Global home automation market poised to expand dramatically

The market could reach $14 billion by 2018, according to an ABI Research report
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Wednesday, March 26, 2014

WELLINGBOROUGH, England—The global home automation market is trending toward significant growth in the coming years, with the $9 billion market projected to reach $14 billion by 2018, according to a report from ABI Research, a technology market intelligence firm with locations around the world.

The North American market, fertile already, will remain robust during the forecast period, rising from $5 billion to $7 billion. North America currently holds 64 percent of the market, but its share is expected to be closer to 50 percent by 2018, the report noted.

Growth is being fueled by a constellation of factors, including a recovering economy and new entrants to the market, according to Adarsh Krishnan, a senior analyst at ABI Research who authored the report. He said some of the barriers that once limited the market’s growth, such as a lagging economy and higher costs, are being stripped away.

“There’s more consumer spending, and there are some different players in the market,” he said. “The entry of the telecoms and cable companies provided another big push for the market.”

The integration of security systems with home automation systems is also promoting wider consumer adoption, Krishnan said, noting that technological improvements in general continue to make the market more palatable to consumers and providers alike. The steady improvement of wireless chip sets, in conjunction with their decreasing costs, has also been a key factor in driving adoption. Krishnan added that the DIY startup market, often on the strength of crowdfunding efforts, has given the home automation market additional momentum as well.

The home automation technologies expected to enjoy pronounced growth during the forecast period include contact sensors, motion sensors, wireless sensors, keypads and control panels.
Some of the functionalities being added onto the existing residential security space will also make substantial gains. “We’re expecting to see the most growth in door locks, indoor smart plug and thermostats,” Krishan said. “These are the three home automation devices we see growing the most in the forecast period.”

Both globally and in North America, the market has gained a lot of traction, and Krishnan said there are very few factors that could potentially impede the lofty projections. “I don’t see a lot of issues,” he said, though he noted that privacy concerns could be a limiting factor.

The market could improve by fostering a more collaborative environment, which could unravel some of the complexities involved with integrating disparate wireless technologies, Krishnan said. Because certain wireless technologies are stronger in some applications than others, it can be difficult, he said, for consumers to determine which wireless radios to use.

“In terms of wireless radios there is little clarity about which is best suited to home automation,” he said. Greater clarity on this matter, he said, would broaden consumer adoption by “making it simpler for consumers to choose a particular technology or device without worrying about integration or interoperability with available devices within the market.”

That, coupled with lower costs for hub devices, will help ensure that the projections for the market are realized, Krishnan said.