This post is contributed by Virginia Harvey and Michelle Kravets who are part of Epsilon's secondary research team providing insights for our clients and our organization.
New technology like wearables and smart home devices bring excitement and the possibility of a simpler and safer life to consumers. This excitement is what attracts early adopters to try new technology. In the past five years, smart home devices have become more prevalent in US homes offering consumers home monitoring capabilities, energy savings, and remote control over their common household devices. BI Intelligence predicts that 193 smart home devices will ship in 2020, up from 83 million in 2015, representing an 18% compound annual growth rate.
More than half of American adults (54%) are excited about incorporating smart home features into their home. Overall adoption will be faster for smaller devices such as lighting, security sensors and home automation systems, and over time will expand to larger devices that have longer replacement cycles, like appliances.
But in order to reach mass market, marketers of smart home devices will need to overcome four major hurdles:
- Price is a top inhibitor of smart home adoption as there is often a large price differential between connected and non-connected home devices. For example, an August connected door lock retails for $250 compared to $16 for a basic lock that offers no connected features. To overcome this challenge marketers need to deliver clear and compelling product messaging that connects emotionally with consumers.
- Long replacement cycles of already-installed devices are also a challenge. This is especially true for appliances, most of which have lifecycles of 10+ years. Marketers of smart home devices must engage consumers in the market for new appliances early and begin to educate them on the added value their products can bring to consumers’ everyday lives.
- Another significant hurdle is limited consumer demand. Companies must prove the need for consumers to want multiple smart home devices that perform disparate functions. In this case, device makers have to not only compete for homeowners’ attention but also justify the price differential over a comparable non-connected device.
- The largest hurdle may be technological fragmentation within the smart home ecosystem. There are currently too many networks, standards and devices being used, creating interoperability problems and confusion for consumers to set up and control multiple devices. It’s important to note that this fragmentation represents an opportunity for disruptors like Apple and Google as well as incumbents such as home security firms, telecoms, and cable companies.
While consumer interest is climbing at a steady pace, overcoming the barriers to mass market adoption can be addressed by marketers in several ways. In the near-term marketers will either upsell comprehensive smart home ecosystems to their existing customer base, or they will create new piecemeal ecosystems.
Regardless of the type of ecosystem a company plans to use, marketers should primarily advertise ease of use and (comparative) low price first are foremost to increase consumer interest, as these are the two largest barriers to widespread adoption.
What’s trending with smart home devices? Click below to check out this topigraphic: