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2016 Highlights

80 million smart home devices shipped worldwide, 64 percent increase from 2015
Personal assistants made strides with the launch of Google Home, Mykie from Bosch
and the announcement by Wynn to install Amazon Alexa in every suite.
Comcast acquired Icontrol Converge, Alarm.com acquired Icontrol Connect and Piper
Merger of AllSeen Alliance and Open Interoperability Consortium (OIC) to from Open
Connectivity Foundation (OCF)
Apple iOS 10.2 introduced notifications for motion and door sensors. Previously
notifications were limited to life safety devices and door locks – resulting in
HomeKit becoming a viable DIY option for security, not just automation
Automotive connectivity expands smart home integrations.

Predictions for 2017

The foundation for smart home was set in the last two years. 2017 will be a year of
minor business model modifications, pricing adjustments, security enhancements
(prevent cyber-attacks) and getting products and solutions out in front of the
consumer because lessons from past years demonstrate consumers have been slow to go
out and ask for smart home. Providers must take it to the consumer to achieve
greater adoption.
130 million smart home devices to be shipped worldwide in 2017, a 60 percent
year-over-year increase
Voice assistants (personal assistants) will become more commonplace, with many
additional brands hitting the market. The technology will improve to incorporate
multiple users and the specific lexicons required to interact with the devices will
dissolve into more natural speech
Device manufacturers and DIY platforms will place greater emphasis on real-estate
and the builders market. As the technology improves, more insurance companies will
adopt smart home packages
Paywalls for advanced services and features will begin to materialize, with DIY
systems that were 100 percent free in 2016. This may include contracts to monitor
appliance health and incorporate a service plan for maintenance.
Service providers (telecoms) across Europe and Asia will see higher adoption rates
compared with 2016
Interacting with smart home, the cars infotainment system will become commonplace
Greater emphasis will be placed on integrating appliances with open platforms, such
as Wink and Amazon Alexa
Security dealers will receive a boost from professionally monitored, self-installed
smart home systems. Dealers will also benefit from solutions geared toward apartment
dwellers.

Analysis for 2017

An important year for smart home, 2017 will be the launch-pad year for EMEA and APAC
adoption rates along with consolidation and maturity in North America. For the
market as a whole, professional and DIY channels will continue to be fierce
competitors, with a hybrid of the professional channel ultimately winning out at the
end of 2017.
Although DIY companies such as Apple will make large strides, DIY solutions will
continue to suffer from mixed reviews and high upfront costs. As a result, the
non-smart home enthusiasts will opt for professional support until DIY platforms
become more reliable. As the price for connected devices come down, DIY systems will
benefit until the cost of back-end services and maintenance allow service providers
to lower monthly subscription fees.
2017 will also be a transformational year for the user interface (UI) and hardware.
Voice control will continue to impact the way in which users interact with the smart
home; however, IHS Markit believes voice will not entirely replace mobile devices
until voice becomes more naturally interactive.
For hardware, routers, televisions and OTT devices will take the place of the
proverbial smart hub starting in 2017. Moreover, 2017 will bring more intelligent
systems. IHS Markit believes that telecoms and security providers will start to
deploy smart homes, not just connected security solutions such as video cameras and
intruder alarms. This will lead to more use of the data that is being collected.
Retailers and other service providers will begin to offer more services around
maintenance such as monitoring the usage of appliances to prevent malfunction or the
automated scheduling of contractors to support failing HVAC equipment or plumbing
leaks before they become a major problem.
Lastly, consumers will become more educated on smart home in 2017, which will drive
revenue for all aspects of the market. This education will be driven through the
media and tangible use. For example, Google Home was featured on the ABC show,
Modern Family and Amazon Alexa will be used in hotel rooms and cars. Real-estate
showrooms are also getting involved by showcasing smart home functionalities, while
builders are pre-installing smart home in select developments – resulting in a
bigger marketing push compared with previous years.