In 2017, 433.1 million smart home devices were shipped worldwide, growing 27.6 percent from the previous year. Looking ahead, CAGR of 18.5 percent is anticipated as the market balloons to 939.7 million devices shipped in 2022. Within the smart homes market, the smart speaker category, which includes devices like the Amazon Echo and Google Home, will remain the fastest growing category. Meanwhile, shipments for most other categories, with the exception of video entertainment products, will experience a double-digit CAGR.
The smart homes market is still in its infancy but some significant changes can be already seen in consumers and vendors’ approach. There is less of a focus on having a central hub and apps as the center of the interface as hardware makers race to create interoperability with smart assistants like Alexa, Siri, or Google Assistant. On the other hand, consumers, while still somewhat hesitant to anthropomorphize smart assistants, are beginning to expect a more natural user interface to the myriad of smart home devices.
While it is still early days for the smart homes market – and the wider consumer IoT ecosystem in general – considerable growth is expected over the next few years, especially as consumers become more aware of and increasingly interact with smart assistant platforms, according to IDC. Whether in the form of a smart speaker or embedded in a thermostat, refrigerator, TV, or any other device, smart assistants are quickly becoming the cornerstone of consumer IoT by enhancing the accessibility, use, and functionality of connected devices, which will noticeably boost adoption rates in the near future.
Video entertainment devices, inclusive of smart TVs, digital media adapters, and other IP-connected video devices, are forecast to deliver a CAGR of 8.3 percent for unit shipments. These devices are also expected to capture around three quarters of the dollar value of the entire smart home market as the ASP for TVs will be among the highest. Smart speakers with built-in smart assistants have captured the spotlight recently as major new brands have entered the market. In addition, Amazon and Google have been quick to respond by offering additional models and price points through their first-party speakers and by partnering with numerous other brands to bring Alexa- or Google Assistant-enabled speakers. Thermostats are expected to have a worldwide CAGR of 20.8 percent for unit shipments by 2022. Despite the high growth, it is expected to be among the smallest categories as most homes will have a single thermostat and a large part of the world does not use standalone thermostats, relying instead on air conditioners or heating units.