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Smart home 2022-2023: Year in review and a sneak preview

Smart home 2022-2023: Year in review and a sneak preview
As we bid farewell to 2022 and get ready for 2023, it’s time to look back at the smart home market – what was trendy, what the challenges and opportunities were, and what we can expect for 2023.
Another year has passed. As we bid farewell to 2022 and get ready for 2023, it’s time to look back at the smart home market – what was trendy, what the challenges and opportunities were, and what we can expect for 2023.
Smart home has had a good 2022. According to Oberlo, total revenues for the smart home market are expected to reach US$115.7 billion in 2022, up 10.8 percent from 2021. Yet, despite this growth, certain changes were seen in the smart home sector this year.
“We have certainly seen things change. 2022 saw a very sudden surge away from at-home spending towards travel, and away-from-home. At the same time, emphasis has shifted towards energy-saving products, especially in Europe where home energy costs have doubled this year,” said Paul Gray, Research Director for Consumer Electronics at Omdia. “This abrupt switch, combined with the over-full supply chain unloading, has led to an inventory glut. As a result, new shipments were slow in the second half of the year.”

2022 trends

Besides these changes, the smart home industry also witnessed certain trends in 2022. These ranged from integration to AI. Below we take a closer look.

Integration, interoperability ‘Matter’

Integration and interoperability are key in the smart home. Rather than seeing difference devices working in silos, users want different-brand devices communicating and co-working with each other. One of the biggest developments in this area in 2022 was Matter, formerly Project Connected Home over IP (CHIP), a proprietary standard for home automation that aims to achieve interoperability among smart home devices. The project group was launched and introduced by Amazon, Apple, Google, Comcast and the Zigbee Alliance, now Connectivity Standards Alliance (CSA).
“The biggest [trend] is Matter. It’s another serious attempt to move towards common standards and interoperability rather than brand-based silos. The direction is clear, although it doesn’t necessarily mean an end to standards proliferation,” Gray said.

Building management

According to Gray, building management was a hot topic too. “Definitely we are seeing a splitting in smart home with a new category appearing which are for building management – for example for rented apartments. The smart home devices allow the landlord to manage the letting – from remote access for prospective tenants, to leak monitoring and security,” he said.

Energy savings

As mentioned, energy savings were a key trend in smart home this year. Strong demands were seen for smart home devices that can help save energy – for example smart thermostats. These devices are now must-haves in smart homes, able to create a cooling/heating schedule based on the time the user is at home, as well as detect what room the user is in and adjust the temperature accordingly.


All of the aforementioned trends could not have been possible without AI. Indeed, artificial intelligence is already deployed in a range of commercial projects and is now finding its way into the smart home too, a trend that is particularly noticeable in 2022. Examples range from voice assistances to security cameras being able to identify suspicious individuals by way of facial recognition to smart refrigerators that can automatically order food when it runs out.

Supply chain issues

Meanwhile, supply chain issues seen in various industries also had an impact on smart home as well. “Definitely IC shortages and high shipping costs subdued part of the market. We saw the largest companies and those with good supply partners do well. At the same time, it killed off some low-margin products,” Gray said. “IC shortages are now easing and (with the exception of power semiconductors) are in normal availability.”
He added inflation also produced some impact, but not as much. “Definitely margins are under pressure outside the U.S., due to the very strong US Dollar. Most other regions have seen falls around 15 percent which is pressurizing margins. With consumer spendable incomes under pressure, brands are hesitant to increase prices,” he said. “Devices with a clear payback (like energy saving) should do well.”

What can be expected in 2023

As for next year, the smart home sector is expected to see a market consolidation, as well as continued popularity for energy savings solutions. The likelihood of a recession may also play a part.
“The end of the era of cheap money to finance businesses, combined with consumers being more skeptical and focused on tangible benefits is likely to bring consolidation and a more tightly-focused market. Energy saving will become the hottest category. If regions go into recession, there is also likely to be more interest in home security,” Gray said. “At the same time, pressured households will revisit subscription services. This is a really new area compared to past recessions, and it will be interesting to see the hierarchy of priorities between (say) gym membership, Netflix and home security monitoring.”

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