Home automation:The Future of Home Automation

All of a sudden, as if someone ­flipped a switch, experts outside the custom electronics industry are paying attention to home automation. Overall, it’s a good thing. And with this increased attention and scrutiny also come more research and analysis, which appear to be predicting that the industry is rapidly evolving into three distinct niches: DIY, entry-level and high-end luxury - but there is no mention of a “middle market.”

Here’s how it breaks down from different sources. First, there has been glowing data and financial analysis coming fast and furious from the investment community. Industry watchers are falling all over themselves to predict solid growth for the industry. Terms like “explode” and “capital-efficient” and “rising category awareness” are all being used by in­fluential investment groups.

There is a research that shows how home automation, much like the U.S., is becoming a market of “haves” and “have-nots.” A recent report from GigaOm breaks the market down into those three distinct segments: DIY, custom-design smart home systems (from providers like cable, telco and entry-level security companies), and connected home systems (served by CE pros). The report estimates that by 2017:

·             The DIY home automation market will be $200 million

·             The telco/cable/security portion of the home automation market will reach $2.2 billion (growing 7 percent annually)

·             The connected home portion of the market will reach $1.5 billion, up from $300 million in 2013

If you do the math, it means the custom channel is expected to grow by an incredible 500 percent in the next four years. And while the custom market is expected to be surpassed by the entry-level options in terms of total revenue, it also shows that the custom installation channel will be 750 percent larger than the DIY market. The report cites the growing demand for luxury systems, increasing consumer awareness being driven by the mass marketers, cloud technology that is making home automation more affordable, and open API platforms from companies as the primary drivers of growth.

If anything, the report is interesting because it clearly pinpoints where the future lies for the market (both from high-end and low-end professionally installed systems). Unfortunately, that prediction means integrators “in the middle” serving those $7,500 to $12,000 projects are not in the sweet spot for growth. The data also helps CE pros gauge where their future competition is going to come from - not from homeowners themselves but from mega-companies entering the space on the low-end.

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