What’s trending in European smart home market

Home automation has been around for decades in Europe where electricians and system integrators play an integral role in automating homes. Now, new technologies in the market are making homes smarter. New service providers, like energy and insurance companies, are also getting involved in this rising market.

The European smart home market is expected to achieve double-digit growth over the next few years. According to a European smart home market research report from research firm MarketsandMarkets, the overall European smart home market is expected to reach US$15.3 billion by 2020 at a CAGR of 17% between 2015 and 2020. This view was clearly shared by most of the companies a&s talked to at the Light+Building 2018.
 

The smart home trend is quite prevalent. Hamish Neale, Residential Sales Manager for Europe at Crestron EMEA, observed that houses of a certain value need to have the technology because it’s expected when selling the property. “Once one developer is offering smart technology for multi-dwelling units in a city, every other developer needs to offer it as well to allure customers,” he explained.

Energy Saving is the Main Trend

Energy, cost savings, security and convenience are some of the major drivers of the European smart home market. Smart home applications are believed to be more energy saving-oriented in Europe than in other geographical regions. Johan Pedersen, Product Marketing Manager at Sigma Designs, said, “In the US, it is very security-focused, while energy savings is more of a driving factor in Europe.” Several energy companies even tie smart home services with customer energy bills. “They introduce a smart home gateway that you can get with your energy subscription,” he added.

According to Pedersen, insurance companies also appear to be one of the big drivers of home applications in recent years. “Insurance companies are tying insurance with smart home service like leakage detection and humidity sensing because water leak is one of the biggest costs for these companies. If you get water damage in your house, it is very expensive for the insurance company,” explained Pedersen.
 

LUPUS Electronics CEO Matthias Wolff agreed that it’s a huge trend right now for insurance companies to include home security solutions to avoid huge damage from fire, water leakage or burglary that might result in huge costs. “When there is a fire, the system that recognizes the fire or the smoke is directly connected to the insurance company. They can act on it in minutes and might be able to keep the fire from getting worse, or causing some damage.”

Wolff also added that convergence is an important aspect of the market. “It is a big trend that covers not only the convergence of software and hardware, but also services like insurance, energy and any other home or building-related services that are all connected.” The company itself is a partner of one of the biggest insurance companies in Germany, Provinzial Versicherung. Wolff also indicated that providing a solution bundled with services, technology and all of the products is the future. “Probably in five years, that will be the prevailing business model,” he predicted.

Cybersecurity in Focus

When installing home security devices or integrated systems with security functions, cybersecurity issues should be taken into consideration. In Europe, especially in Germany, consumers are wary of data breaches and hacks.
 

LUPUS Electronics addresses the issue by keeping the users’ data in their houses, not on the cloud. “Your data never leaves the house so it can’t be hacked. German customers really like that a lot,” said Wolff. To differentiate its offering from its competitors, LUPUS Electronics uses Zigbee instead of cloud services, to integrate home automation devices such as Philips Hue lighting devices and building automation systems. He also stressed that they make sure the security devices are really safe, saying, “To secure communication among devices, the company’s security sensors communicate with a proprietary protocol.”

With more and more wireless technologies being introduced into the market, consumers are worried about reliability and vulnerability to cyberattacks. Thus, we can see some new security standards rolling out in the industry. Z-Wave has introduced the Security 2 (S2) framework in the smart home for security at a much higher level. Pedersen said, “It is something that we have developed about four years ago together with white hat hackers and security experts. It has never been hacked.” Besides its high level of security, it is power optimized, enabling secure battery-powered devices with several years of battery lifetime. “This is very important to see because more and more of our products are battery-operated, but we still want them to be secure. And we also don’t want security to come at the cost of the user experience.”

Move Towards Smarter Products

Various technologies and solutions have existed on the market. There is no universal standard for smart homes worldwide now. For end users, it’s a jungle. To boost market acceptance and penetration, ease of use is essential. Pedersen thinks end users would choose products or services that won’t require much know-how. Pedersen said, “There are a lot of different protocols to choose from and we believe in the future, end users should not worry about protocols at all. They should just be able to pick whatever product they like.”

Undoubtedly, Amazon Echo and Google Home have sparked a wave of excitement in Europe. New technologies like voice control and AI has increased consumer smart home awareness. The technology features ease of use and intuitive operation that offer more convenience to end users.

“There are more and more American technologies coming into Europe and coming into Germany like Amazon Alexa,” said Neale. “We have had that quite some time we were working with Amazon before they were imported. So as these American products become more common, we have an advantage.” AI and machine learning technologies are all the rage worldwide. The technology supports speech commands, providing hassle-free user experiences. For example, when you say “I want to go to sleep,” the blinds will go down and the light will turn off in the room.

digitalSTROM integrates its networked devices with Google Home, providing a convenient user interface. The integration makes it easy for users to set up a scene and control devices by voice. The AI-enabled Google speaker can recognize the person who is talking and then passes this information via digitalSTROM to the connected devices to take action based on personal preferences.

Sigma Designs introduced a new 700 series platform to enable sensor type products to generate more data for these intelligent systems to learn more about the home, user habits and configure itself. “Context awareness in the smart home is a big thing for us,” said Pedersen. “The user doesn’t have to worry about configuring the home, and doesn’t have to tell Alexa to turn on the light because the system already knows that at this time you prefer this light to be on.”

Easy Installation is Essential

Smarter homes means more new technology that might make installers nervous about taking care of all this technology. “Normally, they put tiles on the wall. Now you ask them to put a screen on the wall. That is an entirely different thing to them. Suddenly, they have to deal with things they never had to deal with before. It’s just simple things like that,” said Adrian Obrist, CEO of digitalSTROM. To solve this problem, digitalSTROM helps installers get materials and support in setting it up in an easy way. The setup will get easier as more and more devices have standard application programming interfaces (APIs).

It’s important to make it easy to set up systems. For example, powerline, one of the popular technologies in Europe, provides easy installation and plug-and-play connected home experience as users don’t have to configure communications. digitalSTROM uses a power line and IP network as an infrastructure to connect devices. Also, the company uses several layers to integrate devices, making them work together. Obrist indicated, “People might have different devices, software, and needs in the application. If they have powerline and IP, the basic infrastructure is all the same all over. It’s pretty standardized.” Users don’t need to be latching to a certain brand or system. Powerline is everywhere either in luxury or middle-class houses. “You can add a very expensive shower or an IKEA light to it. You know the light priced at 7 euros will work the same as a shower at 12,000 euros,” he added.

Integrators Play a Key Role

Electricians and system integrators (SIs) play vital roles in smart home installations in Europe. Obrist said, “The end consumer wants a bathroom like that, and then he is looking for somebody like the system integrator who does it. That’s what it is more about.”

End users might be tech-savvy and understand how to install those smart home devices. However, they will want to have their systems working in harmony and reliably. Neale said, “End users would like to automate their homes, but don’t necessarily want to do it themselves. They want to have something that is more reliable. They don’t want to have to go and fiddle around with ‘oh yes, this app does this,’ and they also want it to be integrated nicely. We consider the integrator to be a very important part of the network.”

Smart Home Market to Continue Growth

The market is gearing toward professional installation market. There are more new technologies coming in the market lately, and new entrants are entering into this market for a piece of the action. Additionally, more and more end users are now willing to embrace new technologies to enjoy the convenience that comes along with it. We can expect the household penetration rate of smart home systems and services to grow exponentially over the next couple of years. Also, we will be seeing home security become an integral part of the professionally-installed smart home systems in Europe.