According to the new research report, the “European Smart Home Market with COVID-19 Impact Analysis by Product (Lighting Control, Security & Access Control, HVAC Control, Home Healthcare), Software & Services (Proactive, Behavioural), and Region – Global Forecast to 2025”, size is expected to grow from USD 23.2 billion in 2020 to USD 39.6 billion by 2025, at a CAGR of 11.3%. The growth of the market is driven by many factors, such as an increasing number of internet users, increasing disposable income of people in developing economies, the rising importance of home monitoring in remote locations, and the growing need for energy-saving & low carbon emission-oriented solutions. Moreover, the rapid proliferation of smartphones & smart gadgets, expansion of smart home product portfolio by a large number of players, growing concern about safety, security, and convenience among the general population will fuel the demand for smart home solutions.
COVID-19 impact on the European smart home market
The COVID-19 pandemic has severely impacted the growth of the global smart home industry. Sales of European smart home products are expected to decline by 10–15% in this fiscal year, depending upon the progression of the virus in different parts of the world. The decline in the number of new construction projects and the temporary shutdown of manufacturing facilities are some of the factors hampering the growth of the European smart home market. However, the limited short-term adoption of smart homes and the supply chain disruptions are expected to affect the growth of the market in the region.
The demand for video and entertainment smart home products is expected to suffer the most, particularly smart television, from COVID-19. The shutdown of manufacturing facilities has led to component shortages, and consumers are spending on devices, such as monitors, laptops, and cameras, which improve their work from home. The cancellation of major sports competitions in Europe in 2020, including the European Football Championship and the Olympic Games, is also expected to have an adverse impact on video and entertainment smart home products, as their sales typically grow during the sports competitions.
DRIVERS : An increasing number of internet users and the growing adoption of smart devices
The Internet of Things (IoT) has gained popularity among residential consumers owing to the benefits achieved by connecting household products to the internet. The IoT connects products, software algorithms, services, and end-users, enabling a smooth flow of data and making real-time decisions. It has proved its efficiency and has enhanced the quality and consistency of automation systems. Several large-, mid-, and small-scale companies worldwide are highly investing in the IoT industry. With most of the businesses shifting their traditional practices toward IoT, it is expected to reach numerous application areas such as lighting, HVAC, security, healthcare, and entertainment.
The growth of the European smart home market is expected to be significantly driven by the increasing consumer preference for video doorbells, voice-assisted technologies (such as Alexa and Google Home), and surveillance systems. The growth in the adoption of consumer IoT is attributed to the increasing penetration of the internet, the growing usage of smartphones, and the expansion of social network platforms. The continuous increase in the number of internet users across the globe is expected to boost the growth of the overall IoT market owing to the growing adoption of internet-enabled smart devices such as radio frequency identification (RFID), barcode scanners, and mobile computers.
RESTRAINTS: High costs of switching for existing smart device consumers
The shipments of smart home products depend on the utilization and requirements of homeowners. Consumers usually prefer products that offer convenience and energy efficiency. The concept of home automation is not new in the economically advanced countries in North America and Europe. Most of the residences in North American countries are already equipped with smart devices. Several residents have been using smart thermostats, smart meters, HVAC controls, and lighting controls for a long time. As the switching cost of these products is high, consumers do not replace them soon after installation. Even European countries, such as the UK and Germany, have a considerable number of smart homes. Therefore, the market for home automation products, which had a substantial penetration rate in the past three years, is expected to grow at a slower pace during the forecast period.
OPPORTUNITIES : Incorporation of lighting controllers with in-built data-connectivity technology
The lighting control market has witnessed considerable growth over the past few years. This market includes a significant number of products such as dimmers, timers, occupancy sensors, daylight sensors, and relays. These products are used either independently or in an integrated form. They can be integrated with home automation systems through wired and wireless technologies. To enable their automated operations, lighting controllers have to be integrated externally with communication protocols. However, lighting control manufacturers are now manufacturing products with inbuilt data connectivity. These controllers can be operated directly, without external communication protocols and connectivity. This is expected to create a considerable demand for such products, thereby creating opportunities for the players operating in the smart home market.
CHALLENGES : Increasing instances of cybersecurity threats to smart infrastructures
The Internet of Things (IoT) has changed the way people interact. Buildings and homes are becoming smart, highly complex, and increasingly connected. This massive interconnection leads to new efficiencies and capabilities for consumers, organizations, and cities. However, these advantages come with significant challenges in the form of cybersecurity risks.
Presently, securing smart homes and smart buildings from cybersecurity risks has become more relevant than ever in the wake of the spread of the COVID-19 pandemic. As consumers are spending a considerable amount of time in homes owing to the imposition of lockdowns, they are using smart cameras, wearables, and telecommunications devices to access different services. They remain in contact with doctors, government agencies, schools, friends, and family. Thus, the increased use of these technologies makes consumers highly susceptible to cybercrimes.
Entertainment has become an essential part of life as it provides relaxation and rejuvenation. A multi-room entertainment control system allows the user to centralize all connected devices and then listen to, watch, and control that equipment from every room in the house simultaneously or independently. Major control systems used in smart homes are audio, volume, and multimedia room controls. The growth of the market for audio, volume, and multimedia room controls is driven by the convenience offered for managing as well as controlling the entertainment systems within a house.
The advancement in wireless communication technologies is a major factor boosting the growth of the home theater system control market, thereby driving the overall European smart home market for entertainment and other controls. The large market share of this segment can be attributed to the high penetration rate of products such as smart meters and smoke detectors. The increasing cost of electricity is a major concern that drives household consumers toward energy savings. Moreover, the rising popularity of smart plugs, smart hubs, and smart locks are fueling the adoption of control systems.
The European smart home market for software and services, by type, has been sub-segmented into behavioral and proactive solutions and services. There is a high competition in market for software and services due to the development of technically advanced and user-friendly software solutions as well as the provision of improved and real-time services to customers, in response to the growing awareness about reducing energy consumption within households. Moreover, the environmental regulations implemented by government bodies in most countries, both developed and developing, are further increasing the installation of smart homes. The software and service industry is generating high revenue from the installation and marketing of smart homes and is also providing services to the customers. All these factors are expected to lead to the high growth of this market during the forecast period. The markets for behavioral software and services are expected to hold the largest share of the market by 2025.
Germany is projected to hold the largest share of the European smart home market during the forecast period. The key providers of smart home products in Germany include Siemens AG (Germany), Robert Bosch GmbH (Germany), and MOBOTIX AG (Germany). The products of these companies cater to the requirements of smart home consumers in the country. Moreover, the growing awareness about energy conservation systems, along with various government initiatives to promote the use of smart lighting controls, is driving the growth of the European smart home market in Germany.
In 2019, the European smart home market was dominated by Johnson Controls International (Ireland), United Technologies Corporation (US), Schneider Electric (France), Honeywell (US), and Siemens (Germany). A few strategies adopted by these players to compete in market include product launches and development, partnerships, and mergers and acquisition.