can afford the technology or for extreme technophiles. "Things are changing for this industry due to a perfect confluence of market, regulatory, strategic and technology trends," said Alan A. Varghese, lead analyst at Berg Insight.

Varghese explained, "First is the pull from consumers in the mobile age, who desire to use products such as iPhones and iPads to control their lifestyles through user-friendly interfaces. The regulatory drivers come from governments, whereby countries and utilities are mandated to better control the generation, distribution and consumption of power in residences. The strategic push comes from new entrants such as broadband providers who are already inside consumers' homes and are looking for the next opportunities to increase ARPU, reduce churn and become complete solution providers. Finally the technology piece is coming together with increasing focus on interoperability, even as the cost of modules, chipsets, and software is trending down."

Smart home technology adoption is steadily increasing not only in custom and luxury homes, but in mainstream and production houses, as well. In 2010, only 0.1 percent of mainstream houses had some sort of smart home tech integrated in them. By 2015, Berg Insight forecasts that 4 percent of mainstream houses will adopt some sort of smart home technology.

During these tough economic times, house construction is in a slump. That's why vendors are focusing their attention on retrofitting existing housing stock and easy-to-deploy technologies (e.g. wireless). According to Berg Insight, this market will soon be crowded with dealer-installers from traditional industries such as security service providers, as well as new entrants such as broadband, wireless and utilities service providers. Vendors, who want to succeed in this growing market, should be able to find the right partnerships, business models and pricing.

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