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Smart home

Smart home

Smart home, also known as home automation, encompasses connectivity technologies that allow home owners to interact with their households in a variety of ways.


Home automation and smart homes are the two terms used in reference to a wide range of solutions for monitoring, controlling, and automating functions in a home. A smart home setup enables appliances and devices to be automatically controlled over the internet from anywhere in the world using a mobile or other networked device. This allows the user to regulate functions such as security access to the house, temperature, lighting, and home theater.

The smart home market
Projected growth

According to a MarketsandMarkets research report, the global smart home market size is expected to see growth from USD$78.3 billion in 2020 to USD$135.3 billion by 2025, at a CAGR of 11.6%. Another research firm, Mordor Intelligence, claims that the smart homes market was valued at USD$79.13 billion in 2020 and is projected to reach USD$313.95 billion by 2026, with growth at a CAGR of 25.3% over the forecast period (2021-2026). Fortune Business Insights's projection stands out, asserting that the global smart home market size has the potential to reach USD$622.59 billion by 2026, with a CAGR of 29.3%.

The growth of the smart home industry is driven by various factors, such as the increasing number of internet users, the growing adoption of smart devices, as well as the rising of disposable income of people in developing economies.

  • Increasing number of internet users and growing adoption of smart devices

  • Increasing disposable income of people in developing economies

  • Increasing importance of home monitoring in remote locations

  • Growing need for energy-saving and low carbon emission-oriented solutions

  • Proliferation of smartphones and smart gadgets

  • Expansion of smart home product portfolios by a large number of market players

  • Growing concern abut safety and security as well as interest in convenience in the general population

  • Favorable government regulations promoting green buildings

  • Incorporation of lighting controllers with in-built data-connectivity technology

  • Integration of power line communication technology in smart homes

Potential restraints
  • Convenience-driven and not necessity-driven market

  • High cost of switching for existing smart device consumers

  • Issues related to potential breaches of security and privacy
  • Linking disparate systems can be problematic, limited functionality of smart devices, and absence of open standards

  • Risk of device malfunction increasing with the number of smart devices

  • Disruptions in the supply chain due to the COVID-19 pandemic
IoT and the smart home market

The IoT connects products, software algorithms, services, and end users, enabling a steady flow of data. Since many large-, mid-, and small-scale companies from various sectors worldwide are investing in the IoT industry, numerous application areas such as lighting, HVAC, security, healthcare, and entertainment are expected benefit from these investments and contribute to the growth of the smart home market.

The growth of the smart home market is also expected to be significantly driven by the increasing consumer preference for video doorbells, voice-assisted technologies (such as Alexa and Google Home), and surveillance systems. The growth in the adoption of IoT among consumers is attributed to increased smartphone and internet usage and the expansion of social network platforms. The growing adoption of internet-enabled smart devices, such as radio frequency identification (RFID), barcode scanners, and mobile computers, as well as the continuous increase of internet users across the globe, are expected to further foster the growth of the IoT market, and in turn the smart home market.

Entertainment control systems

Multi-room entertainment control systems allow users to centralize all connected devices and then interact with and control them from every room in the house. Control systems used in smart homes are audio, volume, and multimedia room controls. The growth of the market for audio, volume, and multimedia room controls is driven by the convenience offered for controlling the entertainment systems within a house.

Wireless communication technologies

Advancements in wireless communication technologies are a significant factor in promoting the home theater system controls market, thereby driving the overall smart home market for entertainment controls. The large market share of this segment can be attributed to products such as smart meters and smoke detectors. Concerns about the increasing cost of electricity may be driving household consumers toward saving energy by implementing smart home solutions. The rising popularity of smart plugs, smart hubs, and smart locks is also contributing to the widespread adoption of control systems.

Behavioral-type software and services

Behavioral-type software and services help analyze energy-related data and forward it to end-users, providing basic information regarding the real-time energy data, along with the historical data reflecting energy usage.


The increasing need to address security issues is anticipated to be one of the primary drivers of growth in the global smart home market, as well as the introduction of novel wireless technologies, including HVAC Controller, security and access regulators, and entertainment controls. Furthermore, it is expected that the advancements in IoT that resulted in price reductions of sensors and processors will encourage manufacturers to promote automation in the household sector.


Smart HVAC (heating, ventilation, air conditioning) systems contribute significantly to the smart home market. These systems are integral to environmental controls in residences. They are comprised of smart sensors, control valves, smart actuators, air conditioning systems, smart room heaters, and other devices and systems. As a result of the increasing government regulations in developed and developing countries, many new buildings around the world need smarter heating and cooling solutions, which drives the growth of HVAC systems.

The smart home market in North America

North America led the smart home market in 2020, with nearly 30 million US households projected to add smart home technology since then. Connected cameras had the highest demand among smart home products, followed by video doorbells, connected light bulbs, smart locks, and smart speakers. According to survey data, family safety is a significant motivator for adopting smart home technology. However, consumers adopting smart home technology, such as smart lighting and energy management solutions, constituted the most significant driver for the market.


It is estimated that 16% of Americans owned a smart speaker in 2020, or around 39 million people, signifying a 128% rise in the adoption of this technology since January 2017. According to survey-gathered data, customers use Amazon Echo for a variety of purposes, with one-third using it as an information provider responding to questions and over 40% as an audio speaker for streaming music.

The smart home market in Asia-Pacific

Analysts at MarketsandMarkets projected the growth of the smart home market in the Asia-Pacific region to be significant in the period from 2020 to 2025, naming factors driving the growth such as strong economic performance, population increase, improved standard of living, and accelerated urbanization that leads to more complex solutions in infrastructure.

The growth of the smart home industry and large-scale implementation of hardware and software solutions in smart homes in China and Japan potentially makes Asia-Pacific a huge market for smart homes. The region sees a considerable rate of implementation of various products such as lighting controls, HVAC controls, security and access controls, and others.

COVID-19 impact on the smart home market

The COVID-19 pandemic has had a negative impact on the growth of the global smart home industry, including the US and China, with global sales projected to decline by 5-10%. The decrease in the number of new construction projects and the temporary shutdown of manufacturing facilities are some of the factors hampering market growth in China. The market in the US is expected to undergo higher growth in comparison to other countries in the Americas. Despite this, limited adoption of smart home systems for the short term and the ongoing trade war with China are expected to inhibit the smart home market growth in the region.

Smart home companies


December 2019
Amazon, Apple, Google, and the Zigbee Alliance enter into a collaboration to develop a royalty-free connectivity standard to increase compatibility among smart home products, with a focus on security.
May 2019
Amazon launches Echo Show 5, which includes updated smart home controls, customizable morning and evening routines, new privacy features, and more visual content.
October 2018
Johnson Controls International acquires Lux Products Corporation, a leading provider of residential thermostats and smart products.
July 2018
Siemens AG adds new functionalities to the Synco IC cloud platform for remote heating, ventilation, and air-conditioning (HVAC) control.
June 2018
United Technologies Corporation introduces the next-generation touchscreen displays for i-Vu building automation systems to aid building operators in the management of HVAC equipment.



Further reading


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