According to Parks Associates in a recent whitepaper, “Smart Home Evolution: Unlocking Value,” the smart home market has entered a new phase of maturity, with 45 percent of US Internet households owning at least one smart home device in 2024.
The smart home market has grown significantly, with nearly half of US Internet households having at least one smart home device, notes a recent whitepaper by Parks Associates. A key growth driver cited was AI, which makes the home more secure and automated. Meanwhile, challenges such as connectivity and interoperability issues remain and need to be resolved to ensure further growth.
Smart home is all about leveraging the powers of AI and IoT to bring users a smarter and more automated home experience. Smart home devices range from smart locks to smart lightbulbs to smart speakers. Arriving at home to see lights and TV automatically turned on is a smart home experience many homeowners go for these days.
And the smart home market is experiencing a boom. According to Parks Associates in a recent
whitepaper, “Smart Home Evolution: Unlocking Value,” the smart home market has entered a new phase of maturity, with 45 percent of US Internet households owning at least one smart home device in 2024 (excluding smart speaker/display), representing a 165 percent growth from ten years ago. In the past four years, roughly 13 million new households entered the market, and 18 percent of smart home device-owning households are “power users” – those owning six or more devices, the paper said.
Among other findings in the report, millennials own smart home devices at the highest rates, followed by Gen X, who are native technologists yet are behind in smart home adoption due to their lack of home ownership. Also according to the paper, households with kids are smart home champions, with 63 percent of households with kids owning at least one smart home product compared with just 37 percent for those without kids.
AI as key accelerator
The paper cites AI as a key accelerator for smart home growth, with more and more smart home vendors packing AI features into their products to attract smart home users. “Smart home device owners are likely to be on the forefront of AI usage generally, as they are more familiar than non-owners with the next wave of generative and conversational AI tools like ChatGPT, Claude, and Gemini, and more likely to use these tools,” the paper noted. “In the home, consumers find a variety of AI-enabled benefits attractive, particularly amid concerns for the safety and security of their home and loved ones.”
That said, the report cites the following as quickly becoming competitive differentiators in smart home solutions:
AI-Driven automation and personalization, where machine learning adapts to user behavior for optimized energy use, security, and comfort, while next-generation voice assistants and predictive automation enhance the user convenience.
Advanced sensing and real-time monitoring, where smart sensors improve safety with real-time alerts for fire, CO, water leaks, and motion detection; and video analytics and AI-powered security enhance threat detection and verification.
Proactive and predictive services, where Internet service providers monitor network traffic for malicious behavior and offer proactive, do-it-with-me support, keeping the connected home up and running. Predictive maintenance reduces downtime and costly repairs for HVAC, appliances, and security systems.
Challenges remain
Despite strong adoption, challenges inhibiting continuous, sustainable growth of the market remain. The paper cites 52 percent of users reporting setup difficulties, and 34 percent facing connectivity issues in the past year. Cybersecurity is also a concern, as consumers – including current users – want better assurances that their products are secure and that they can erase data and approve authorized users. According to the paper, 31 percent of Internet households surveyed selected an independent cybersecurity certification as a top means to resolve their data security concerns.
Last but not least, interoperability remains a major pain point, with 60 percent of device owners using products as standalone solutions rather than integrated systems. Indeed, having a Google setup in the living room and an Amazon setup in the bedroom that do not communicate with each other can sour the smart home experience.
“The number of apps required to manage different smart home features poses a significant challenge to interoperability and user experience. This fragmentation makes it harder for consumers to adopt and integrate new smart home technologies and creates barriers for achieving a truly connected home. Integrating these devices is also difficult today,” the paper said.
It adds that overcoming this challenge requires a concerted effort from manufacturers to adopt common standards and protocols that enable devices to communicate and work together, regardless of the brand. “The industry is betting on standards like Matter and Aliro to solve fragmentation, enabling multi-brand compatibility and smoother device coordination,” it said.