Smart home players deploy new strategies to streamline offerings and overcome consumer price sensitivity, lack of benefits, and privacy concerns. Parks Associates research finds perception of high prices as a leading barrier to adoption of smart home devices.
Asmag says: Parks Associates have many interesting research notes, and this is a good point in the discussion about smart home devices value proposition. Broadly speaking, we can see smart home devices are divided into major segments, “life-style and entertainment” and into “security and utility”. If you look at existing eco-systems like Google home and Amazon Alexa it seems that the life-style and entertainment segment is in the lead, but the security and utility segment is the one with potential long term ROI.
Last updated 11 May 2021
Smart home players deploy new strategies to streamline offerings and overcome consumer price sensitivity, lack of benefits, and privacy concerns. Parks Associates
research finds perception of high prices as a leading barrier to adoption of smart home devices.
In a recent report, Parks Associates finds high perceived prices remain a top barrier to smart home adoption, with providers and manufacturers working to bring lower-priced products to market and discontinue specific premium products.
The firm’s Smart Home Tracker
finds 20.5 million, or 44% of consumers who do not own or intend to purchase a smart home device, report expensive prices as their reason to forgo adoption, followed by perceived lack of benefits and data and privacy concerns.
To overcome the cost barrier, Apple is offering a smaller form factor for its HomePod, and Google is offering a new Nest thermostat with fewer features and a smaller price tag.
“Perception of high prices is a key barrier to smart home device adoption, but it is also tied to the perception among non-owners that these devices do not offer any benefits to the lifestyle,” Patrice Samuels, Senior Analyst, Parks Associates.
“Device manufacturers in the smart home market are evaluating multiple strategies to address the leading adoption barriers. Companies are betting that getting one device in the home, even as a loss leader, will convince consumers of the value of smart home devices and inspire future purchases. Our research indicates this is a sound strategy.”
Parks Associates notes that households that own at least one device have an average of seven devices. Companies such as Eufy are offering lower-priced models that retain most of the features of their higher-priced models, knowing there is a good chance that their customers will buy more products following this initial purchase.
The Smart Home Tracker, a quarterly service, also finds that as new social distancing guidelines continue to impact schools and businesses, a number of tech giants—including Facebook and Google—are incorporating video conferencing solutions into their products and systems. The percentage of US broadband households that report using video services is 54% higher than prior to the pandemic.
“One of the leading and overarching value propositions of smart home products is to improve convenience for users,” Samuels said. “Services like Zoom have become invaluable. Helping users to make video calls more conveniently increases the value of smart home devices in these times, and we expect to see additional integration around solutions like these.”
Lower prices could add nearly eight million more US broadband households into the smart home market
Parks Associates reveals that among the 42% of US broadband households who do not own and do not plan to buy a smart home device, 17% admit they would likely buy a device if the cost were lower. Capturing these consumers at the right price point would add 7.9 million more households to the population of smart home owners.
The company's Q4 2020 survey, ranks affordability as the most important purchase consideration among purchase intenders. Discounting product prices and bundling products in ways that strengthen value are critical strategies to attract the majority of consumers who rank affordability in their top three purchase considerations.
Bundling of smart home devices such as smart plugs, smart light bulbs, or smart thermostats with a smart speaker can introduce the smart home experience to consumers through a leading entertainment device that can be used to stream music and control smart home functions.
More than 50% of US broadband households who do not own or intend to purchase a smart home device report they do not see any benefits to smart home ownership, although this attitude is more prevalent among older consumers.
Messaging that highlights strong product value helps overcome price sensitivity and counters the perceived lack of a viable value proposition,” Samuels said. “Familiarity with devices is increasing, but value perception is not. Brands must emphasize pragmatic value propositions such as energy savings, loss prevention, and safety to persuade the broad swatch of broadband households that do not see any benefit or value in owning smart home devices” concluded Samules.