Smart IoT Device Brings Future Homes into Focus, but Sparks with Interoperability Issue

Technology, Consumer Staples Author: Sasha Chen, Fuller Wang Jun 02, 2022 10:07 PM (GMT+8)

With the dawn of home automation having been heralded for years, the 'smart' label of in-home products as forthcoming additions has become ubiquitous in the sustainable technology market. Global companies sought to further underline their credentials in home automation which led to a massive stretch of the imagination from smart light bulbs and thermostats to doorbells.

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In short, this article gives an in-depth overview of the global smart home market and China's growing position in the adoption of smart home space.

Among rising stars in home automation, more are trying to sprint ahead of their competitors in leveraging IoT-powered connected solutions that are staying at the top of buyers' wish lists. Additionally, many globe-trotting pundits are advocating making the world more sustainable, with vendors and residential complexes committed to clean energy initiatives and tracking daily energy consumption. Either for cost savings, conservation, or convenience, smart home devices have been constantly gaining traction.

Not only have smart home devices been installed in residential complexes, but retail warehousing and hospitality buildings have also leaned considerably toward similar solutions. As common smart home appliances rely on IoT cloud-based services, remote computing, and analytics, more consumers expressed their willingness to use smart speakers to control daily electronic devices, such as lights, thermostats, door locks, TV, and stream media players. Inevitably, the global boom of the smart home market has no longer been a secret for years. According to Emergen Research, the global smart home market is expected to reach USD 184.1 billion in 2028 and register a steady CAGR over the forecast period. 


Tightening Grip on Energy Management  

The first thing that comes to mind when it relates to smart home devices is their high-value insights to consumers about their energy usage. These devices can be integrated into a monitoring or automation service to create additional efficiencies and peace of mind for consumers and business owners. 

The global trend of smart home appliances has continued to thrive led by some global behemoths, such as Samsung, Amazon, and LG Corp, explained Elizabeth Parks. She is the President and Chief Marketing Officer at Parks Associates, a Texas-based market research firm that has been focused on researching the emerging IoT market and smart home systems since 1986. 

"It is definitely a global trend, especially when it leans into energy management. The main players are looking into the consumer tech space because of all these blur lines that come with remote work in recent years," said Parks who has been in this business for 36 years. 

As a result, a wide variety of smart home devices often pair with battery back-ups and on-site power generation to ensure real-time energy monitoring. For instance, a smart thermostat can trigger on energy-saving mode and return to temperature control when connected sensors indicate a window has been opened. 

"The role of energy management for the growth of smart or connected home space sits right behind convenience, safety, and security as one of the biggest drivers in the adoption of smart home products. The smart thermostat is the first smart home device that was introduced and also considered as a hero device," said Parks. 

It is worth noting that the boom in the smart home market is not confined geographically. Not only in the United States or Europe but also in China's smart home market, energy management is among two key segments along with home automation, already reaching a combined market share of over 60 percent a few years ago. Furthermore, the Chinese government has supportively taken multiple initiatives to promote green energy consumption and IoT-powered devices. According to the China Quarterly Smart Home Device Tracker Report by International Data Corporation (IDC) in Q4 2021, the total shipment volume skyrocketed to 63.37 million units, an increase of 4.1% year on year, 

Specifically, 2021 was a banner year for China's smart home market. Among different smart home devices, smart speaker shipments drove an increase in market shares of over 15% year on year. There were over 68 million households using smart home products in China. Some of the overweights include Xiaomi, Alibaba, Haier, and others who have already stepped into the smart home market with the increasing demand. 

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By elongating the development trend of smart home devices, it is undeniable that in the next ten years, smart home markets will experience a significant transformation and enhancement in technologies, as well as being quickly adopted in multiple scenarios. "Right now, we are at a great point in the lifeline of connected home space. Many of these silo ecosystems have grown up. There are intersecting points that we have visions of whole-home control and renewable energy push," indicated Parks.

Interoperability & Data Privacy 

On a wider scale, in the smart home space, data privacy is an unspoken consensus around the globe. "Data security continues to be a growing and the biggest issue with more devices and intricate data while adopting the trend of shifting to the smart home space. We have a very fragmented market where consumers can purchase various products from different channels," explained Parks. As her company surveyed 10,000 broadband households quarterly, Parks highlighted that 30% of consumers said that they have less trust in companies who owe their data, with the privacy issue that is red underlined. 

The interoperability issue has continued to drive software companies, manufacturers, smart home device retailers, and other broadband companies to improve their services around the world. For example, in addition to the control and connectivity appliances delivering smart analytics, China has held security as the second-largest application segment. In fact, China's security device segment is expected to achieve an annual growth rate of 15.75% from 2022 to 2026, with more than 115.5 million users and active households by 2026. More evidence pointed to the fact that young adults and the high-income population are two major consumer groups purchasing smart home security appliances, accounting for 37.5% and 42.7%, respectively. 

With the increased demand for security devices, privacy concern is also among the top reasons that have impeded the adoption rate of smart home space. For instance, Chinese multinationals including Huawei, Tencent, and Xiaomi have all launched smart home initiatives through intelligent control. But interoperability with third-party hardware creates new insurable risks during the advent of smart home technology. To overcome this challenge, Huawei's smart home ecosystem consists of solutions to bring the strengths of network pipelines, massive user numbers, and business services to bear in the smart home arena. For example, Huawei's LinkHome mobile app uses the NetOpen management system to integrate and enable interoperability between different vendors' applications under a unified interface. 

Besides corporate efforts, many organizations are making significant progress in uniting members together. Taking an example of the Connectivity Standards Alliance Member Group China (CMGC), its council members include some of the leading Chinese smart home service providers, including OPPO, Tuya, Shuncom AIoT, ORVIBO, and Heiman. One of the Alliance's projects called Matter is designated to promote and achieve smart home device interoperability in China by harmonizing technology standards and ecosystems. With the common goal of unifying standards promising simplicity in the smart home industry, China and other global countries are stepping at the forefront of fortifying interoperability, reliability, and security as the foundation for connected home space. 

The Bottom Line

The globe is hurtling into the smart home era with new tech gadgets released nearly every single month. China has been also increasingly showing its growing position by offering a preview to the world of what's technically possible in terms of smart home devices. On top of several benefits, such as energy-saving, convenience, and independent living, the smart home space lits up with security improvements and brings the future homes into the world's focus.