The Worldwide home automation technology market is witnessing remarkable growth thanks to the demand for home automation and security systems that improve the efficiency of all kinds of homes. Home automation technologies not only simplify living, but also increase energy efficiency and secure lives. One of the widely used home automation and control systems is lighting, which results in significant energy savings. The largest segment of home automation market, however, is in entertainment controls, which include audio/volume control, home theatres, keypads, multi-media room controls and touch screens.
The home automation market is divided into different segments, namely: HVAC, Lighting, Audio and Video, Security, Intercom, Robotics and other systems. They may be available under three main categories: Power Line systems, Wired Systems and Wireless Systems. Power Line systems leverage the existing power lines of your home to transmit information to a common control interface. They commonly use X10 technology, an international and open industry standard for communication among electronic devices used for home automation. The Wired Systems use Cat 5 cables to communicate information, usually connected to a proprietary control system or a more open control center. Wireless Systems do not require cabling behind the walls. Today wireless home automation systems also integrate with Wi-Fi networks, so they can be integrated into existing home networks, including computing networks.
Globally there have been recent developments on both the demand and supply side of home automation products. The rise in standards of living, combined with the growing awareness of both security needs and energy efficiency, is driving demand. Though the economic crisis has somewhat dampened the construction of luxurious automated homes, researchers are of the view that it will once again flourish in the coming years, as the technology-savvy young generation of today becomes home owners in the near future.
arket is mainly driven by the declining cost and complexity of home automation products. Once perceived as “elite class-only,” the home automation products are gaining widespread popularity mainly because of the development of standard-based technologies that can be integrated into existing communications/utility infrastructure of modern homes, resulting in lower cost systems that eliminate the need for bulky hardware and cabling.
In 2008, ABI Research predicted that the number of home automation systems — both professionally installed and “do it yourself” (DIY) — will reach more than 4 million units in 2013, growing more than 50 times in number since 2008. This growth is mainly attributed to “mainstream” systems based on standardized technologies and packaged components available in the market. Another growth driver is the popularity of managed home automation services offered by telecom and broadband service providers. According to ABI Research, managed home automation will show the strongest performance, with an anticipated 1.3 million shipments in 2013. Managed home automation will be offered as part of a “quintuple play” bundle and will provide the functionality through remote monitoring via computer or smartphone.
The latest report on the global home automation and control systems market from Global Industry Analysts predicts that the global market for Home Automation will touch US$2.8 billion by the year 2015. The report, titled “Home Automation: A Global Strategic Business Report,” says the importance for safety and convenience, technological advancements in home automation, and rising demand from both European and emerging countries are the major factors driving growth in the home automation market.
North America represents the largest market for home automation worldwide. According to a recent research from Electronics.ca Publications, the US market for home automation systems and devices was worth approximately US$3.2 billion in 2010. It is expected to grow to almost US$3.4 billion in 2011, and it is expected to exceed $5.5 billion in 2016, a CAGR of 10.5 percent during this time.
Lighting, home entertainment, and security systems accounted for nearly 58 percent of the US home automation market in 2010. These components of home automation are estimated to be around US$2.1 billion in annual sales and are expected to reach US$3.8 billion by 2016, growing at a CAGR of 12.2 percent. The remaining 42 percent of the American home automation market consists of heating, ventilation, and air conditioning (HVAC) and energy management. This segment is expected to reach US$1.7 billion by 2016 at a CAGR of 7.4 percent between 2011 and 2016, the report said.
Earlier this year, Frost & Sullivan conducted a research of Home Automation market in Europe. The research, titled “European Home Automation Markets,” finds that developments in adjacent sectors have created opportunities for Home Automation to reach a wider audience. From estimated earnings of €164 million in 2010 (approx. US$215 million), the European home automation market will reach €228 million (US$300 million) by 2015, according to Frost & Sullivan. Europe represents the fastest growing regional market for home automation worldwide and is poised to register a CAGR of more than 10 percent over the analysis period.
In the Asia-Pacific region, the growth of home automation is being fueled by high-speed broadband connections, developments in home networking and advancements in 3G communications technologies. Earlier, In-Stat estimated that the total Asia-Pacific home automation market will soar to over US$500 million in 2011. Japan and South Korea will continue to take the lead position in the region while Australia and New Zealand present high development potential, according to In-Stat. Among these, South Korea has the highest penetration of home automation systems and services in the region. In-Stat study links the growth of home automation in this region not only to the interest of broadband service providers who hope to increasing average revenues per user (ARPU), but also to mobile operators that can link home automation to 3G services. The report rates China, Taiwan, Thailand, Hong Kong, and Singapore as potential huge markets.
In India, the home automation market is growing at a compound annual growth rate (CAGR) of 30 percent. Smart home products are becoming an affordable luxury to the average Indian, while the increasing awareness of energy efficiency and smart living has been growing over the last few years. However, India is still not the lucrative choice for home automation majors. Honeywell Security, which has been prominent in the global home automation business over the last 20 years, launched its home systems business in India only in 2006. Legrand India, a subsidiary of the Legrand group based at Limoges, France, a manufacturer of electrical installation and information network products, has been in the smart home products space in the country since 2003. Researchers, however, conclude that home automation has a long way to go in India, but surely the interest is catching on.
The global economic recession and a fall in the real estate market has had a negative impact on the home automation sector. However, the market is picking up, mainly because of the emergence of cost-effective home automation services. Conventional home automation systems are likely to expand with more technology innovation and competitive offerings from leading players. The DIY segment is also expected to exhibit significant growth over the coming years. Mobile devices like smartphones and tablet PCs have created innovative and affordable home automation systems by offering a luxurious and user-friendly interface, which has helped popularize them to a wider customer base. The convergence of these technologies has made installation and adoption of home automation systems simpler and more cost effective. Smartphones and tablets can also be used in collaboration with the Internet and wireless technologies for monitoring or signaling purposes.
Price reduction is another major trend expected in the home automation market in the coming years, mainly driven by increasing competition among market participants and the pressure on manufacturers to reduce profit margins during the economic recession, according to Frost & Sullivan. The most important factor that has influenced home automation system prices is the introduction of the tablet computer, substantially reducing the cost of the overall system, particularly in the luxury segment of the market. This makes home automation more affordable, boosting sales of the mid-range product segment, the research agency said.
“The introduction of tablet computers – particularly Apple’s iPad – has had a huge impact on the luxury segment of the home automation market,” said Frost & Sullivan Research Analyst Hammam Ahmed. “Using a touch screen tablet computer as a user interface can save up to 50 percent of the home automation system price; home automation manufacturers should therefore shift their R&D focus from hardware user interfaces to software applications and embrace the new technology.”
Advancements in wireless technologies have also resulted in the growth of the control systems market, as they allow users to control systems remotely and from great distances. Advanced technologies like Z-Wave and ZigBee are enabling the production of cost-efficient solutions, making them affordable to even low-income customers. The popularity of low-cost home automation systems will expand the reach and potential of this market. Further, the increasing availability of peripheral components for low-cost home automation systems will fuel further revenue growth for manufacturers.
The biggest impediment to widespread adoption of home automation products are their high prices. Added to the cost of home automation technologies is the price of bandwidth that rules the proliferation of multimedia, which is an integral part of home automation systems. Deployment costs and labor are site-dependent and may represent a constraint until uniform packages are launched.
Home automation vendors are expected to deliver customized solutions that suit the demands of individual customers. This results in a lack of proper service strategy, including SLAs and pricing plans. Standardization of home automation technologies and their seamless integration into existing home infrastructure will help address some of these challenges. Service providers are also challenged with the huge infrastructural costs associated with providing seamless communications to emergency home automation systems. In the present scenario, they are able to offer these services to areas where the penetration is high or likely to be high in the near future.
Major players contributing to the growth of the global home automation market include AMX Corporation, ABB Ltd., Control4, Crestron Electronics Inc., GE Security, Haier Group, Home Automation Inc., Honeywell International Inc., Lightolier Controls, Lutron Electronics Inc., Schneider Electric Ltd., Siemens AG, SmartHome Controls Ltd., Smarthome Inc., Vantage Controls Inc, among others.
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