High costs continue to stifle smart home growth – report


The study states that the smart home industry has generated US$550 million in venture investment from 2005 to 2014 and points to large mergers and acquisitions in the industry.

These include Google’s acquisition of Nest and Dropcam, Samsung’s purchase of SmartThings, and Flextronics’ acquisition of Wink.

According to Alex Herceg, research analyst at Lux Research and lead author on the report, said that there has been a “dramatic shift” in the number and capabilities of smart home devices, however, hardware cost reductions have not kept up with the rate of innovation.

Mr Herceg said: “In many applications, benefits are increasingly complex to quantify, making it a challenge to communicate the value proposition to consumers.”

The average cost of a fully enabled smart home sits at US$6,700, notes Lux Research.

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The report – ‘Smart Homes: Chasing the Elusive Dream’ – also highlights several trends in the smart home space.

Smart home platforms, thermostats and connected apartments are gaining increased popularity among consumers.

In terms of smart home platforms, Wink is one to watch, according to Lux Research.

It states that Wink has the most company partners overall, compared to with many large companies. Nest, it says, has the most start-up partners as well as more capabilities than any of its industry peers.

Thermostats are also a dominant offering in the smart home market.

Lux notes that smart thermostats form the most saturated smart home segment, offering energy savings between 12% and 30%, at a cost of US$250 to US$400.

The firm adds that smart “connected” apartments are nearing “mass adoption”. A strong service-delivery model is helping to gradually write off the initial costs.