The Future of the Smart Home Market in 2015

Back in the 1960s, the creators of the animated TV series The Jetsons envisioned a future where the home would basically take care of itself. Their vision has now become a reality. No, not in the form of a robotic maid (although having your own personal Rosie would be cool) but rather with the arrival of smart home technology. And as we’ll cover in this post, the future is just getting started.

Before we offer a look into the future of the smart home for 2015, let’s take a quick glance at the present reality…

North America is currently driving the adoption of smart home services, with over 70 percent of the market – a market that is already starting to see consolidation. In the past year alone, Apple launched HomeKit, Microsoft made strategic partnerships with LG and Insteon, Samsung acquired SmartThings, and Google acquired app providers Nest Labs, DropCam, and Revolv.

So far, security has been the biggest driver for smart home adoption, as 35 percent of consumers mention intruder notification as their top priority, while 33 percent are focused on hazard detection.

So what does the future of smart home technology look like? And how might wireless carriers cash in on this trend? Here are a few predictions:

Increase in Open Platforms and Interoperability

There is a push for two configurations that will help fuel the smart home. The hub solution – using a central smart home hub – and the in-home device ecosystem, where devices will be controlled through common protocols, will both require an interoperability between devices. In addition, hardware interfaces will need to be reconfigured to work with a variety of software defined interfaces.

In the next year, we expect app and service developers to focus on the ability for their technology to be used in conjunction with a variety of different solutions.

Increase in Service Offerings

So far, individual apps have powered the smart home marketplace. While apps and devices are an easy way for companies to enter the market, it’s not the best way for companies to monetize smart homes. With larger companies already consolidating smart home apps and devices, they can begin to offer services that complement their apps. Smart home revenues reached $33 billion last year. They are expected to reach $71 billion by 2018. This revenue won’t be driven solely by apps and devices – which are getting cheaper and cheaper – they will be powered by services and other forms of recurring revenue. We expect larger companies to start acting on this notion in the coming year.

Greater Presence of Multiple-System Operators and Security Companies

Until now, high-end specialists such as Lutron and AMX have driven early smart home adoption with over 3 million subscribers. In the past couple years however, security and multiple-system operators (MSOs) have achieved the highest rate of growth. Currently security operators have only a little over 1.5 million subscribers, but we expect this number to grow considerably this year.

Smart home adoption reached record levels in the past year, but the next year is expected to be a major expansion for the market. As larger companies enter the market, consumers are seeing even more potential in connecting their homes. The question now is, what direction will the industry take, who will come out on top, and how will these companies monetize it?