Communication Service Providers (CSPs) may still drive growth in the smart home device market, but competition from the retail sector will “sideline” their channel sales during the 2019-24 period, the latest research from Rethink reveals.
According to the report, which forms the next phase of Rethink’s research into the smart home market, CSPs will only control 23.3% of total sales, whilst retail will account for 76.7% of total device additions.
In key geographic markets, device sales are expected to hit 356.3 million units annually in 2024, accounting for 80.2 million smart homes. According to Rethink, this represents an installed base of 1.3 billion smart home devices, with annual sales revenue to total $21.4b by 2024.
During this period, the average number of smart home devices per household is tipped to climb from 5.35 to 16.53 – with North America accounting for 40.5% of the market, Europe on 31.2% and APAC holding 28.3%.
Ultimately, CSPs have “collectively missed the opportunity” to create their own smart home platforms, the research firm said, and instead now find themselves in a marketplace dominated by consumer offerings.
To compound the landscape further, providers will also face the challenge of price and capability variance during the period.
“Every device in a smart home is at risk of being replaced by a much cheaper rival,” Rethink wrote.
“But as per-device costs come down, the number of installed devices should rise. Lower per-device prices are only going to help overall adoption.”
CSPs such as Comcast, Deutsch Telekom and Orange that have seemingly been the most ambitious in pushing SHaaS packages are now expected to “turn to Amazon and Google to try and cross-pollinate” devices.
Other platform approaches can be found from Hive and Nest, both of which have a utility-focused angle, while security service providers like ADT, Securitas, and Alarm.com are well-positioned to push SHaaS offerings.
“Away from the SHaaS angle, online retailers like Amazon and eBay, will flood the market with cheap devices, most of which will be used in the less mission-critical smart home roles, such as lights and sensors,” Rethink explained. “The high-value applications, such as thermostats, cameras, and media experiences, will remain the main area that established brands can compete in, but there will be a significant race to the bottom in hardware pricing.
“Smart home devices have already reached the point where they can be casually plucked off the shelf during a weekly grocery shopping trip, and it is this price-point that is going to drive volume.”
