Smart Home Companies Focus on Increasing the Value Proposition

by Elizabeth Parks | May. 11, 2022

Despite slow and steady growth of the smart home, issues related to perceived weak value proposition still top the list of purchase inhibitors for smart home devices. Now, 37% of US internet households have a smart home device with smart doorbells topping the list at 15% adoption. Smart light bulbs, networked cameras, and smart thermostats are the next highest adopted smart home devices according to ongoing Parks Associates quarterly research of 10,000 internet households.

Parks Associates 26th annual CONNECTIONS: The Premier Connected Home Conference, held May 17-19 at the Omni Frisco Hotel in Frisco, Tx focuses on the growing role of broadband and connected devices, systems, and services in the home. Our research shows a rising average number of connected devices in the home, jumping from 13 in 2020 to 16 at the start of 2022, which includes a mix of smart home, connected health, and connected CE devices. The event will address the current and future opportunities for the connected home, including new business models, marketing and partner strategies, and the expanded opportunities as a result of converging ecosystems.
As smart home players drive market growth, companies are working hard to create more compelling use cases, leverage AI capabilities for a more enhanced user experience, and focus on safety and security use cases, along with energy management.

As smart home players drive market growth, companies are working hard to create more compelling use cases, leverage AI capabilities for a more enhanced user experience, and focus on safety and security use cases, along with energy management.

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Creating more compelling value propositions is at the top of the list for smart home solution providers. AI and machine learning are expanding the value of smart products and systems. Individual products leverage analytics to automate existing controls and add new features. Analytics of unstructured data, such as audio and video, as well as analytics based on combining data from multiple sources, are still in their infancy. However, voice and video analytics are already transforming the user experience. In the security space, market leaders are differentiating their offerings with AI-driven features and services that not only improve the user experience but also reduce false alerts and inform context awareness for greater personalization and automation.
Networked camera manufacturers are now leveraging video analytics extensively for residential security. The technology can identify people, objects, animals, packages, license plates, and other subjects of interest visible in video camera feeds in order to interpret the meaning and context of their presence near or in the home.

Artificial intelligence and big data applications can continually add more value to smart home and IoT solutions at the application level, often without requiring substantive hardware changes. Companies are enhancing traditional single-sensor devices with additional sensors for motion, temperature, video, audio (near- and far-field), humidity, light, and more. Additional sensors provide more context for device control, ultimately feeding artificial intelligence applications with data that can provide more predictive and personalized automation.
For example, when multi-sensor devices are integrated into and managed by smart home or security services, they create value that can be captured by whole-home energy management services, connected health monitoring services, or insurance risk mitigation services.
Smart home providers need to communicate product features in ways that demonstrate how they address or provide solutions to current consumer challenges – especially given that consumer familiarity with many smart home products is low. Current owners of smart home devices express stronger intention to purchase new smart home devices and are the ones who are buying more and more devices. Currently, smart home device households have an average of 8 smart home devices. 

In order to help consumers get the most value, smart home platform providers are building recommendation engines that suggest shortcuts/automations/events/routines that consumers can enable, given the devices that they currently have in their home. For example, if a platform provider identifies that a consumer has both a smart thermostat and a garage door opener, the provider may suggest a shortcut that automatically changes the thermostat to “Away Mode” once the garage door is locked. These recommendations can also be leveraged to drive device adoption. Expanding recommendations to include devices that the consumer does not already own may encourage adoption of additional devices—if the use cases that leverage those devices are appealing.

Parks Associates research indicates that consumers find smart home use cases focused on home and personal security the most appealing. Features that alert consumers to unusual changes that may put the consumer or their home at risk are particularly appealing. Smart home use cases that help consumers to minimize energy consumption and protect their assets are also highly appealing.  

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Manufacturers can also learn a lot about consumer smart home device interest using devices without specific functionality such as a smart plug. Data attained from all devices can provide insight into how consumers use the devices in order to create new features and improve user experiences. However, devices such as smart plugs can also provide valuable insights into the avenues for growth in smart home industries. For instance, as part of the set-up process for a smart plug, consumers could name the device that they have plugged into the outlet. Since smart plugs allow consumers to control a broad range of devices, this strategy provides new information on the types of devices for which consumers want to have greater control.

For information on Parks Associates research, visit www.parksassociates.com We love feedback. Please reach out to me or our team with any questions. Thank you for reading our research.

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Next: Health and Wellness Solutions: Expanding the Market: Insights from American Heart Association
Previous: The Smart Home Buyer Journey: Complex and Personal

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