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The Maturing Smart Home Industry of 2020

Five Key Takeaways From the Z-Wave 2020 State of the Ecosystem Report

By Mitchell Klein

In 2020, technology has reached a point of maturity; adoption and consumer education have begun to see consistent growth, particularly with mainstream and new-totechnology consumers. Smart home technology has become pervasive in the way we all live our lives. We reach to digital assistants to help us complete tasks, smart security cameras and systems are a large part of our culture, and technology that was once considered to be reserved for the wealthy or tech-savvy experts is now found on the shelves in large sections of “big-box” stores and wide swaths of the internet.

This year, the entire global supply chain has seen an impact from COVID-19, including the smart home and consumer technology market. Even though we’ve seen factories begin to reopen, products are still facing major delays in making their way to sellers and consumers. The entire logistics cycle has been impacted, and that is likely to have an impact on sales to an extent for some companies. But retail sales at big-box stores like Best Buy and Home Depot have remained quite strong amid socialdistancing, as many homeowners have opted for home projects. The integrator and installer community have also faced challenges in relation to the pandemic, with many reporting that business has slowed down and they’ve faced challenges in relation to not being able to get face-to-face install time.

One thing is for certain: The smart home, as well as pretty much every other industry, is facing unforeseen challenges in 2020. But there are still opportunities for growth and places for everyone in the industry – manufacturers, integrators, developers, retailers, and others – to contribute to building a better smart home experience for consumers and end-users.

In our recently-released 2020 Z-Wave State of the Ecosystem Report, we examined smart

home and connected technology – from both within and outside of the home – and explored the smart home landscape as it exists today, current and future trends, data compiled, and new opportunities with an emphasis on the role Z-Wave technology plays in the advancement of the industry.

Here are five key takeaways from the report:

1. Z-Wave Smart Home Categories Primed for Growth

In the report, we highlight current figures as well as projected growth for the Z-Wave ecosystem. We compiled data around the top-10 Z-Wave smart home categories primed for growth, according to ABI Research, who found that Z-Wave all-in-one devices, smart doorbells, and water sensors, are the top three categories predicted to grow the most through 2025.

All-in-one devices refer to smart devices with hubs built in, i.e. a smart security system or display that also functions as a gateway, which supports the desire for ease of use and installation that consumers cite as important to their experience with their smart home. Smart doorbells and other security devices have seen a growing popularity in recent years and smart water sensors are seeing growing interest in part to new incentives from home insurance carriers.

2. Smart Home Growth Remains Strong in International Markets

While the smart home has seen consistent, year-on-year growth in North America, it is in international markets that we expect to see some of the strongest opportunities for growth. In the same data from ABI Research, it was found that the regions most primed for growth through 2025 were in Latin America and the EMEA regions. In Europe, strong economic growth, increased investment, and interest in solutions like smart lighting and water from public utilities, and rapid urbanization are all contributing to this anticipated growth.

In Latin America, the reasons behind growth include increased investment from highly populated countries like Mexico and Brazil in IoT and smart cities initiatives and policies, as well as projected economic growth.

3. The Smart Home Continues to Move Beyond the Home and into Vertical Industries

Although it is predicted that more than 63M American homes will qualify as “smart” by 2022, the opportunity for smart home tech outside of a residential setting has also continued to expand and take hold, with connected technology taking shape and feasibility in new applications. Smart home and connected technology no longer refer to just the residential sector. Connected tech has permeated apartment buildings/MDUs, hospitality, offices and enterprise, new home construction and realty, as well as industries like healthcare and insurance.

The realty opportunity, for example, has shown that the value and interest in the smart home have impacted new home sales – 65 percent of U.S. homebuyers are willing to spend more on a home purchase that includes smart home technology packages. And for older adults opting to age in place in their homes, smart home technology adoption rates have more than doubled in the last few years, as it can be used to ease mobility and inform caretakers of activity around the home.

4. Industry Experts Agree: Interoperability, Ease-of-Use and Setup, Security, and New Technology Like AI will be Critical to the Continued Success of the Smart Home

In our report, we surveyed (including Residential Tech Today executive editor, Jeremy Glowacki) industry experts and media across a wide range of verticals to get their take on the future of smart home – what they see as challenges, opportunities, and trends to come through 2020 and beyond. Of those quoted, most seemed to align on what the industry needs to prioritize to ensure continued growth. Device and network interoperability remain a critical point, as many consumers cite frustration with device incompatibility, which can lead to high return rates and disinterest and also contributes to device ease-of-use and setup. The professional install community can leverage these concerns as an opportunity to show the value of professional vs. DIY smart home.

Network and device security remain other important opportunities for manufacturers and developers to improve, and new technology,

such as AI and contextual awareness, or the opportunity for technology to learn and execute routines or room occupancy, are also cited as important considerations for smart home growth.

5. In a Post-Pandemic World, the Smart Home Value Proposition will Evolve

Lastly, the impact of COVID-19 cannot be discounted. While we began work and data collection for the report pre-COVID-19 at the beginning of the year, we recognized the significance of the pandemic and the ways in which it would impact the smart home market, along with the very way we live our lives.

We asked experts on their thoughts on how the smart home industry would need to pivot post-pandemic. Ideas included a rise in demand for smart entertainment devices, as well as a need for stronger network capabilities, with more people spending time at home streaming entertainment content, working, and learning, and a renewed focus on using smart home technology to keep people connected, both inside the home and at a distance.

“Historically people started buying connected devices for security, followed by a desire to save money on energy costs,” said Stacey Higginbotham, of Stacey on IoT. “The very last reason people bought smart home devices was for entertainment.” x Read more in Z-Wave’s full report, available for free download at https://z-wavealliance.org/zwave-state-of-the-ecosystem-report/.