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Aussie smart-home adoption booming says major annual report

Australians continue to embrace iot-based smart home technologies despite recent economic headaches. According to research from Australian emerging technology analyst firm, Telsyte, 69 per cent of Australian households have at least one IoT product in their home in 2022. Nice. The research shows they will also have an average of 33 connected devices by 2026.

The results come from the Telsyte Australian IoT@Home Market Study which is in its 10th year. It also found that around half a million consumers started their smart home journey during the past 12 months.

Telsyte expects the smart home market will grow by 20 per cent from 2021 to 2022 to reach $2.1 billion by the end of 2022. This growth will also be driven by a need for energy efficiency due to the rising cost of products and services.

The smart energy, smart lifestyle and installation services categories are expected to see the largest growth in 2022 (up 22 per cent, 31 per cent and 57 per cent respectively).

While the economic environment is putting pressure on consumer budgets for IoT@Home products (just over $2,000 for 2022, down 6 per cent year-on-year), consumers still recognise the long-term benefits provided by a ‘smarter’ home with 42 per cent believing it will help reduce the cost of living in the long run.

About a quarter (26 per cent) of households already have more than five different types of smart home devices installed.

The top benefits consumers imagine a smart home should provide remain: being more energy-efficient; making the home more secure; and cost savings in the long term. Sustainability has also become an important part of the smart home conversation and is now ranked fourth.

Interest in improving energy efficiency high

According to the study, smart energy is still expected to remain the largest segment by revenue in 2022, driven by smart battery storage and smart lighting options.

Consumers are increasingly considering cost-saving and better energy efficiency solutions to combat rising energy costs and climate change. The total smart energy segment is expected to grow by 18 per cent in 2022.

The overall interest in smart security products remains high as more home workers return to the office. Telsyte expects the segment to grow steadily in 2022 (up 9 per cent year-on-year). Security cameras and smart doorbells and locks are expected to make up the bulk of the segment’s total revenue.

As Australians become increasingly connected, over half (53 per cent) are also concerned that smart home products are becoming targets of cyber-attacks and while almost all (97 per cent) have taken steps to protect their online security with selected personal devices, only around two-thirds (64 per cent) have taken measures at the home network level.

The study found that 24 per cent of Australians experienced some form of cybercrime in 2021. This incidence rate was based on a survey conducted in Jan 2022, prior to recent high-profile cybersecurity incidents.

The growing smart home industry is also boosting opportunities for professional support, even with DIY tasks. The study found 41 per cent of Australian households still need external help to setup Internet-connected devices. Additionally, 61 per cent of Australians value advice from professional installers for smart home products.

Telsyte estimates the installation services segment will grow the most in 2022 (up 57 per cent year-on-year), due to pent up demand, increased market awareness of offerings, and more high-value work such as battery storage installations.

Connected devices continue to grow with ‘Matter’ protocol on the horizon

Telsyte estimates the average Australian household will have 21.9 connected devices by the end of 2022, up from 20.5 in 2020, and this number is expected to grow to around 33 by 2026, equivalent to more than 350 million Internet-connected devices in total.

Telsyte smart home study 2022.
Telsyte smart home study 2022.

Telsyte’s measurement of home-connected devices include: smart home components, non-smart-home components and Wi-Fi provisioning devices (excluding modems).

With this continued adoption, Telsyte forecasts the smart home market will reach $4.7 billion by 2026, with help from migration to smart appliances, demand for sustainable and long-term cost-effective energy solutions and the new Matter standard that addresses the compatibility issues of different smart home devices and platforms.

Matter is a smart home protocol aimed at unifying industry standards and allowing devices with different communication protocols across multiple platforms to communicate with each other.

Started by Amazon, Apple, Google, Comcast and the Connectivity Standards Alliance (CSA). Subsequent 200+ members include IKEA, Samsung, Schneider Electric and Signify. It includes support for popular smart home device categories such as lightbulbs, power plugs, door locks, security sensors, bridges/hubs, smart TVs and set-top-boxes.

Foad Fadaghi, Telsyte MD, said, “Matter is a huge catalyst for the IoT industry and signifies that no one company can do it all on their own in the smart home.”

Telsyte’s research found half (51 per cent) of Australians are more likely to buy smart home devices knowing they will be compatible with other connected devices on different platforms. The rate increases to 61 per cent among existing smart home adopters.

The research also found a strong desire for key benefits brought by the Matter, with more than 65 per cent believing it’s important that smart home devices are easy to setup, self-manage, with better compatibility, strong security and centralised control.

Smart speakers have been the starting point for many households’ smart home journeys and Telsyte estimates more than 30 per cent of homes will be using one by the end of 2022. While Google remains the leader in the smart speaker market, Amazon is fast catching up by bundling with other devices and services in the Amazon family.

Telsyte estimates a total of 1.9 million smart speakers will be sold in 2022, with Google, Amazon and Apple making up more than 80 per cent of total sales.

Australian smart speaker market 2022.
Australian smart speaker market 2022.

Smart home appliances to become mainstream as entry costs fall

More availability of smart kitchen, laundry and small appliances is set to make the smart lifestyle category mainstream within the next 12 months according to Telsyte research. Telsyte forecasts the smart lifestyle segment to grow 38 per cent in 2022 and is on track to become the largest smart home category next year driven by smart appliances.

Alvin Lee, Telsyte senior analyst, said, “Despite product price rises due to inflation and shortages in 2022, consumers are now more likely to choose the ‘smart’ option due to better product availability and lower price premiums.”

The price premium between smart and non-smart appliances is coming down. Smart appliances are now typically around 15 to 25 per cent more expensive than comparable non-smart products, down from up to 50 per cent a year ago.

The study found consumers are willing to pay an 11 per cent premium for smart appliances (19 per cent more among invested adopters). Some of the popular smart appliances include robot vacuum cleaners, smart air treatment devices, washing machines, and connected heating and cooling appliances.

View the full 2022 Telsyte Australian IoT@Home Market Study, here.

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