Smart Home Market Size, Share, Forecast (2021-2026)

The smart home market is projected to grow from USD 84.5 billion in 2021 and is projected to reach USD 138.9 billion by 2026; it is expected to grow at a CAGR of 10.4% from 2021 to 2026.

The factors such as increasing number of internet users and growing adoption of smart devices along with growing need for energy-saving and low carbon emission-oriented solutions are the key factors driving the market. However, high cost of switching for existing smart device consumers is the key factor limiting the growth of the smart home market.

The technological developments in AI are anticipated to drastically improve the operational capabilities of smart home products. Smart home and artificial intelligence technologies are developing rapidly, and various smart home products associated with artificial intelligence (AI) are proving beneficial towards improving the quality of living for occupants. AI plays a vital role functions in various areas pertaining to smart homes, namely, activity recognition, data processing, voice recognition, image recognition, decision-making, and prediction-making. For instance, AI based voice recognition is used in smart home products such as Amazon Alexa, Google Home, Ivee Sleek, Jibo, Athom Homey, Apple HomePod, Josh Micro.

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The integration IoT and cloud connectivity with smart home platforms can facilitate, transformation of the concept of smart homes by embedding intelligence into sensors and actuators, networking of smart things using the corresponding technology, facilitating interactions with smart things using cloud computing for easy access in different locations, increasing computation power, storage space and improving data exchange efficiency. The internet of things (IoT) paradigm refers to devices connected to the internet. Devices are objects such as sensors and actuators, equipped with a telecommunication interface, a processing unit, limited storage, and software applications. It enables the integration of objects into the internet, establishing the interaction between people and devices among devices. IoT and smart home can benefit from the wide resources and functionalities of cloud to compensate its limitation in storage, processing, communication, support in pick demand, backup and recovery. For example, cloud can support IoT service management and fulfillment and execute complementary applications using the data produced by it. Smart home can be condensed and focus just on the basic and critical functions and so minimize the local home resources and rely on the cloud capabilities and resources.

The market for smart furniture is expected to exhibit the highest growth during the forecast period. The shifting trend of consumers towards adoption of furniture that is interconnected to IoT coupled with increasing disposable income and changing lifestyle is expected to contribute to the growth of the market. In addition to this, there is a rising concern among individuals due to escalating property prices, because of which many people are opting for smaller living spaces. Owing to space constraints, consumers are preferring smart furniture that saves a significant amount of space. Smart furniture offers multiple benefits to consumers as it occupies minimal space along with being interactive and transformative. Thus, considering the growing trend of urbanization as well as minimal living spaces, smart home players can focus on this product segment in order to augment their revenues.

The market for behavioral type software and service is expected to hold a larger share during the forecast period. Behavioral software and service is increasingly being utilized in smart home devices as it helps in enhancing the energy efficiency of these homes and minimizes energy bills based on behavioral data analysis. Behavioral software and services possess the ability to learn user behavior and accordingly render a smarter control of appliances, which is leading to an increase in its demand. As this type of software and algorithm is the most widespread due to its initial adoption and low cost, it provides a profitable opportunity for market players.

In terms of geographic coverage, the smart home market has been segmented into 4 regions, namely, North America, Europe, Asia Pacific (APAC), and Rest of the World (RoW). The market in APAC is expected to record the highest growth rate during the forecast period, primarily due to countries such as China, Japan, and South Korea contributing to the overall market share significantly. APAC region houses numerous key players such as namely Samsung Electronics (South Korea), Panasonic (Japan), Haier Smart Home (China), LG Electronics (South Korea), and Sony (Japan) which always focus on technological innovations and providing high-end smart home products at economical prices. Various factors like changing lifestyles, increasing discretionary income, growing geriatric population, growing inclination toward smart building infrastructure in developing economies of the region, several initiatives are undertaken by the government to support energy-conservation and adoption of low-carbon oriented solutions, the presence of a huge customer base, and rapid technological advancements in smart home products are driving the growth of the market in APAC. Hence APAC presents a large market opportunity for smart home products and offerings.