Smart Home Devices: What’s Saturated and What’s Fast Growing?

Smart home devices are playing an increasingly important role in our daily lives. Thanks to rising broadband access, disposable incomes, and a growing variety of affordable and interconnected devices, our homes have become smarter and smarter. Almost every appliance or home fixture now has smart options in the market, including smart TVs, robot vacuums, thermostats, refrigerators, security systems, doorbells, and much more.

The dream of smart devices includes many positives to the discerning consumer, such as freeing up one’s time from unappealing chores, saving energy costs, and having more control and security, even at the expense of higher upfront costs for device acquisition and the loss of metadata privacy.

The smart home device market per se may not currently be as hot as other topics such as WEB3, the metaverse, AI, cryptocurrency, etc, but it is still a growing market with some surprising categories experiencing huge growth over time. Per market research company IDC (International Data Corporation), overall worldwide smart home devices are forecasted to grow at a CAGR (Compound Annual Growth Rate) of 10% from 2021 to 2026, but the growth of the each category within smart device market varies a lot. Some categories will see almost no growth while others will see tremendous growth.

If you make investment decisions involving the smart home device market, you advise others on opportunities in smart device and internet of things (IoT) areas, or you are curious on what the future beholds for smart home devices in general, you should pay attention to this article.

Source: IDC Worldwide Smart Home Device Tracker, April 2022.

Video Entertainment Devices

Video entertainment devices include smart TVs, streaming sticks, and internet-connected set-top boxes. The streaming hours grew tremendously in the past couple of years, especially during the pandemic. Watching shows using smart TV, sticks, or set-top boxes became hobbies for a lot of people while we were isolated.

Video entertainment devices make up 34% of all smart home devices in 2021. Even if video entertainment devices represent the largest percentage of all smart home devices today, it is forecasted to grow very slow, only at a CAGR of 3.8% from 2021 to 2026 because this market is highly competitive and almost saturated. Smart TVs make up the majority of the revenues in video entertainment devices, and this market is dominated by five TV manufacturers, including Samsung (29.5%), LG (18.5%), Sony (9.5%), TCL (8%), and Hisense (6.8%) according to analyst firm Omdia.

Home Monitoring / Security Devices

Home Monitoring / Security devices include security alarms, connected doorbells, cameras, and other devices that are used for home monitoring or security purpose. These devices make our home safer. Home Monitoring / Security devices make up 21% of all smart home devices in 2021, the second largest category after video entertainment devices. This category is also forecasted to grow very slow, only at a CAGR of 3.8% from 2021 to 2026. Players in this market include established and traditional alarm companies like ADT, Vivint, and Frontpoint, but also industry disruptors like SimpliSafe, abode, and Ring Alarm that offer DIY systems and flexible contracts.

Smart Lighting Devices

Smart lights like Philips Hue allow you to control the lights through an app when they are connected to the internet. The app allows you to change the color, luminance, set time to turn on/off and much more. Smart lighting devices only make up 10% of all smart home devices in 2021, but they are forecasted to be the fastest growing category of devices with a CAGR of 23.6% from 2021 to 2026.

Smart lighting devices are forecasted to grow the fastest because there are still a lot of untapped market potential in this area and the market is highly fragmented with no dominant players. Currently players in smart light devices market include Philips Lighting, Sengled, Lifx, TP-link, Wyze, Nanoleaf, Govee and much more, but none of them dominates the market.

Source: IDC Worldwide Smart Home Device Tracker, April 2022.

Other Smart Home Devices

The rest of smart home devices include smart vacuum cleaning robots, appliances, curtains, speakers, thermostats, and other internet of things (IoT) at home. This is quite a big part of overall smart home market, representing 35%. This category is forecasted to grow at a CAGR of 10.6% from 2021 to 2026.

In summary, video entertainment devices and home monitoring / security devices will see very slow growth because it is getting saturated, while smart lighting device market will see very high growth in the next 5 years.