The 2017 Smart Home Insider Survey
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A survey of smart home industry insiders highlights the trend of voice control and virtual assistants as the dominant story of 2016, while concerns over privacy and security are expected to shape 2017. The majority of experts view consumer confusion and market fragmentation as significant barriers to adoption, with a desire for greater consumer education on smart home benefits. Overall, the outlook for the industry in 2017 is mixed, with some optimism tempered by skepticism about mainstream consumer uptake.
The 2017 Smart Home Insider Survey
- 1. SMART HOME INDUSTRY INSIDER SURVEY 2017 Brought to you by NextMarket Insights & The Spoon Author: Michael Wolf
- 2. Executive Summary In December of 2016, NextMarket Insights surveyed a group of smart home industry insiders to ask their opinion about what they thought about the year that was and what they expected in the coming year for the connected home. Here’s what we found: Alexa and voice interfaces were the clear winner in 2016. 7 out of 10 respondents said that virtual assistants and voice control were the story of 2016. While many expect voice and virtual assistants to be important this year, things are not as clear cut. Many believe the defining story of 2017 in smart home will be the growing need for more robust solutions for privacy and security, likely a direct result of the wake up call that was Mirai botnet attack last fall. Others see machine learning and artificial intelligence as a candidate for the defining trend of 2017, while a smaller number see mesh Wi-Fi and robotics as important but having a lesser impact. Many saw 2016 as a disappointing year overall in the smart home, with nearly half (49%) feeling the smart home market didn’t meet expectations last year. Their outlook for 2017 is a more optimistic – if tempered – one. About 39% see the smart home as having a ”great” year this year, while 54% see the market as performing “Ok”, where it will continue to serve mainly early adopters.
- 3. Executive Summary (cont’d) When asked what they saw as the biggest hurdle to the adoption of the smart home, the number one choice by our panel of experts was consumer confusion over technologies and products to choose. Other hurdles to broader adoption included lack of a compelling need for consumers to buy smart home products and too much fragmentation in the smart home market. These concerns about smart home fed our respondents’ wishes for the future of the smart home when we asked them the one overarching goal they’d like to achieve in the smart home in 2017. Tied for the top response was greater consumer understanding about the value of smart home and reduced fragmentation. Overall, this survey of smart home experts shows an industry at an inflection point, one that has learned some hard lessons about product value and approachability, the need to industry cohesion and standardization and is starting to coalesce around innovative and disruptive new approaches taken by industry leaders such as Amazon and Google.
- 4. About This Survey This survey was conducted Nov-December of 2016. We surveyed 141 industry executives employed in the smart home, IoT and related industries. Unlike consumer surveys, industry surveys are meant to provide an understanding of what a knowledgeable audience thinks will happen to their market sector. To that end, we are able to detailed, industry specific questions. We are also able to ask open-ended questions to let our audience educate us, the readers, about their market and what they are thinking about. In between each chart slide you will see a highlighted quote/observation (sometimes edited for readability) from one of these open-ended responses from our panel of industry insiders. To see the full appendix of open-ended responses to this survey, simply go visit the Spoon here. The study was authored by Michael Wolf.
- 5. According to our panel of industry experts, the clear choice for biggest smart home story of 2016 was: Voice control and virtual assistants like the Amazon Echo/Google Home. This shouldn’t be a surprise to people who follow the smart home, as the smart home virtual assistant, pioneered by Amazon with the Echo/Alexa, has become an early consumer mass market hit, with the installed base of Echos likely exceeding 7million by end of year. The success of Alexa as a voice interface was a revelation for an industry that had watched smartphones and apps become the primary IoT control point the past few years. Fixed natural language user interfaces in the home present entirely new user-interaction paradigms, while a robust ‘Skills’ platform also presents an opportunity to friction around potential integration for hardware providers when compared to more complicated platform integrations (such as HomeKit). While a distant second, 7% of industry insiders viewed the growing interest in mesh Wi-Fi as an important story. 3% 4% 6% 7% 7% 69% 0% 10% 20% 30% 40% 50% 60% 70% 80% Nest's struggles/ departure of Tony Fadell Continued growth of managed smart home providers Success of focused point products The growing interest in mesh Wi-Fi products Steady growth of smart home security Emergence of voice control & virtual assistants What Was the Smart Home Story of 2016?
- 6. “Early adopters are moving away from their previously purchased point devices and into products that are more compatible across a particular platform. We’ll also see continued subscriber growth of Vivint/Xfinity home with entry level, lower price point, smart home / energy management offerings.”
- 7. Looking towards 2017, our panel of industry insiders are split more evenly on what could define the year in smart home While the biggest percentage (29.8%) believe voice control will be the biggest story in 2017, a close second believe IoT security and privacy could the biggest headline. AI and machine learning came in a close third at 27%. The prominence of voice control and AI/machine learning in our survey underscores the growing importance of virtual assistants such as Alexa and Google Home in 2017. The rapid growth in the number of Alexa skills, Amazon’s continued evolution of the platform and recent efforts by large technology platform players like Google, Apple and Microsoft to bolster their own voice interface and AI competencies for the connected home are strong indicators our panelists are on the right track. The Mirai botnet attack was a wakeup call for the industry, leading to much higher awareness around security and privacy early in 2017. For established companies, cohesive IoT security strategies will become a requirement in 2017. However, we also expect more high-profile IoT security breaches like Mirai as the year progresses, which will raise the prominence of the topic even further and possibly create more concern about connected products in the minds of consumers. 3% 4% 7% 27% 29% 30% 0% 5% 10% 15% 20% 25% 30% 35% Home robotics and the smart home Connected commerce platforms (i.e. Amazon Dash) Mesh Wi-Fi Artificial intelligence and machine learning IoT security and privacy Voice control and the smart home What Will be Defining Smart Home Story of 2017?
- 8. “Security is going to be an issue, but adoption is the key barrier to transpose in the near term. If products don't become easier to setup and use, we will struggle to reach mass market adoption. Once there is semblance of mass market adoption, security will become a real issue in consumer's minds.”
- 9. Nearly half of our smart home industry insiders felt the smart home had a disappointing year in 2016. 49.3% of respondents said the smart home performed below expectations in 2016, compared with 4 out of 10 respondents (40%) who said that the smart home met expectations in the last year. Only 11% of respondents said that the smart home exceeded expectations for the year. According to our respondents, some of the problems plaguing the smart home industry according include continued technology and standard fragmentation, confusion among consumers about the value delivered by smart home technology, as well as an inability by the smart home industry to adequately articulate smart home. The good news is the industry seems to recognize their problems. Regarding fragmentation, the challenge is developing solutions in the face of continued divergent agendas among large technology companies, standards bodies, etc. Meet expectations, 40% Exceed expectations, 11% Below expectations, 49% Did Smart Home Meet Expectations in 2016?
- 10. “Consumers still remain wary of the complexities of smart home technologies. Voice control seems to be an attractive way to illustrate the potential for simplification of the smart home, but in reality it still has ways to go.”
- 11. When asked to pick the smart home product of 2016, our panel of smart home industry insiders were pretty clear in their choice: virtual assistant products like Amazon Echo and Google Home. This isn’t surprising. At the beginning of 2016, it was clear Amazon Echo and Alexa was the integration product of choice for smart home hardware makers, and by the end of 2016 the Echo had sold out on Amazon and was the #1 product on the site. Coming in a respectable but distant second was the smart front door, which includes video doorbells and smart locks. Ring was the standout here, but others like August, Vivint, Kevo and Skybell also had a decent 2016. Mesh brought Wi-Fi back into vogue, with 6.4% choosing these products as the product of the year. We expect 2017 to be bigger for mesh with a flood of new products. 2% 4% 6% 7% 14% 66% 0% 10% 20% 30% 40% 50% 60% 70% Connected commerce (i.e. Dash) Smart kitchen (i.e. Samsung Hub) Mesh Wi-Fi system (i.e. Eero) Smart security Smart front door (i.e. Ring) Virtual assistants (i.e. Amazon Echo) What was the smart home product category of 2016?
- 12. “Echo and other devices will replace traditional remote controls. Voice is killer app in 2016 and will continue in 2017. 2-way voice for interaction with live agents and other service providers. A new Amazon kitchen device expanding to video with voice control will open new product categories and use cases.”
- 13. When asked what they believed was the biggest hurdle for the advancement of the smart home, our panel of industry insiders saw consumer confusion as the biggest issue holding back consumer adoption. 32% said consumers were confused by which technology and products to choose. In a way, this response is also related another response: market fragmentation and a lack of interoperability. 18% said that this was the top hurdle holding back smart home. These two responses show that approximately half of our insiders see technology and product confusion as a serious issue. The second most popular response was ’consumers don’t see a compelling need’ for smart home at 24%. This points to the need for product companies and retailers to learn how to better tell the story of smart home, identifying compelling use-cases and applications for these products that are relevant to consumer lives. I’d suggest this is related to retailer inability to show the value of smart home (9%), the fourth most popular response. Interestingly, price was not considered a top concern, with only 8% seeing this as an hurdle to wider consumer adoption. 8% 9% 18% 24% 32% 0% 5% 10% 15% 20% 25% 30% 35% Prices for a smart home system are too high for mass market adoption Retailers don't know how to properly show the value of smart… Too much market fragmentation/lack of… Consumers don't see a compelling need to adopt smart home… Consumers confused by which technology and products to choose. What is the biggest hurdle holding back smart home?
- 14. “2017 will be a down year for the Smart Home. Retailers will be dismayed at the poor sell-through and will pull back on featuring products. Several start-ups will fail. A big player will take a hit -- Alphabet may sell Nest. This will lead to a lot of negative media and "will it ever take off" articles..”
- 15. When we asked our panel of smart home industry insiders what they thought should be the overarching goal of the smart home industry for 2017, two responses tied for the top overall response at 29%: consumer education about the value of smart home and finding ways for disparate platforms to interoperate. Both of these are directly related to the previous question, which aimed to understand what hurdles continued to hold the industry back. By addressing the need for better consumer education and reduction of fragmentation, our respondents hope that they can reduce what has been holding back the smart home and make it more approachable to a wider audience. 22% of respondents see the creation of new and sustainable business models as an important for the smart home. This is one area we are seeing significant advances, as smart home providers embrace subscription, concierge and commerce- based business models. 14.9% 22.0% 29.1% 29.1% 0% 5% 10% 15% 20% 25% 30% 35% Expanding and better defining use- cases for smart home technology into new areas such as eldercare… Creating sustainable business models using smart home and IoT technology Finding ways for disparate smart home platforms to interoperate Consumer education about the value of smart home and IoT What should be the goal of smart home in 2017?
- 16. Amazon showed how much natural UIs matter for smart home. There are so many more smart home UI possibilities that can be opened by the backing of a big player such as augmented reality, gesture, location, etc
- 17. The outlook for smart home in 2017 is decidedly mixed according to our panel of industry insiders. One in four respondents are optimistic about the coming year, saying that outlook is great and that the smart home should see significant growth. The majority – 54% - are more subdued in their outlook. They say the smart home will do ok, but it will not gain traction among mainstream users this year. Only a small percentage felt the smart home market would show poorly in 2017. Compared with nearly half (49%) that felt the smart home market didn’t meet expectations in 2016, this is a relatively small overall percentage who have low expectations for this year. Great - Smart home will grow significantly/ see mainstream adoption, 39% Ok - smart home will continue to sell to early adopters but not mainstream consumers ,… Poor - I think the smart home market will perform poorly in coming 12 months, 4% Outlook for smart home in 2017
- 18. Amazon showed how much natural UIs matter for smart home. There are so many more smart home UI possibilities that can be opened by the backing of a big player such as augmented reality, gesture, location, etc
- 19. About The NextMarket Insights & The Spoon NextMarket Insights is a research and advisory firm focused on the connected consumer. The Spoon is a site dedicated to covering the future of the smart ktichen, smart home, cooking and food and is a sister publication to the Smart Kitchen Summit. You can subscribe to the Spoon weekly newsletter here. Subscribe our our family of podcasts, including: The Smart Home Show – discussions with leaders in the connected home space The Smart Kitchen Show – conversations with visionaries shaping the future of food, cooking and the kitchen Check out these and other great technology podcasts at Technology.FM, our podcast portal.