Depending on which analyst you ask, forecasts for Smart Home revenue in 2017 are as high as $61 billion. Some experts estimate that number will increase to $490 billion in 2019.
Yet despite those projections, many consumers and pundits alike challenge the validity and potential of the Smart Home, claiming it's a fad. While the market is certainly young, it is nonetheless setting the foundation for what will be the next wave of the internet: the Internet of Things. (I compare this point in the Smart Home's lifecycle to the point in social media's lifecycle when Facebook was just getting started.)
As a leading entrepreneur in the Smart Home, I see an opportunity for entrepreneurs to positively impact consumers while capturing the growth that is ahead of this industry.
If you want to position yourself to benefit from the Smart Home's rapid growth, you need to understand the opportunity at hand. Consider these seven reasons why the Smart Home is a real and sustainable opportunity.
Consumer preference is clear
Initially, most Smart Home-related startups and VC backers were looking to "own the home" with a hub, but customers aren't walking into retail stores with $1,500 and the desire to automate their entire home all at once.
Instead, "point solutions" are driving Smart Home adoption as customers select individual products to solve specific problems. In order of importance, customers are prioritizing home security, cost savings and home automation.
Big companies are staking claim
Dozens of top companies, from chip manufacturers to retailers, are making serious investments in the Smart Home space. Tech giants like Google, Apple, Amazon and Samsung all have their own Smart Home platforms. Amazon.com, Best Buy, Target and other major retailers now feature Smart Home sections in stores and online. Major security companies and ISPs (Internet Service Providers) have added Smart Home gadgets to enhance their service offerings.
Non-tech companies are deeply involved
It's not just technology companies that are getting involved in the industry. Home improvement retailers, home builders, insurers and realtors are all trying to attract new customers, retain current customers or bolster their businesses with Smart Home products and technologies. It seems that everyone is getting into the space in a big way.
Success of Amazon Echo and the Alexa Voice Assistant
While Nest's thermostat put the Smart Home on the map, it is Amazon's voice-enabled Echo that is bringing the Smart Home into the spotlight. Powered by Alexa, Amazon's voice-activated assistant, Echo is more than a Smart Home controller. It's a transformative device that pioneered the adoption of voice as a user interface and made it possible for the whole family to embrace the Smart Home.
Products deliver primary and secondary value
Successful Smart Home products solve real needs and deliver supplemental benefits that increase customer delight. For example, a smart thermostat offers homeowners financial savings, as well as the convenience and comfort of walking into a home that is automatically set at their ideal temperature. Smart video doorbells provide increased home security, as well as the added convenience of not having to stop what you're doing in order to answer the door.
Stable communication protocols
Wi-Fi, Bluetooth low energy, Z-wave and Zigbee are more mature and stable than they were a few years ago. Greater range, lower power usage, more bandwidth and faster connections allow Smart Home device makers to create smarter, more capable hardware products.
The home automation industry is making serious progress in getting devices to communicate with each other. Platforms like HomeKit, IFTTT, SmartThings, Honeywell TotalConnect, Alarm.com and XFINITY Home allow disparate smart devices to work together and add more value to consumers.
The Smart Home is already more than a flash in the pan. Typically, industries that are both exciting and sustainable are created over 5-10 years. Just look at Web 2.0 and social media as examples of industries that started as a fad and evolved into the next iteration of the internet. That's exactly what will happen with the Smart Home. In fact, it's happening already.