Addressing customer complaints is essential for smart home companies aiming to boost their bottom lines.
Demand for smart home technologies was weaker in 2021 compared to 2020, but the first full year of the pandemic was an anomaly for the entire market. According to Blake Kozak, Senior Principal Analyst for Smart Home at Omdia, some devices experienced record growth.
Smart speakers, for instance, grew by 70 percent in the Americas region in 2020 relative to 2019. Lighting experienced record growth in 2020, but in 2021, growth is more aligned with pre-pandemic expectations.
“The global smart home market was worth the US $72 billion in 2021, up from $60 billion in 2020,” Kozak said. “In terms of household penetration, about 54 percent of broadband households in the US had a smart home device in 2021, up from about 48 percent in 2020.
“Being home more did not deter consumers from buying more smart home equipment. Even security devices like security cameras continued to increase. This year, 2022, will be another strong year for the smart home market, especially as adjacent markets ramp up adoption, like smart apartments and home builders.”
Such an optimistic outlook will undoubtedly cheer the industry. However, analysts point out that several concerns continue to limit the adoption of smart home solutions and challenge growth. Addressing them would be one of the major criteria for companies aiming to boost their bottom lines.
High costs
Cost and benefit remain the primary barriers, according to Omdia’s latest consumer survey. Unfortunately, many brands are keener to add new features than reduce prices. Kozak suggests that companies should focus on doing more with less, especially by taking more advantage of the software.
“Prices remain high for many devices, and the cost won’t be coming down as brands look to add more features in single devices,” Kozak said. “[Examples of these are] Sengled’s latest smart light bulb that also uses radar technology or the latest Arlo sensor that combines several use cases like motion, open/close and water leak.”
“Companies can address these issues of benefit and cost by adding software features, like Nest’s Renew program,” Kozak continued. “Instead of adding more features to single devices that ramp up the cost, the software can provide actionable insights while keeping costs down for the consumer, although the software may come with a small monthly fee.”
Ease of use and flexibility
As people start to venture back into the world in a post-pandemic world, they will begin to realize how disconnected they are from their homes that they just spent such a long time in. Customers will start to double down on smart home cameras to give them the ability to check into their homes. But, according to Sergio Flores, Chief Product Officer at Canary, they would want the devices to be convenient, flexible, and easy to use.
“Smart home security cameras like Canary allow customers to protect not only their homes and apartments but allow them to check in on their loved ones anytime, anywhere, simply via their smartphone,” Flores said. “DIY smart home security cameras like Canary can be set up in five minutes by simply downloading the app and connecting the camera to WiFi/ethernet.”
Also read: Why 2022 will be a pivotal year for smart homes
Privacy concerns
Several factors have increased consumer concerns about privacy. Reports of cyberattacks, ransomware, backdoors, and such are pretty frequent now. We have seen several instances where hackers accessed smart home cameras and, in some cases, harassed the owners. Thus stringent adherence to privacy regulations and robust cybersecurity support is necessary to encourage adoption.
“We believe that providing transparency around data and personal information is crucial. Canary privacy policy is GDPR (EU General Data Protection Regulation) compliant and upholds the highest European security standards,” Flores said. “We make sure that all communications and data are safely encrypted, all our traffic is covered by TLS, and that proper security measures, such as certificate pinning, are in place, and that we give users the tools necessary to secure themselves, such as two-factor authentication.”
Supply chain concerns
Delays in new products and low stock availability due to the ongoing supply chain constraints could also lead to consumer resentment. Although this is not a challenge that customers pose or one that companies can solve easily, its impact on the market cannot be ignored.
“Supply chain issues could have a negative impact on growth as inventories are reduced and lead times increase,” Kozak said. “So while 2022 will be a good year for the smart home market, especially as technologies like Matter come to fruition, the growth could be tampered by external factors, notably supply chain and price increases.”
Addressing customer concerns
The pandemic certainly made more customers consider smart home devices. But the challenges listed above continue to make growth difficult. For many companies, issues like cost are yet to become a priority.
Going forward, matters like cybersecurity and privacy would receive even more importance. The trends we see clearly indicate that hacking and hackers are becoming more and more sophisticated. There is definitely no conclusive solution to this, but ensuring that the customer is confident of product support is necessary.
Finally, we can only hope that the supply chain concerns will ease by the end of this year. Semiconductor chip shortage, which is at the heart of the current supply chain issue, may see some improvement by the second half this year. Still, the situation will continue to remain challenging.