The Business of Consumer IoT: Product Strategy in a Maturing Market

The smart home market is maturing, with 45% of US internet households owning at least one core smart home device. The customer base is shifting to a more mass-market profile, new competitors continue to enter the market, and category leaders continue to push the envelope of innovation and value to keep their competitive edge.

As the market matures, business leaders must adapt their product strategy, business models, and marketing messages for success.

This research surveys more than 100 executives across the connected home and consumer IoT landscape to better understand their view of the market, changing business strategies, key metrics for success, and top challenges facing the market.

Contents

Survey Methodology and Definitions

Business Respondent Profile

Business Markets

Connected Consumer Product Units Sold

Annual Revenue in 2024

Respondents’ Position

Respondent’s Functional Roles

Executive Summary

Business Expectation for 2025 vs. 2024 vs. 2023

Drivers of Positive 2025 Outlook

Reasons for Challenged Outlook

Connected Home Business KPIs

% of Units Connected to Internet

Engagement Frequency for an "Active" Customer

Smart Product Benchmarks

% of Businesses with Strategic Industry Partners

How are industry partnerships most beneficial to your business?

Top 10 Most Impactful Marketing Channels

Drivers for User Engagement with Connected Devices

Matter Standard Adoption

% Using AI Internally

% Using Consumer-Facing AI

IoT Market Evolution

Business Profile and Offerings

Company Product Profile

Business Models Employed

Type of Connected Consumer Product Offered

Types of Business Customers Served

Revenue Models & Channels

Revenue Models Employed for Connected Consumer Products and Services

Business Model Most Impacting Profitability

Services Offered in Connected Home Services

Paid Service Subscription Adoption

Paid Service Subscription Retain for 12 Months

Price of Basic-Tier Smart Products Compared to Traditional Products

Products Bundle with Smart Products

Sales Channels of Connected Consumer Solution

Return Rate of Smart Home Products Compared to Traditional Products

Most Impactful Marketing Channel

Business Strategic Partnership

"In a few words tell us how industry partnerships are most beneficial to your business."

Important Factors Influencing Vendor Selection

Evaluating the User Experience

Metrics Indicative of Successful Connected Consumer Products

Engagement Frequency for an "Active" Customer

Drivers for User Engagement with Connected Devices

Average Percentage of Smart Product Units Connected to the Internet

Effective Methods to Ensure Product Connecting Online

Services Offered to Help Device Set-up and Installation

Data Strategies & AI

Products & Services Guided from User Generated Data

Willingness to Pay Money for Insights Derived from User Data

AI Usage in Organization

AI Usage in Consumer Product and Service

Business Strategy to Computing and Storage Technology

Interoperability & Ecosystems

Home Automation Standards, X10 to Matter

Home Automation Standards Supported

Challenges to Smart Home Interoperability

Matter Standard Product Adoption

"What factors do you believe will be most critical to Matter’s success in the smart home ecosystem?"

Attitudes Towards Tech Giants

Business Outlook: 2025 and Beyond

Business Expectation for 2025 vs. 2024 vs. 2023

Drivers of Positive 2025 Outlook

Reasons for Challenged Outlook

Business Challenges in the Future

Goals for Connected Product Business in 2025

"What competitive advantages do you see as most critical for success in the smart home market?"

Connected Home Market Growth Outlook: 2025-2028