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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