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Smart Home Forecast: 55% Market Penetration in North America by 2021

The European smart home market lags behind North America in terms of penetration and market maturity, according to Berg Insight.

GOTHENBURG, Sweden — The number of smart homes in North America and Europe reached 30.3 million in 2016, according to a new research report from Berg Insight.

North America is the world’s most advanced smart home market. According to Berg Insight, the region had an installed base of 21.8 million smart homes at the end of 2016, marking 47% year-on-year growth. The strong market growth is expected to last for years to come, driving the number of smart homes in North America to 73 million by 2021, which corresponds to 55% of all households.

The European market is still a few years behind North America in terms of penetration and market maturity. At the end of 2016, there were 8.5 million smart homes in Europe and the market is forecasted to grow at a compound annual growth rate (CAGR) of 57% in the next five years to reach 80.6 million smart homes by 2021. That corresponds to 36% of all European households.

The most successful products on the smart home market include smart thermostats, security systems, smart light bulbs, network cameras and multiroom audio systems from vendors such as IKEA, Philips Lighting, Honeywell, Belkin, Nest, Ecobee, Somfy, Sonos, Canary, Netatmo and D-Link.

Major vendors of comprehensive whole-home smart home systems include a mix of energy, security and communication service providers and home automation specialists such as Vivint, ADT, Comcast, Control4 and AT&T in North America. In Europe,  Verisure, eQ-3, RWE, Deutsche Telekom and Loxone pace the market.

“2017 is anticipated to be a good year for smart home technology as entry-level smart home systems have become affordable for the mass market, at the same time as the reliability and features have improved significantly,” says Anders Frick, senior analyst at Berg Insight.

New innovative user interfaces are also important as a catalyst for market growth. “Several ICT [information and communications technologies] industry giants are now betting on voice driven user interfaces to make it easier to control smart home solutions,” Frick says.

The Alexa service from Amazon has quickly become very popular through its Echo products and Google is pushing its digital assistant through Google Home. Furthermore, Apple with its HomeKit platform and the HomePod smart speaker as well as Microsoft with its Cortana service and the Invoke speaker are ready to challenge Amazon and Google when the devices are being launched later in 2017.

Berg Insight anticipates that the popularity of voice-enabled speakers will continue to increase and that smart speakers will be one of the most significant user interfaces in the home environment. “Amazon is still the leading player, but Google’s and Apple’s ecosystems are stronger, at least outside North America,” says Frick.

There are additional smart speaker initiatives as well. Lenovo has announced a smart assistant and Japan-based LINE Corp. will launch WAVE using the virtual assistant Clova later in 2017. There are even open source alternatives, such as the assistant Mark 1 from Mycroft. Ivee Voice, Invoxia’s Triby, JAM Voice, Cubic, Fabriq and Zettaly Avy are additional smart speakers on the market.

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One response to “Smart Home Forecast: 55% Market Penetration in North America by 2021”

  1. Jack Smith says:

    I now have a couple Google Homes (GH) and had the Echo since it launched. I just do not get how anyone being honest in comparing the Echo to the GH and say they are close. The GH is completely different, IMO.

    The Echo uses commands. So you memorize how to ask it something. An example for songs it has a command “song goes like” if you do not know the name.

    With the Google Home you just talk like you would to your wife. The GH is the most humanish technology I have used.
    I am starting to use a shorter english as the inference is so incredible with the Google Home. So say “hey google play sting gwen bottle on tv”. Google figures out that I want to watch a video of Gwen Stefani and Sting singing message in a bottle on my TV. It then turns the TV on, sets the proper input, and the video starts playing.

    Our brains inference capabilities allow us to communicate with one another in a compressed manner. Information can be inferred versus being said. This is what Google is doing and for some (many?) things they can do better than a human.
    Maybe it is because I have an engineering background but the Google Home from a technology standpoint and what Google is doing just blows me away.

    The GH is also picking up some nuances. So started talking to it and then say “I forgot” and she will say “no worries happens to me all the time”. Then another time I say “nevermind” and it indicates “Yes let’s move forward”. I gets the I. The answer changes I guess from Google crawling the web all these years it learned how to respond to humans in a human type manner.

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