IoT Strategy

Trends Driving the Adoption of Connected Devices

by Patrice Samuels | Jun. 1, 2015

The various categories of Internet-connectable devices are at different stages of market adoption, but collectively are clearly a growing segment. Though computing devices maintain their prevalence throughout broadband households as critical components of the connected lifestyle, smart home, connected entertainment, and connected healthcare devices are gaining penetration in broadband households.

New research from Parks Associates highlights the adoption of new consumer technology services:

  • 80% of U.S households now have broadband.
  • 58% of Canadian broadband households have at least one connected CE device that allows online content to be accessed through a TV set, up from 48% in 2012. Nearly 40% have a gaming console connected to the Internet, 25% have a connected smart TV, and 14% have a connected streaming media device.
  • 16% of light vehicles in the U.S. will have an active Internet connection by year-end 2015.
  • 66% of U.S. broadband households have at least one Internet-connected CE device and on average they have over seven devices.
  • 27% of U.S. broadband households now own a streaming media device, and nearly 90% of these households have these devices currently connected to the Internet.
  • One-fourth of U.S. broadband households find value-added monitoring services very appealing.
  • One-third of broadband households plan to purchase a smart home device in the next 12 months.
  • 57% of U.S. broadband households subscribe to a subscription OTT video service.
  • 85% of U.S. broadband households took action to reduce their energy usage or costs in last 12 months.
  • Approximately 50% of U.S. broadband households have privacy or security concerns about smart home devices.

Along with the appealing value-propositions derived from the Internet-connectability of these devices, several other trends drive the development and adoption of connected devices.

  • Increase in broadband penetration – Due to high competition in the markets for broadband services, service providers have been very responsive to consumer demand for high speeds. Most have rolled out high-speed services capable of accommodating higher connected device traffic.
  • Development of wireless networking technologies – A growing number of wireless technologies now enable communication among devices. These technologies include: Wi-Fi, Bluetooth, Zigbee, Z-Wave, Insteon, DECT and Thread. Peer-to-peer solutions such as AllSeen, DLNA, and UPnP are also accelerating development; these allow direct device-to-device communication. Increased innovation in wireless connectivity serves as an important enabler for IoT device growth.
  • Growth in mobile control initiatives – Manufacturers of smart devices now make them controllable from other devices such as smartphones and tablets, both of which have high penetration rates in broadband households. Prior to the emergence of IoT, enabling control over smart home systems and devices often required the purchase and installation of a central controller as well as system user interfaces.
  • Reduction in the cost of connected devices – The cost of connected devices is lower than in the past, making them more easily affordable for more consumers. A reduction in the cost of producing technical products and rapid technological innovation have increased competition in the marketplace for connected technical products and services, forcing providers to accept lower margins to remain competitive.
  • Increase in market familiarity – The marketing efforts of large companies promoting smart home systems are gaining traction, educating the general public regarding the capabilities and value propositions of connected home systems. These companies include security providers such as ADT, cable operators such as Comcast and Time Warner Cable, and telecom operators such as AT&T.
  • Maturing markets for traditional devices – Mature markets require manufacturers to develop new features and methods to differentiate products in order to hold margin and avoid commoditization. Manufacturers of traditional household equipment add connectivity and new features enabled by this connectivity to increase the appeal of these products and drive adoption through upgrades and replacements of traditional products.
  • Evolution of cloud-based / virtual services and features – Cloud-based services and features have moved from novelty to core expectation. Consumers expect devices to have some connectivity and enhanced features that leverage that connectivity. With platform-as-a-service (PaaS) offerings available, companies can add cloud-based functionality without having to build out their own enterprise cloud infrastructure.

The net result of these drivers is a dramatic increase in the number of devices in the home and significantly higher industry expectations for future IoT growth.

Patrice Samuels

Patrice Samuels

Senior Analyst

Patrice Samuels studies digital home technical support services across global markets, with a focus on market trends, business models, and provider strategies. In addition to exploring events and disruptions in the technical support space, she examines pay-TV and broadband services in North America and Europe, digital media, and digital music services.

Patrice earned her MBA from Texas A&M University at College Station and BSc. in Psychology from the University of the West Indies in Kingston, Jamaica.

Industry ExpertiseTelevision Services, Broadband Services, Technical Support Services, International Markets, Digital Music

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