The analysts found that at the end of 2022, there were a total of 206.7 million smart home systems in use in the EU27+3 countries, up 21.0 percent year-on-year. Around 26.5 million of these systems were multifunction or whole-home systems whereas 180.2 million were point solutions. This corresponds to around 63.1 million smart homes when overlaps are taken into account, meaning that 27.1 percent of all households in Europe were smart at the end of the year.

The number of European households to adopt smart home systems is forecasted to grow at a compound annual growth rate (CAGR) of 12.1 percent during the next five years, resulting in 112.8 million smart homes by 2027. Market revenues also grew by 18.9 percent to € 34.9 billion (US$ 36.7 billion) in 2022. The market is forecasted to grow at a CAGR of 14.3 percent between 2022 and 2027 to reach € 68.0 billion (US$ 71.5 billion) at the end of the forecast period.

North America remains the most advanced market

By comparison, the North American smart home market also recorded strong growth during 2022. And, the installed base of smart home systems increased by 12.2 percent to reach 264.9 million at the year-end. An estimated 35.7 million of these were multifunction or whole-home systems whereas 229.2 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 57.5 million smart homes at the end of the year. This corresponds to 39.2 percent of all households, placing North America as the most advanced smart home market in the world.

Between 2022 and 2027, the number of households that adopt smart home systems is forecasted to grow at a compound annual growth rate (CAGR) of 8.9 percent, resulting in 88.1 million smart homes. Market revenues reached US$ 45.4 billion (€ 43.2 billion) in 2022, an increase of 10.5 percent year-on-year. The market is expected to grow at a CAGR of 10.1 percent between 2022 and 2027, reaching US$ 73.4 billion (€ 69.8 billion) in yearly revenues at the end of the forecast period.

Consumers begin with single point solutions 

A point solution will in many cases constitute a consumer’s first smart home purchase. The most popular point solutions to date, in terms of sold units, include smart thermostats, smart light bulbs, smart plugs, connected security cameras and voice controlled smart speakers. These products are marketed by incumbent OEMs such as Signify, Resideo, Danfoss, Belkin, Chamberlain, Schlage and Assa Abloy and newer entrants such as Ecobee, Sonos, Arlo, Nuki, Mysa, Ikea and Wyze Labs. In the whole-home system market, traditional home automation vendors such as Crestron Electronics, Control4, Savant Systems, Eq-3 and Loxone are facing new competition as companies from adjacent industries have entered the market. Communications and security service providers such as ADT, Vivint, Comcast and Telus have established themselves among the largest whole-home solution vendors in North America. Major vendors in Europe include Centrica, Verisure, Somfy and Deutsche Telekom.

Matter Standard a key driver

The outlook for the smart home market is positive. The new Matter standard is anticipated to become a key driver for mass market adoption of smart home systems in the next coming years. Matter enables interoperability between devices and services from various vendors which will facilitate the purchasing process and setup of smart home devices for consumers. In recent years and particularly in the past year, consumer interest for energy efficiency solutions has grown as electricity prices have surged in many countries. There are several smart home solutions that can help households lower their energy consumption and energy bill. Energy management products such as smart thermostats and connected heat pumps, and other smart home product categories with a clear value proposition for the consumer are expected to continue to be the most popular smart home products.