Smart home technology

Part
01
of four
Part
01

Smart Home Technology Education

The smart home technology market revenue was estimated to be $27.7 billion at the end of 2018; household penetration increased to 33.2% in the same year; it’s expected to reach 53.9% in 2023. The annual growth rate was estimated to be 12% and only expected to increase. Some triggers driving the growth are low monthly cost, free trial of the device, new innovations, ad marketing, and influencers marketing.
Some obstacles in utilizing smart home technology are an expensive device, concerned about data privacy, concerned about hackers accessing the network, difficulty in installation, homeowners association/landlord doesn't permit smart home devices and not enough programmable settings.

To identify consumers like and dislike, benefits and obstacles, and education needed in the smart home technology market, we carried out an extensive search through credible media publications, surveys regarding smart home technology, industries reports, ad marketing websites, and companies websites. We utilize GutCheckit survey report, McKinsey reports, and academic database like ScienceDirect, and Research Gate, industries report like Statista, companies’ websites like Safewise, Cubical, Gensecurity, and Pcmag.com to unearth the required information.

The details of our findings are presented below.

CONSUMER LIKES ABOUT SMART HOME TECHNOLOGY

  • Lighting Control: Consumers are fascinated with the feeling of have their light control from anywhere in the world. They like the fact of being able to on, off, and dim lighting appliances according to mood.
  • Fan Control: Fan’s speed is controlled with seamless effort with the help of smart devices. Consumers like to use the voice and app feature to conventionally regulate fans.
  • Curtain Control: Smart home products help to pull hard to reach curtains with seamless effort with voice commands or tap; this creates a relaxed, comfortable and convenient living environment for smart home technology users.
  • IR Device control: Infrared based appliances like the air conditioner, television, entertainment systems, and smartphone are easily controlled with voice note and apps to suit the user mood. Consumers like these products as they conveniently control home appliances with less stress and effort.
  • Energy Monitoring: Energy utilization is one of the likes that drives the smart home technology market; consumers can completely control all home appliances. From anywhere in the world users can On/off their home appliances.

CONSUMER BENEFITS OF USING SMART HOME TECHNOLOGY

Smart home devices' adoption has been reported to be on the increase; before now, this technology was conceived as technology merely for the rich and technologically gifted individuals. At the end of 2017, 16.3% of homes in the United States were considered smart homes.

Some benefits of smart home technology presented as follows.

  • Prevention of Thefts: Burglars are more likely to invade empty homes. Smart home technology helps protect homes from thefts and burglars by allowing owners to control appliances, like lights and creating an impression that someone is home using blind features.
  • Money Savings: Good management and efficient utilization of energy translate to financial saving. Smart home technology help runs home appliances on energy-efficient modes and automatically turn off inactive devices to save energy consumption.
  • Comfort: Interconnecting appliances like smart security systems, speakers, lightings and TVs improve home productivity. Smart home devices provide invaluable peace with the management and monitoring of home appliances.
  • Surveillance: Smart home devices provide a surveillance feature with the aid of cameras and smart cameras to increase home protection. Consumers can seamlessly manage home activities in the event of suspicious activities from anywhere in the world.

CONSUMER OBSTACLES OF USING SMART HOME TECHNOLOGY

Despite the increasing nature of smart home technology, the industry has been faced with many issues. Generally, the barriers that face the adoption of smart home technology are device/Products are too expensive, concerned about data privacy, concerned about hackers accessing the devices/network, technology is still developing / too many potential glitches, difficult to install, not easy to use/navigate once set up, concerned about product energy usage, doesn't sync with other devices (e.g. Amazon Echo, Google Home, etc.), homeowners association/landlord doesn't permit such devices/products, poor aesthetic design, and not enough programmable settings.

GutCheck Technology reports the barriers in the adoption of smart home technology in the United States. The results of this survey are presented below.
  • 29% reported that the device/products are too expensive.
  • 21% reported concerned about privacy.
  • 18% reported concerned about hackers accessing the device.
  • 12% reported difficulty in installation.
  • 4% were not available online.

SMART HOME TECHNOLOGY EDUCATION

The result of GutCheck survey reviewed that 12% had difficulty in installation of the device; therefore, there is no need for educating users on smart home technology.

Part
02
of four
Part
02

Smart Home Technology Buyer Demographics

45% of US adults bought smart home technology as of 2016. According to an online survey report ("smart home device adoption") published by GutCheck in June 2018, “smart homes” accounted for 16.3% of the total homes in 2017. Smart appliances (smart refrigerator, washer, and dryer) and smart smoke detectors are among the smart home products with the fastest growth, with 267% and 250% respectively. Smart TVs and speaker system (44%) is the most popular smart home technology already, followed by smart home technology (31%) and closely followed by smart temperature technology (30%). According to GutCheck, smart home technology buyers are married (46%), 72% live in a single-family home, 46% are domiciled in a suburban settlement, 58% with no children, and 25% either High school graduate or college graduate. Find below detailed demographic information on smart home buyers:

Gender

Age

32% are aged 18-34 years
36% are aged 35-50 years
32% are aged 51-64 years

Household Income

18% earn less than $20,000
11% earn $20,000 - $29,999
13% earn $30,000 - $39,999
10% earn $40,000 - $49,999
11% earn $50,000 - $59,999
6% earn $60,000 - $69,999
5% earn $70,000 - $79,999
3% earn $80,000 - $89,999
4% earn $90,000 - $99,999
6% earn $100,000 - $124,999
3% earn $125,000 - $149,999
4% earn $150,000 - $249,999
2% earn over $250,000

Education

Less than high school - 4%
High school graduate - 25%
Some college - 25%
Associate degree - 14%
Bachelor degree - 21%
Advanced degree - 10%

Location

Urban - 28%
Suburban - 46%
Rural - 26%

Region

Midwest - 24%
Northeast - 19%
South - 40%
West - 17%

smart home technology/products category - buyers' demographic

1. Smart HOME technology MANAGEMENT PRODUCTS

GENDER
Male 41%
Female 59%
AGE
18-34 years 36%
35-50 years 35%
51-64 years 29%
LIVING LOCATION
Urban 31%
Suburban 47%
Rural 23%
HOME OWNERSHIP
Own 56%
Rent 36%
Other 8%
CHILDREN
No children 49%
Children 51%

2. smart home Security / Safety products

GENDER
Male 48%
Female 52%
AGE
18-34 years 38%
35-50 years 37%
51-64 years 25%
LIVING LOCATION
Urban 30%
Suburban 50%
Rural 21%
HOME OWNERSHIP
Own 64%
Rent 32%
Other 4%
CHILDREN
No children 47%
Children 53%

3. smart home Utility Management products

GENDER
Male 51%
Female 49%
AGE
18-34 years 42%
35-50 years 38%
51-64 years 20%
LIVING LOCATION
Urban 35%
Suburban 45%
Rural 20%
HOME OWNERSHIP
Own 66%
Rent 29%
Other 5%
CHILDREN
No children 46%
Children 54%

4. Smart Home Appliances

GENDER
Male 46%
Female 54%
AGE
18-34 years 41%
35-50 years 40%
51-64 years 18%
LIVING LOCATION
Urban 37%
Suburban 39%
Rural 24%
HOME OWNERSHIP
Own 61%
Rent 32%
Other 6%
CHILDREN
No children 42%
Children 58%

5. Smart Home Entertainment products

GENDER
Male 52%
Female 49%
AGE
18-34 years 37%
35-50 years 39%
51-64 years 24%
LIVING LOCATION
Urban 29%
Suburban 42%
Rural 29%
HOME OWNERSHIP
Own 54%
Rent 39%
Other 7%
CHILDREN
No children 52%
Children 48%
Part
03
of four
Part
03

Crowdfunding for Smart Home Technology

The companies that managed to transition from crowdfunding to attaining sustainability include SkyBell, Canary, and SmartThings. Some older sources have been used to provide historical information since we considered companies that were crowdfunded over two years ago in order to be able to determine their current success metrics. Below is an overview of our findings.

Findings

SkyBell

SkyBell's key offering is a smart doorbell that enables users to hear, see, and speak to visitors at their doors by transmitting videos to their smartphones. In 2013, SkyBell raised $600,000 in 30 days of crowdfunding on Indiegogo. The company's well-orchestrated marketing campaign earned it features on TechCrunch and Engadget within days of the launch, which contributed towards its crowdfunding success.

SkyBell managed to be successful in transitioning from being crowdfunded to sustainable because it provided an innovative, first-in-class home security device that earned it a "2014 CES Innovations Design and Engineering Award" nomination. Also, SkyBell's founders chose the B2B route to ensure high sales volume and then partnered with large companies such as Comcast and Honeywell to grow its reputation in the space. With about $1.5 million in annual revenue, SkyBell is now ranked among the top smart home brands in the United States.

Canary Smart Home System

Canary provides smart security products including cameras with high-tech features such as HD video and motion sensors. In 2015, Canary raised almost $2 million in about one month on Indiegogo. The company's crowdfunding success is attributed to a combination of rewards-based campaign and a pre-retail approach that enabled investors to test and validate products before investment.

Canary's successful transition from being crowdfunded to sustainable was made possible by targeting the then underserved home/domestic security market with a simple and inexpensive product line. Additionally, Canary's success can be attributed to its strategic partnerships that created value for its clients. On top of partnering with top retailers such as Amazon and Home Depot, Canary partnered with insurance firms such as State Farm and All State that provide buyers with discounts of up to 7% on renters or homeowners insurance. With about $3.5 million in annual revenue, Canary is one of the top smart home security brands in the United States.

SmartThings

SmartThings is a provider of smart home security and a bundle of other smart home solutions. SmartThings is considered among the top crowdfunding success stories in the world after raising about $1.2 million on Kickstarter in a few weeks of crowdfunding and selling to Samsung two years later. The company's crowdfunding success can be attributed to its clever campaign strategies that included user engagement, setting stretch goals, and superb marketing tactics.

SmartThings' marketers' ability to capture media and influencer attention facilitated its transitioning from being crowdfunded to sustainable. They were able to capture the attention of major news outlets such as CNN which exposed them to tech investors such as its current owner Samsung. SmartThings then leveraged Samsung's vast resources to expand its market position and product portfolio and now makes about $6.5 million annually.
Part
04
of four
Part
04

Failure of Smart Home Technology Brands

Some of the reasons that smart home technology brands fail include having expensive products, lack of consumer education initiatives, limited funding, the complexity associated with these products, competition from established brands and selling products that are not reliable for consumers. Additionally, brands fail when consumers are frustrated since the technology used is fragmented, and the devices do not offer the full value proposition.

WHAT CAUSES SMART HOME TECHNOLOGY BRANDS TO FAIL

PRICE

The cost of home automation technology is relatively high, and this makes them unaffordable to most homeowners. High prices lead to low sales, and eventually, these products are shelved. Companies that succeed in the market are those that are able to offer fairly priced and competitive products with important features. Examples include the Google Home Speaker and HomePod by Apple. While the HomePod is priced at $350, the Home Speaker is relatively cheaper, resulting in more sales.

RELIABILITY

Ideal smart home products should be reliable for use by consumers. Products that might fail due to power outages cause inconveniences to users. However, given that these devices have online connections, their use can be affected by poor internet connections.

Additionally, brands that cannot make different technologies of their smart home solutions to work together are likely to fail. An example is the LG robot, CLoi in 2018. The robot was designed to manage smart home kitchens, but it faced challenges right from the unveiling presentation when it failed to work on stage.

LACK OF FUNDING

Some brands fail because of lack of funds even after having several funding and acquisition rounds. In this case, the company cannot finance the production and marketing of their smart home technologies. One example of a product that lacked funding was the smart lock maker ‘Otto’ that ceased operations in 2018.

LACK OF CONSUMER EDUCATION INITIATIVES

Brands need to invest and have initiatives to facilitate consumer education regarding smart home technology. Most brands lack the sales force that have the right skills needed to market smart home technologies. As such, it is necessary for consumers to be informed of the advantages and features of various smart home technologies so that they can make more purchases.

BRAND REPUTATION AND CONSUMER FRUSTRATIONS

The smart home technology industry is still growing, and companies are developing their distinct solutions with minimal cooperation, which makes it difficult to unlock the value within the sector. Factors affecting the reputation of brands in this sector include positioning, customer support, and retail and online channels. Companies in the sector have launched smart home initiatives as unrelated businesses to their core offerings; hence they lack the brand support that could have facilitated success. Additionally, they fail to offer these products in their online and retail channels and have few support staff specifically trained to handle issues relating to smart home technology.

Consumers will often be frustrated when their smart home technologies fail to offer the full value proposition after purchase. This also arises when the devices use fragmented technology. Furthermore, most smart home solutions also fail to cover all aspects of the household, which negatively affects the sales and reputation of various brands. Such factors affect the reputation of the brand, and this affects brand loyalty.

LACK OF MITIGATION AND MARKET COOPERATION

There are various brands that are well-established in the sectors. This makes it difficult for startups with new innovations to effectively compete in the market. As such, one way to mitigate risks is to have a more collaborative market environment.

COMPLEXITY OF THE DEVICES

Complex processes are required to set up smart home technology. The process involves selecting the right brands, routers, choosing wireless communication protocols like Bluetooth, Z-Wave or ZigBee and hubs, to facilitate the interaction of the various devices. In cases when consumers are not informed about these complexities, they will be frustrated, and this affects brand reputation and eventually leads to failure.

COMPETITION WITH OTHER SOLUTIONS

Smart home technology directly competes with other high margin products in the market, which requires more sales and marketing. On the other hand, most brands have also not invested in developing a complete ecosystem that provides an all-inclusive platform for their device. This is unlike some competitors like Amazon that have formed partnerships and built platforms which position their products at the top of the smart home technology field.

  • EXAMPLES:
There are several instances of brands that have stopped their smart home initiatives. Some of these include Digital Life by AT & T, Home Control by Belgacom, Home Monitor by BT and Home Monitoring and Control by Verizon.

Sources
Sources

From Part 02
Quotes
  • "By the end of 2017, there were an estimated 16.3% of homes that were considered “smart homes.” To be considered a smart home, the home has to include more than one internet-connected device, such as a TV, lights, appliances, locks, thermostats, cameras, and more. "
  • "With companies like Amazon, Google, and others coming out with new and improved smart home technology we can expect more consumers to adopt the use of smart devices in the home. In fact, the annual growth rate for the connected home industry is 31% and only expected to increase. "
  • ". Smart appliances (smart refrigerator, washer/dryer, etc.) and smart smoke detectors are among the smart home products with the highest year-over-year growth, with 267% and 250% respectively—but how might brands in the smart home space encourage more adopters?"
Quotes
  • "Close to half (45%) of American adults either own smart home technology or plan to invest in it in 2016, according to a survey conducted by Coldwell Banker. Among the one-quarter who currently own smart home technology, Millennials (18-34) comprise the largest share, at 44%, followed by Gen Xers (35-54; 33%) and those aged 55 and older (24%). Smart home technology adopters also skew more male (57%) than female (43%)."