2015 European smart home industry

2015 European smart home industry
According to market research, Europe is the second largest smart home market — there are a considerable number of safety- and energy-conscious households. The U.K., Germany, Netherlands, France, Switzerland, Italy, and Spain are considered major powerhouses for smart homes in Europe. A few Eastern European countries like Poland and Hungary also play important parts with their intelligent hardware and software solutions.

The European market, which is in the early stage of growth for the connected home market, has been growing steadily since the economic slowdown in 2009. According to MarketsandMarkets, the European smart home market, covering the entire ecosystem on the basis of products and services, is forecasted to reach US$15.3 billion by 2020 at a CAGR of 16.5 percent from 2015 to 2020. In the region, security concerns, energy consciousness, population aging, and government initiatives are major growth drivers.
Regulatory initiatives and subsidies by the European Union (EU) is one of major growth enablers in the region. KRC Research’s report indicates that in the Netherlands, government initiatives are driving demand by providing financial support to the installation of smart home applications for assisted living homes as part of their social welfare program.

The high adoption rate of broadband networking and low penetration rate of smart home devices make this region a gold mine for opportunists. Service providers like telcos and utility companies are strong promoters in Europe. However, consumers are still reluctant to accept new technology due to lack of standardization and communication standards, high initial cost, and privacy concerns.

Popular product categories

In Europe, the major smart home product categories consist of security and access control, entertainment systems, lighting control, HVAC control, and healthcare systems, with security and smart energy systems the major categories at the moment.

The MarketsandMarkets statistics shows that security systems are expected to have the highest adoption rate for mass markets. Surveys by Parks Associates show that safety and convenience are key factors for getting consumers to purchase smart home devices in Europe. Smart smoke detectors and door/window sensors scored highest among individual devices.

The residential security market in Europe is forecast to have stable growth. According to Technavio, the market is forecast to grow at a CAGR of 15.5 percent over the period 2014 to 2019.
With an increase in theft and burglary in residences and a rise in the aging population in Europe, the demand for physical security solutions such as intruder alarms, safety sensors, and electronic locks have surged. Such solutions are also used to monitor infants and pets at home.

French telecom group Orange offers a home security kit to cater to market needs. Matthieu Douriez, Open Innovation Manager of the Product Marketing Department at Orange said, “I believe security device is the best way to build the smart home. Our mobile app is designed in-house to support a wide range of smart home devices, including smoke detectors, motion detectors and sirens, among several others.” Monthly recurring fees are a major way to generate revenue streams for service providers.

The Homelive system, Orange’s smart home name, is currently offered on a monthly fee basis — customers will have to purchase the device with a monthly subscription fee:€79 for the package (home automation box + 3 sensors) and€9.99 for the service.

Energy management in high demand

Smart energy, referring to energy management, is comprised of smart meters, climate control, and lighting sectors. Energy management implies cost savings and reduced carbon emissions. From startups to large-sized home automation companies, cost savings and individual room control are two major features seen in new products.

According to Eurostat, the statistical office of the EU, the cost of electricity in Germany was 29.8 cents per kilowatt-hour (cents/kWh) in 2014. This price was the second highest in the region, behind Denmark, with the European average being 20.4 cents/kWh.

KRC Research’s survey shows that out of 2,000 respondents, 37 percent of UK responders had a connected utility meter installed and 29 percent of Germany responders had smart lighting systems.

Bernd Grohmann, CTO of eQ-3 said, “Heating control system is the most popular, followed by roller shutters, safety and security systems like smoke detectors, and window/door control, in our company. Over 70 percent of energy bill comes from heating.” Grohmann believes the heating control application is much bigger than safety and security in Europe.

Michael Scheffler, CIO of Easy SmartHome, which offers products to end users through online stores and installers, indicated that smart light bulbs are the best sellers; the online store is the largest sales channel for the company.

Zipato CEO Sebastian Popovic thinks energy-related products like lighting and heating devices are the most promising categories to boost the smart home market. The Vebbu Smart Thermostat, connect to existing heating and cooling systems, allows individual room control and separate schedules in different rooms by placing separate temperature sensors in each room. The Vebbu relay box is designed to be connected to standard gas boilers, oil boilers, wood chip boilers, and chillers. The company indicated that its smart thermostat solution is 10 times cheaper than traditional thermostats.

DIY smart home sizzling

The European smart home market is composed of DIY and professional installation markets. Different regions are in favor of different solutions. Based on interviews, most revenue still comes from the professional installation market. Josep Ceron, CEO of Intesis Software cites the professional-installed, whole-home systems contribute much more to Europe’s entire smart home market than DIY systems. “Contrary to the US market, DIY smart home systems are rarely offered in Spain. We are more geared towards professionally-installed projects and solutions. We can say that the booming construction sector revived the home automation side,” he said. However, DIY is a hot-sizzling market, as many retailers and service providers are active promoters. Online and physical retail stores are major sales channels for DIYers. DIY products feature low-cost home automation to lower initial spending for more affordable smart home systems. Also, ease of installation also helps to boost the market demand.

Tobias Andersson, Technical Manager of Smart Home at Proove, said, “Our target now is to go to the DIY for the retail, and that’s the challenge, how to make the system so easy that everyone can use.“ He indicated that the key for going into the DIY market is to make our software and hardware very simple to use, and that is the difficult part. He added, “There are so many good systems, but many of them are actually not easy to use or set up.

Major European channels, consisting of wholesalers, installers, retailers, Internet sellers, and DIY stores, enthusiastically promote the products on the shelf. The major retail channels, to name a few, are Media Markt, Amazon, B&Q, Makro, Maplin, Argos, Brico Depot, Electro Depot, Leroy Merlin, and so on.

Telcos and utilities propel the industry

Krystian Bergmann, Technical Expert at Fibar Group said, “Big game changers will be telcos because they already have existing mobile users who will help push home automation to the masses. At the moment, our largest market share is in professional installers, but we are looking to expand our business through telcos on a business-to-consumer (B2C) model.”

Raivo Raestik, Co-founder of Yoga Systems said, “Telcos can generate new business opportunities. Today, they can include smart home services to their lineup to tell consumers that they have the innovation and technology to stay ahead of the game.”

Sensing & Control offers versatile and flexible solutions, including home controllers and platforms for security, utility companies, and telcos. Pedro Espinel, Chief Commercial Officer of Sensing & Control said, “Telcos or utility companies want to offer different services to their customers.” He added, “I believe telcos and utility companies are potential enablers. However, the issue with telecommunications companies right now is that the market hasn’t grown any faster the past five years because the market is already saturated.”

Startups like Wattio in Spain target the self-monitoring market with two sales channels: retailers such as Amazon, Dixon, Leroy Merlin, etc., and the cooperation with European telcos and utility providers such as Spain’s IBERDROLA. “Currently, our revenue mainly comes from the retailers. We believe the customers prefer the smart home solution without monthly fees. Combining the hardware of hub, motion sensors, smartplugs, and so on with Wattio’s intelligent cloud software, our kit offers flexibility and intelligence to users,” commented Laura Mendia, Account Manager of Wattio. In the future, Wattio also eyes on the collaboration with insurance companies in Europe.

Besides ISPs, Tony Risikko, Marketing Partner of Cozify, thinks energy companies will be market drivers in Finland. “After Apple, Google, Samsung joining the market, it may become a manufacturers’ and retailers’ games,” he explained.

Off-the-shelf products are gaining popularity among service providers and retailers. M2M Solution offers turnkey white labeled or fully customized solutions for telcos to meet time-to-market demand. Mejdi Gharrad, Business Development Manager of M2M Solution said, “New entrants like service providers prefer need to reduce timeframe for the commercial launch.”

Untapped market

The EU has the largest aging population in the world. Healthcare is an emerging application for the smart home and IoT industries in Europe. To cater to the trend, there are more and more solutions regarding remote or personal healthcare applications. Sensing & Control plans to release an e-health solution, a wearable device for elderly care, to be released in summer.

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