Growing Pains for the Smart-Home Industry

Whether or not you’ve made a new home pur­chase in recent years, you’ve like­ly noticed the grow­ing num­ber of inter­net-con­nect­ed options seep­ing into the mar­ket. From Blue­tooth speak­ers that read the weath­er to ovens that pre­heat with just a tap on a phone, smart-home devices own a grow­ing cor­ner of the home improve­ment market. 

How­ev­er, accord­ing to recent research by the Home Improve­ment Research Insti­tute and Parks Asso­ciates, the ris­ing adop­tion of smart devices has not come with­out setbacks.

Here are four key find­ings you should know about the cur­rent state of the smart-home market:

1. Purchase intentions are at an all-time high.

Cur­rent­ly, 37% of all inter­net-con­nect­ed homes have at least one smart-home device, and adop­tion is pre­dict­ed to con­tin­ue to rise. In fact, 43% of con­sumers sur­veyed by Parks Asso­ciates report a high inten­tion to pur­chase a smart-home device. This could be attrib­uted to falling aver­age prod­uct prices as more low-cost options hit the (often vir­tu­al) shelves. Shop­pers today have more options than ever as com­pa­nies offer mul­ti­ple prod­uct mod­els at var­i­ous price points with assort­ed styles, fea­tures and benefits.

Top buy­ing con­sid­er­a­tions for smart-home devices include:

• Price
• Smart­phone compatibility
• Brand rep­u­ta­tion
• Expert reviews

2. Product return rate is high.

With the influx of new low-cost options on the mar­ket comes the real­i­ty that some devices do not meet con­sumers’ expec­ta­tions. For some devices, half as many con­sumers are return­ing as pur­chas­ing prod­ucts.

Accord­ing to those sur­veyed, smart locks, door­bells and light­bulbs were among the prod­ucts returned most fre­quent­ly, and the most com­mon rea­sons for return­ing devices in gen­er­al is that they didn’t work as adver­tised or the home­own­er had dif­fi­cul­ty with the phys­i­cal installation.

Addi­tion­al­ly, con­sumers report return­ing smart devices due to incom­pat­i­bil­i­ty with oth­er devices or brands that they already own. This leaves room for oppor­tu­ni­ty in the mar­ket for uni­ver­sal inter­op­er­abil­i­ty stan­dards. Over­all, prod­uct devel­op­ers will need to work on solu­tions to these com­mon issues to low­er the rate of return on smart-home products.

3. The number of smart devices owned increases year over year.

Not only are more house­holds pur­chas­ing smart-home devices, but those that do are pur­chas­ing a larg­er num­ber of devices.

For the past five years, the num­ber of con­nect­ed and smart devices owned per house­hold has steadi­ly increased year over year, with the aver­age inter­net house­hold now own­ing 16 con­nect­ed devices. The per­cent­age of house­holds own­ing three or more smart-home devices also con­tin­ues to rise (27%) and now rep­re­sents more than five times the num­ber of house­holds that own just one device (5%). While most house­holds still own no smart-home devices at all, those who see the ben­e­fit from their first devices are clear­ly excit­ed to add more.

4. Slow internet is a growing pain for the ​“connected” industry.

This rapid growth of devices added to the home net­work can result in con­nec­tiv­i­ty issues due to band­width lim­i­ta­tions strain­ing home net­works. Since the pan­dem­ic, con­sumers report shop­ping more online, mak­ing video calls, order­ing food online, work­ing from home, watch­ing videos online and play­ing video games.

The increase in these activ­i­ties puts a high­er demand on home net­works, lead­ing over one-half of wire­less net­work own­ers sur­veyed to report inter­net prob­lems over the last 12 months.

Because inter­net con­nec­tiv­i­ty is often required for smart-home devices, loss of con­nec­tiv­i­ty is the lead­ing prob­lem affect­ing own­ers of these devices. In fact, 50% of smart-home device own­ers have expe­ri­enced an inter­net issue with one or more of their devices. Smart light­bulb, sprin­kler sys­tem, smoke detec­tor and plug own­ers encounter the most prob­lems on aver­age. When reliant on con­nec­tiv­i­ty, even the least trou­ble­some devices can cause prob­lems for house­holds.

Despite grow­ing pains, the smart-home indus­try does not appear to be slow­ing down any time soon. Con­sumers con­tin­ue to search for con­nect­ed devices that make their lives and homes eas­i­er (most of the time) and more effi­cient.

Inter­est­ed in learn­ing more about the state of the smart-home indus­try, includ­ing insight into secu­ri­ty and safe­ty devices, ener­gy man­age­ment devices and con­nect­ed health devices? Join HIRI as a mem­ber to get access to our entire research report in part­ner­ship with Parks Associates.