The global smart home market is forecast to grow by nearly a factor of five to reach more than $192 billion in 2023, up from $41 billion In 2018, according to the latest Smart Home Device Database from IHS Markit.

The fastest-growing device types in the market include lighting, smart speakers and connected major home appliances. The United States led all countries in 2018, representing about 35 percent of global market revenue. China was second, accounting for an 18 percent share.

“The brilliance of the smart home is that it can be molded to suit the requirements of any kind of consumer, from the strictest demands of power users to the simplest automation needs of dabblers,” said Blake Kozak, principal analyst for IHS Markit. “Irrespective of consumer tech-savviness, the smart-home market has bourgeoned into a consumer technology heavyweight, eager to move beyond the basics of security and single-family homes and into uncharted opportunities. However, these uncharted opportunities are coming with concerns about privacy and the technology’s readiness for primetime. The remainder of 2019 and start of 2020 will be a pivotal time for the smart-home market as companies and service providers fine-tune their strategies and reposition to compete with the smart home juggernauts—as well as newcomers looking to upend the status quo.”

Smart-home companies look to future opportunities

Companies looking to make waves in the smart home market include IKEA and newcomers such as Wyze, which offer ultra-low-cost devices. Major players also will make pivotal strategy changes to enhance their competitiveness. Examples include Google, which recently ended its “Works with Nest” program. In another example, Amazon Alexa achieved compliance with the Health Insurance Portability and Accountability Act (HIPPA). For its part, Ring is launching into the small-medium businesses (SMB) segment.

Comcast will focus on its Xfinity platform and hone its strategy around content deployment. Meanwhile, Centrica, which offers the Hive smart home, plans to focus its platform on energy and services.

Software, analytics and partnerships

A brief hiatus in hardware development has prompted smart-home companies to make advancements with software, analytics and acquisitions/partnerships. However, another hardware push is set to arrive soon, with the arrival of new smart speakers from Google, Apple and Samsung as well as offerings for insurance companies and apartment complexes.

US smart-home penetration rises, despite privacy concerns

US smart-home penetration exceeded 38 percent in 2018. However, the market’s further progress could be impeded by privacy concerns. IHS Markit is advising technology providers to take steps to alleviate consumer apprehension.

“Rapid innovation often breeds speculation and mistrust,” Kozak said. “Because of that, smart-home companies should be as transparent as possible regarding data usage. They also should focus on edge-based processing, which reduces the need for cloud-based computing systems that send private data over the internet. The smart home should also make greater efforts to comply with standards and regulations for sectors such as security, healthcare and senior care. By having more standards and regulations in place, innovation in the smart home will be less a source of anxiety for consumers and instead become a cause for optimism and a fulcrum for peace-of-mind.”