A report by Juniper Research says that the market for smart home automation and monitoring devices will grow to over 770 million globally by 2021, representing an eleven-fold rise from just 68 million estimated in 2016.
But it claims that subscription services, such as the O2 Home model, are losing traction, and will be overtaken by one-off purchases.
The new research, Smart Home Markets: Entertainment, Monitoring, Automation, Health, Metering, Appliances 2017-2021, found that increasing adoption of platform evangelism and openness to partnerships is boosting third party development of devices, especially in developed markets.
It says that North America, the Far East and China and Western Europe will account for almost 75% of all households adopting the technology by 2021.
But it concludes that home automation hardware sales are rapidly outstripping subscription services, such as AT&T’s Digital Life offering (on which O2 Home is based). Juniper forecasts that while homes adopting this payment model will increase, a one-off purchase model will see faster growth over the next five years. It found that revenues from hardware sales will exceed subscription revenues for the first time in 2018, reaching $4.9b.
The report says that subscription-based offering will remain niche, as consumers will be unable to on-board devices of their own choice. It also stated that the subscription business model was not fit for such an immature market.
Along with machine learning which will drive case-specific applications, the research found that new entrants and disruptors will intensify input from the developer community. But it concludes that the ‘Big 4’ platform providers, Apple, Amazon, Google and Samsung ‘will continue to have a monopoly on the market, therefore any successful new entrants into the market will be those who integrate themselves into a wider offering from the bigger players.’
‘The greatest challenge for any start-up in the Smart Home market continues to be the inability to determine the industry’s path in the future’ says the report. A start-up’s influence on the market is not big enough to drive mass adoption of a technological standard, business model or process. Where, for example, Apple has been able to drive wider take-up of NFC-enabled solutions across some retail and financial industries, no start-up will be able to singly ensure that a low-power communications technology becomes dominant in the Smart Home; unless they emerge from start-up status.’
Research author Sam Barker remarked: ‘Successful players will be able to identify critical issues which can be alleviated through the introduction of smart home technology. For example, countries that are faced with ageing populations, such as Japan, will benefit from increasing interplay between automation and digital health services’.