Internet of Things Observatory, holds the smart home market

Internet of Things Observatory

2020 was a year of light and shadow for the Smart Home market, with sales falling between -60% and -100% during the first lockdown and a robust recovery in the second half of the year. Overall, the market managed to contain the impact of the health emergency and recorded only a slight decline compared to 2019, equal to -5%, maintaining a value of 505 million euros.

The slowdown of the sector compared to previous years was also evident in other European countries, especially in Spain (stable at 420 million) and France (1.1 billion, + 3%), while Germany (2.9 billion, + 16%) and United Kingdom (2.8 billion, + 10%) maintained significant growth.

But the pandemic has also brought the home back to the center of attention of citizens and the government, which activated the “Superbonus 110 % ", A measure that has not (yet) had a direct impact on the Smart Home market but has generated a cascade effect on other measures, such as the Ecobonus or the Domotica Bonus, which have mainly favored the sales of boilers, thermostats and smart air conditioners.

The eCommerce boom has given a strong boost to the eRet channel ailer, which grew by 20% and surpassed the traditional installer supply chain in market share, which, while maintaining a leading role, lost 17% of the market. Multichannel retailers have had ups and downs, closing the year with a turnover slightly lower than that recorded in 2019.

The slowdown in the market has not diminished the level of knowledge and use of connected objects by of Italians: 69% of consumers have heard of a "smart home" or Smart Home at least once (+ 1%), 43% own at least one smart object (+ 1%) and two out of three declare that they often use purchased smart solutions.

These are the results of the research of the Internet of Things Observatory of the School of Management of the Politecnico di Milano, presented during the online conference "Stay at home, stay in a Smart Home: the smart home tested against Covid" .

"The emergency has halted the strong growth trend of recent years, but the Smart Home market has been able to withstand the impact of Covid, marking only a slight decline" says Giulio Salvadori, Director of the Internet of Things Observatory.

«An excellent result considering the context in which companies had to operate and the drop in sales recorded in the first part of the year. On the other hand, the pandemic has helped to renew the interest of Italians in the home and to grow the digital culture of users: two elements that will drive the market in 2021 ".

" In 2020 they emerged two trends that will trace the future of the Smart Home in the coming months "says Angela Tumino, Director of the Internet of Things Observatory.

" First of all, the progressive servitization, that is the transition from the sale of hardware only to the proposal additional services, such as the possibility of activating an emergency response in case of danger for the elderly who live alone at home. The second is the entry of new players into this market, from furniture manufacturers to large-scale distribution, from real estate to car manufacturers, expanding the boundaries of competition ".

According to the report, the new centrality of the home it gained during the pandemic and favored the sale of some smart solutions, while others were penalized. Security solutions - which include cameras, sensors for doors and windows and connected locks - hold the top spot by market share (21%) with € 105 million, but are down 30% compared to 2019.

The setback is also highlighted by the consumer, who still indicates safety as the first reason for buying a smart object but with a decrease of 9 percentage points (from 36% to 27%).

On the other hand, the growth of smart home speakers continues, which hook security solutions in first place, with a value of 105 million euros (+ 10%), equal to 21% of the market. In 2020, new partnerships were signed, features were added and the market consolidated, but it is necessary to strengthen integration with the Smart Home, given that only 14% of smart speaker owners use them to manage other smart objects in home.

Home appliances follow with 100 million euros, equal to 20% of the market and up by 17%, characterized by an expansion of the "connected" offer and with some types, such as robot vacuum cleaners and air purifiers, which marked a boom in sales. The use of smart features by consumers is also growing, equal to 59% of those who own large and small household appliances (+ 19%).

Boilers, thermostats and air conditioners connected to manage heating and air conditioning have benefited from the incentives of Superbonus and Ecobonus, marking a growth of 15% with sales of 75 million euros, equal to 15% of the market. Audio speakers (9% of the market) and connected bulbs (8%) are closing, whose sales are driven by numerous offers that include bundles with other devices.

Sales channels

The health emergency had a different impact on the individual sales channels. The eRetailers rode the boom in online purchases reaching 180 million euros, equal to 36% of the market and with a growth of 20%, driven by the reduction in prices deriving from the entry into the market of new competitors and the increase in promotions dedicated to smart products.

Multichannel retailers have also tried to take advantage of the push towards eCommerce by expanding the range of products offered online, but it was not enough to end the year positively: sales were equal to 95 million euros (-5%) due to the reduction in in-store purchases.

The traditional supply chain is the channel that has suffered most from the impact of Covid-19, due to the fear of contagion risk from Covid-19 which has led many people to be reluctant to welcome "strangers" into their homes, often opting for the installation of the devices independently.

Sales amounted to 175 million euros, with a decrease of 17% and the further loss of market shares, in favor of eRetailers, after those already registered in recent years (from 50% in 2018 to 39% in 2019 up to 34% in 2020). Sales of telco, utility and insurance remain limited for the moment, even if it has been a year of relaunch in terms of new integrated offers for the home.

Consumers

Over two thirds of Italian consumers have heard about the smart home at least once (69%, + 1%), with a higher level of knowledge among 18-34 year-olds (82%) and among users who are more familiar with technologies (89 %). The percentage of users who own at least one object is also growing (43%, + 1%) and the use of smart features (19% increased use, 13% reduced it).

Instead, attention to smart objects decreased, with 14% of the sample considering them less priority than before the pandemic, and the budget to be dedicated to these solutions, which was reduced by a quarter of consumers while it only increased it 5%.

Looking ahead, 62% would like to purchase at least one service associated with connected devices and a third would be willing to pay more for its activation, especially those related to medical assistance (35%) and the monitoring and optimization of energy consumption (31%).

Concern for privacy is decreasing, affecting only 45% of users compared to 54% in 2019, while the need is still strong to maintain control of connected devices in the home, indicated by 57%, with only 25% trusting would want their home to be autonomously managed by smart objects based on Artificial Intelligence.

Technologies

The evolution of enabling technologies for the Smart Home continues. "During 2020, the main interoperability consortia gave an important push towards the standardization of integration technologies, with the development of specifications and certification programs dedicated to interoperability", says Antonio Capone, Scientific Director of the Internet Observatory of Things.

The Connected Home over IP (CHIP) working group - led by the ZigBee Alliance and supported by the big OTTs Amazon, Apple and Google - started work in January 2020 by publishing the source code for the first reference implementations for connected devices and the architecture that compatible solutions will have to support to ensure interoperability between individual devices.

Open Connectivity Foundation (OCF) - consortium led by Electrolux, LG, Qualcomm and Samsung - instead focuses on the standardization of communication between the clouds of the device manufacturers, with the aim of guaranteeing the interoperability of different manufacturers, connected to their respective clouds.