By 2023, smart home device shipments are forecast to reach 187.2 million units, registering a compound annual growth rate of 16.1%. Video entertainment products will account for 41% of the products shipped in 2023, representing the largest share, like they did in 2018.
In the fourth quarter of 2018, shipments of smart home devices in Europe reached almost 33 million units, growing 15.1% annually, according to research by International Data Corporation (IDC).
In the full year 2018,
shipments of smart home device totaled a record high 88.8 million units, growing 23.1% compared to 2017.
The Western Europe smart home market grew 14.4% year-on-year, while the Central and Eastern Europe region grew 22.7%, with smart speaker market size expanding 127.8% in the region.
By 2023, smart home device shipments are forecast to reach 187.2 million units, registering a compound annual growth rate of 16.1%.
Video entertainment products will account for 41% of the products shipped in 2023, representing the largest share, like they did in 2018.
While video entertainment products will see the largest product shipment,
smart speakers will come in second with 25% of the smart home products shipped in 2023, followed by smart lighting, home monitoring/security and thermostat products. It is worth noting that lighting devices will see the highest growth (45%) in shipments.
The top five smart home vendors in Europe, in the order of market share, are Amazon (18.4%), Google (15.4%), Samsung (13.7%), LG Electronics (11%) and Sony (6.1%). Google’s product shipment grew the highest 33% year-on-year, as of the fourth quarter of 2018.
Smart TV gains traction
Video entertainment devices include smart TVs and digital media adapters. Smart TV vendors are shifting their focus from volume to revenues, which is driving the average selling prices up. Devices with an embedded
voice assistant accounted for 16.4% of the market in the fourth quarter of 2018, but this number is expected to grow to 65.6% in 2023, IDC says.
"Although video entertainment is the most mature category in this market, we will continue to see the replacement of TVs to smart TVs, driving growth in the category," said Antonio Arantes, IDC’s senior research analyst for smart home devices in Western Europe.
"Smart TVs in Central and Eastern Europe are still a very small percentage of the total video entertainment category, and therefore we expect adoption to continue to grow rapidly in the forecast period," said Jan Prenosil, IDC’s senior research analyst for smart home devices in Central and Eastern Europe.
Google to surpass Amazon
"Last year, fierce competition between Amazon and Google reached a peak over the Black Friday and Christmas periods, with heavy sales promotions from both companies," said Arantes.
Amazon launched its first Echo products in Italy and Spain, while Google expanded availability of its home products into five new countries in Western Europe. The Echo Dot was the top-selling item on Amazon.com on Black Friday, exceeding all expectations as it became out of stock in several markets.
“The adoption of smart speakers will continue to expand rapidly, as purchases are no longer driven by curiosity or impulse buying, but by the increasing presence of several speakers in the household," Arantes noted.
"Demand for smart speakers is growing in Central and Eastern Europe, but the adoption rate is lower when compared to Western Europe," said Prenosil.
"One of the main reasons is the lack of local language support, which is crucial for faster adoption in the region. Google plans to support more than 30 languages by the end of 2019 and translation into different languages will increase the demand for smart speakers even more," Prenosil explained.
As of the last quarter of 2018,
Amazon was the biggest winner, with 59.8% market share in the segment, while Google came second with 30.7%. Nevertheless, it is expected that Google Assistant will surpass Alexa in 2022 as the top player in smart speaker market, IDC predicted.