The anticipation and excitement is still there for all types of innovative (fun!) technology for the home, and that is exactly what is helping to fuel Consumer Electronics (CE) momentum in the Connected Home markets. This week a new CE product, August Smart Lock, entered the Apple retail storm and took many mainstream media headlines. While the CE home automation and connected/smart home offerings hold the interest of all of us, what we know from IHS data is that the global market for consumer broadband in the home is set to see a 20% growth year-over-year for 2014 versus 2013, marking the highest growth year in four years.
Smart Homes - Connecting the last mile
The smart meter and smart thermostat have seen increasing success as home automation and management is increasingly gaining favor by both consumers and energy companies. As these initial devices push into the home, they pave the way for a slew of follow-on devices that will further propel the adoption of other home automation solutions ("Connected Home" or "Smart Home"). This is the spread of the Internet of Things (IoT) and ubiquitous computing. Bluetooth technology is furthering the advancement of IoT in the home and slowly moving the home to one of the IoT points, all monitored and controlled via users' smartphones and tablet PCs remotely.
According to a press release today by Bluetooth, "[r]esearch firm IHS Technology is now reporting the smart home market will grow by 56 percent, compounded annually, in the next three years, with 190 million products shipping by 2018. IHS Technology projects that Bluetooth Smart will be the fastest growing connectivity technology in the segment over that period." These applications go beyond climate control to include lighting, entry and security systems, audio-visual and entertainment, as well as appliances and a slew of emerging technologies including personal medical devices being connected in the new IoT realm and controlled via apps through Bluetooth Smart. According to Bluetooth, "IMS Research projects that more than 4.7 million consumer medical devices with Bluetooth Smart will be shipping in 2016, with more than 10.3 million shipped from 2012 to 2016."
The connected home relies on both Bluetooth connectivity as well as broadband, WiFi connectivity, software and equipment, called "consumer premises equipment" (CPE). As noted above, IHS is forecasting significant growth this year for this market, and continued growth is expected through 2017: "[r]evenue this year is set to expand by a whopping $1.8 billion. Such notable growth establishes a strong foundation for an increase of approximately $1 billion per year in 2015 and again in 2016, when industry takings will climb to nearly $13 billion. Revenue will peak in 2017 at $13.1 billion."
Taken together, these markets, Bluetooth and 802.11ac WiFi, are essential to supporting Smart Home CE growth and both are forecasted to experience significant growth over the next four years.
Who will own the Smart Home network?
For the semiconductor and electronics industry, these market forecasts hold tremendous promise, not only in the connected devices and equipment that is required, but in the end-devices themselves. But getting to the point of connectivity is one of the major bottlenecks to this growth. One of the CE issues that is stalling more increased momentum is the question of security and ownership. In a recent survey by the home supplies store, Lowe's in the United States, most people preferred an individual, out-of-the-box device and self-managed solution to a monthly subscription service that might include hardware, software and data storage handling. Security and privacy are at the key to these CE positions, outweighing cost savings and efficiency improvements (in the case of energy-use management, for example).
Understand CE hesitancy to handing over control and access to the home to companies who will provide equipment and manage services is going to be critical to opening the anticipated floodgate of device (and application) opportunities for the Connected/Smart Home. While Nest smart thermostat was the early mover for the home thermostat device, it was and continues to be self-managed with no subscription services or other external corporate relationships beyond the connection to the Nest and updates that are automatically downloaded through the home WiFi connection.
The news this week around August Smart Lock (one of three companies with similar devices in the market today) is another step in the direction of CE pushing new pathways for consumers into the Smart Home IoT domain. There are trepidations as to whether the device will perform as promised or whether it will leave the homeowner vulnerable. Tests and manufacturers of course show success in maintaining security and limited access, but it is more about familiarity and trust than data proving success at this early stage in the Smart Home universe.
Regardless of which devices succeed or not, one certain point is that although smartphone penetration in mature markets is reaching saturation points, there is an even wider array of CE devices on the horizon set to transform our lives again, now managed through our smart devices as control panels and propel our lives even farther into the IoT world. Along with this jump forward in our increasingly technical lives, will be a significant increase in volume and diverse markets for the semiconductor and electronics industry.