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Many of the big players competing in the smart home space made significant bets this past year. Among the tech titans, Apple rolled out an improved version of HomeKit; Alphabet-owned Nest overhauled its product line; Samsung launched a new SmartThings hub; and Amazon brought Echo to the mass market. Cable and telecom giants such as Comcast and AT&T continued to heavily invest into their platforms. Even Lowe’s got back into the game, revamping its home automation hub.
The flurry of activity underscores the desire across the board to capture share of a market that is still up for grabs and very much in its nascent stage. Even in the U.S., which leads in smart home adoption worldwide, there are currently only 4.6 million smart homes. But growing demand — consumer interest in smart homes has almost doubled over the last three years — is setting the stage for rapid growth. By 2020, Statista predicts, there will be 24.4 million smart homes in the U.S.
A fivefold increase in five years indicates sweeping changes are ahead. Here are my predictions for what will help drive the smart home market in 2016:
1. Voice becomes the preferred interface within the smart home
After years of incremental innovation, voice-activated services took a giant step forward in 2015. Amazon Echo and the new Siri-powered Apple TV highlighted the advances in and growing familiarity with this technology. These developments also underscore the opportunity for smart homes to employ a virtual assistant to complement the remote control capabilities within apps.
Voice control will democratize home management by enabling consumers of all kinds to take part, regardless of age or tech savvy. If visiting grandparents want to make sure the back door is locked, they will no longer need to download an app or navigate a control panel. A simple voice command does the trick. Just as the touchscreen was critical to the mass adoption of smartphones, voice control will be a key driver in causing the smart home to go mainstream.
2. Real intelligence makes its debut
While remote device control is one of the major value propositions for owning a smart home, it also puts a large burden on the consumer to proactively monitor and manage their home. This year we can expect some of this burden to be lifted as the smart home becomes more intelligent.
Real intelligence will come from a robust understanding of user behavior patterns and contextual suggestions to improve home living. For instance, remote control in a smart home currently lets you lock your door and arm your security system from your phone; real intelligence knows when you’ve left an empty house and automatically secures the house behind you. The home of science fiction lore is one that is a true intelligent assistant, anticipating your needs and enhancing your experience without your even being aware. This year we will see a bold step toward that idealistic future.
3. Full-service providers will continue to be ascendant … for now
Installing and maintaining smart home products remains a complex undertaking. This is why it’s not suprising that an Argus Insights report found that consumer demand for DIY connected home products is growing slowly. As the smart home market matures beyond intrepid DIYers, most consumers will opt for the white-glove treatment offered by full-service providers.
On the other hand, full-service providers will need to be aware of limitations in the customization and flexibility of the various products on the market. Consumers value choice, especially in a setting as personal as their home. Savvy smart home companies will cater to this need.
4. New kinds of partnerships will emerge
While we’re still in the early innings of this market, providers are testing a wide range of business models to determine what is most appealing to prospective smart homebuyers. I anticipate new types of partnerships will materialize as a byproduct of these experiments.
For example, auto insurance companies use devices in cars to segment users and offer discounts based on driving patterns. In 2016, property insurance companies will further explore partnerships with smart home companies, using their systems and data to both stratify customer risk and reduce customer home damage.
5. Additional compelling use cases will arise
Smart homes have initially gained traction by helping consumers with security and energy management — two large smart home categories. This year we will see more sharply defined use cases that will entice even more consumers to invest in a smart home. These could include caring for aging parents, monitoring pet health and safety, staying connected with children and teenagers, or remotely managing rental properties.
The coming year promises to build on the strong momentum of 2015 to deliver greater innovation, adoption, and competition than ever before. While the smart home market could head in a number of different directions, one thing is certain — 2016 will be an even better year for current and prospective smart home owners.
Matt Eyring is Chief Strategy and Innovation Officer at Vivint.
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