Smart and connected thermostats are getting increasingly popular in U.S. households, and the demand is forecast to grow 18% per year through 2022, according to a report by The Freedonia Group.
Smart and connected thermostats are getting increasingly popular in U.S. households, and the demand is forecast to grow 18% per year through 2022, according to a report by The Freedonia Group.
The smart and connected thermostat market size totaled US$640 million in 2017. In 2022, smart thermostats will take more than 70% of market share, thanks to their declining prices, better performance, capacity to cut energy costs and ability to integrate with various smart home devices, says the research institute.
Connected thermostats nonetheless will continue to fill a key role in the market, appealing to consumers who may seek the cost- and energy-saving benefits of smart thermostats but are put off by their higher-tech features and/or somewhat higher price tag.
As thermostat purchases tend to correspond with the end of HVAC system lifecycles (15-20 years), thermostat manufacturers are forming strategic partnerships with utilities, HVAC professionals, etc. to expand near-term smart and connected thermostat adoption - particularly among lower-income households.
Vendors have tried to penetrate new markets via giveaways, rebates, discounts or philanthropic promotions. While the practice may undercut short-term revenues, it will nevertheless generate long-term demand gains, by creating a new customer base for future thermostat replacement purchases.
According to The Freedonia Group, the longevity of the U.S. smart home market, which encompasses smart thermostats, will ultimately depend on vendors’ ability to refine technologies in order to streamline efficiencies, harden cybersecurity and optimize performance.
Technological innovations made by the vendors may also help to lower production costs, which will translate into savings at the retail level.
Smart plug’s energy-saving functionality
Besides smart thermostats, smart plug also helps to save energy consumption and its adoption is on the rise too. Device manufacturers such as Whisker Labs and Jeeo have launched multifunctional smart plugs that include energy monitoring capabilities.
"While smart plugs are a staple of the smart home ecosystem today, next-generation products are creating more value through numerous value-added services derived from energy data," said Tom Kerber, Sr. Director of IoT Strategy at Parks Associates.
Access to high-frequency energy data enables a myriad of applications in home safety, security, aging-in-place and asset monitoring, such as appliance health monitoring and failure prediction, warning about imminent arc faults, etc.
In regards to barriers to smart home device adoption, Parks Associates said 23% of consumers who do not intend to purchase a smart home device cited security and privacy concerns as the reason; and among those who reported problems with their connected devices in 2018, 32% cited loss of wireless connectivity as the cause.
Globally, North America is the most developed market for smart homes, while the energy management is the highest growing segment in this region, which also includes the installation of smart grids and smart meters.