Lack of awareness and knowledge of smart home products is holding back market growth.
According to a Beecham ResearchÂ report, the high price tag associated with smart homes is to blame for putting such homes out of reach for most home owners. For those who can afford the costs, they are not being sold on the benefits.
The â€˜Smart Home Market- Current status, consumption trends and future directionsâ€™ report, identifies that the lack of awareness and knowledge of smart home products and associated benefits is a barrier to market growth.
This is in addition to Â relative concerns about data privacy and lack of device interoperability.
Beecham Research predicts that revenue from the sale of smart devices for the home will achieve a compound annual rate growth of around 34% over the next five years, increasing from $3.1bn in 2015 to $16.2bn in 2020.
Beecham, however, says that smart home â€˜speed bumpsâ€™ are capable of making some of the more over-optimistic forecasts unrealistic. However, new industry partnerships and innovative routes to market will help drive impressive market growth.
Olena Kaplan, Senior analyst at Beecham Research said: â€œAs initiatives to encourage the adoption of smart devices proliferate, the partnerships offering specific financial advantages or benefits will show a stronger uptake. These partnerships will also drive the shift from product to subscription or cloud-based service offerings.â€
The report points to the Amazon Echo smart home hub and Samsung Smart Things as evidence that major companies are trying to attract more customers by getting a foothold in the home by offering entry products at affordable prices.
â€œA basic light bulb is more than 20 times cheaper than its smarter counterpart,
but evidence shows that consumers are willing to pay a premium price if they understand the value of the more expensive product,â€ saidÂ Kaplan.
â€œThe critical question is; does the smart bulb or any smart home product, offer sufficient benefits for consumers to justify the price tag?â€
When it comes to smart homes, the Beecham report also identified that the US market is more advanced than Europe and other parts of the world based on its proactive attitude towards connected consumer devices.