North America found to be World's most advanced smart home market

Gothenburg, Sweden

In the new market report Smart Homes and Home Automation – 8th Edition from Berg Insight, analysis shows the latest developments on the connected home markets in Europe and North America.  The North American smart home market recorded strong growth during 2019, and was found to be the most advanced smart home market in the world, with almost a third of all households deploying at least one form of smart system.

In North America the installed base of smart home systems increased by 28.5 percent to reach 172.6 million at the year-end 2019. An estimated 19.1 million of these were multifunction or whole-home systems whereas 153.5 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 43.1 million smart homes at the end of the year. This corresponds to 30.2 percent of all households, placing North America as the most advanced smart home market in the world, according to Berg Insight.

Between 2019 and 2024, the number of households that adopt smart home systems is forecasted to grow at a compound annual growth rate (CAGR) of 12.5 percent, resulting in 77.9 million smart homes. The market value reached US$ 27.0 billion (€24.1 billion) in 2019, an increase of 20.5 percent year-on-year. The research predicts the market value is expected to grow at a CAGR of 14.1 percent between 2019 and 2024, reaching US$ 52.3 billion (€ 46.7 billion) in yearly revenues at the end of the forecast period.

Europe a few years behind

The European market for smart home systems is still a few years behind North America, both in terms of market penetration and maturity. At the end of 2019, analysts found that there was a total of 111.9 million smart home systems in use in the EU28+2 countries, up from 83.9 million in the previous year. Around 10.8 million of these systems were multifunction or whole-home systems whereas 101.1 million were point solutions. This corresponds to around 40.3 million smart homes when overlaps are taken into account, meaning that 17.4 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 20.2 percent during the next five years, resulting in 101.1 million smart homes by 2024. The market value grew by 28.7 percent to € 16.6 billion (US$ 18.5 billion) in 2019. The market value is forecasted to grow at a CAGR of 24.3 percent between 2019 and 2024 to reach € 49.0 billion (US$ 54.9 billion) at the end of the forecast period.

Point solution constitutes first purchase

The research shows that a point solution will in many 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 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, Kwikset and Assa Abloy and newer entrants such as Ecobee, Sonos, Arlo, Netatmo, Ikea and Wyze Labs.

New players enter the market

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 Brinks Home Security (Monitronics) have established themselves among the largest whole-home solution vendors in North America. Major vendors in Europe include Centrica, Somfy, Deutsche Telekom and Verisure.

The Covid-19 pandemic has so far had a very limited negative effect on the smart home market in North America and Europe, according to the Berg Analysts. While sales in brick-and-mortar stores declined, online sales instead surged. Many people spent more time at home during the pandemic and thus became interested in home improvement activities such as adding smart homes devices.

Berg Insight expects that working from home will become increasingly common in the future, even as Covid-19 related lockdowns and restrictions are eased. Smart home products that make people feel safer at home as well as enable time-savings and convenience are likely to be popular among the many people that spend an increasing share of their time at home.


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