The arrival in Italy of the great Over The Top (OTT) with Google Home and Amazon Echo smart home speakers revolutionizes the connected home market, which reached a value of 380 million euros in 2018, up 52% compared to 2017, bringing unprecedented investments in terms of communication and marketing to the smart home and boosting sales of other connected objects , especially related to heating and lighting.
The growth trend of the Italian market is comparable or even higher than that of the main European countries, even if in absolute terms the gap to fill is still wide. Together with the market, the level of knowledge and the diffusion of connected objects in Italian homes is also growing: 59% have heard of smart homes at least once and 41% own at least one smart object, with security solutions (such as sensors for doors and windows) in first position.
The boom in voice assistants has above all favored online and offline retailers, which together account for 40% of the market (up 160% compared to 2017), to the detriment of the traditional supply chain - manufacturers, architects, builders, material distributors electricity and installers – which maintains a leading role but is losing ground in terms of market shares (from 70% in 2017 to 50% this year). Finally, an important role continues to be played by startups that develop "connected home" solutions: collaborations with major players are multiplying and the loans granted by institutional investors continue to grow. There are 141 new companies surveyed internationally, of which 102 financed, for a total of 1,5 billion dollars in investments raised.
These are some of the results of research on the Smart Home ofInternet of Things Observatory of the School of Management of the Milan Polytechnic. “The smart home solutions market is growing at a very fast pace, driven by the landing in Italy of smart home speakers which, in addition to generating good sales volumes, have also dragged down the sales of the entire sector – he says Angela Tumino, Director of the Internet of Things Observatory -. For the moment, the traditional supply chain of manufacturers and installers has not been able to fully exploit the opportunities offered by the new IoT solutions for the home, losing ground against retailers (traditional and online), manufacturers, insurance companies, utilities and telcos, which together they are now worth 50% of the market. However, there are some signs of greater integration for the future”.
“Despite the great steps forward, there are still many barriers to overcome – comments Giulio Salvadori, Director of the Internet of Things Observatory -. Firstly, the communication to consumers of the real potential of using smart objects, which has grown a lot with the entry into the OTT market, but is still not adequate if we look at other producers and small brands. Then we need to work on the training of installation and sales personnel, who are often unable to provide adequate support to the user, and on the offer of valuable services enabled by connected objects. A further challenge for companies in 2019 will be to exploit the enormous amount of data made available by smart objects and emerging technologies such as Artificial Intelligence and at the same time manage fundamental issues such as privacy and cyber security, at the top of the concerns of users who own or intend to purchase smart home solutions.”
The market - The Italian market for Smart Home solutions is growing very rapidly in 2018, with a pace comparable or even higher than that of the main European countries. In absolute terms, however, Italy ranks ahead only of Spain (300 million euros, +59%), while the gap is still wide with Germany (1,8 billion, +39%), the United Kingdom (1,7. 39 billion, +800%) and France (47 million, +130%). The largest share of the market is linked to security solutions, which are worth 35 million euros, equal to 2018% of the market. In second position we find the main novelty of 60, smart home speakers, which in addition to generating sales of 16 million euros (55% of the market), have directly or indirectly driven a large part of the overall growth. Sales of household appliances were slightly lower, amounting to 14 million euros and 25% of the total, among which washing machines stand out – connected, controllable via App and in some cases also equipped with a voice assistant – which continue to drive sales in the sector . The offer is expanding (some manufacturers already have more than half of the "connected" range), but the use of smart functions is a habit only for 15% of users who own a connected household appliance (up compared to 2017% of 12). Boilers, thermostats and connected air conditioners for the management of heating and air conditioning account for 45% of the market (about 50 million euros), with an increase due to the growing integration with voice assistants and the possibility for the consumer to obtain important benefits in terms of energy savings and comfort. Among the remaining solutions, solutions for lighting management (connected light bulbs) stand out with a growth of +XNUMX%.
Sales channels – The "traditional" supply chain continues to play an important role within the Smart Home market, with a value of 190 million euros (50% of the market, +10% compared to 2017), even if it is losing ground in terms of market (in 2017 it was worth 70%). In fact, the driving forces are eRetailers (78 million euros, +140%) and multi-channel retailers (72 million euros, +180%), which together make up 40% of the market, driven by the sales of smart home speakers and of connected appliances. Sales by telcos, insurance companies and utilities are more limited, reaching a total share of 10% of the market. The growth compared to 2017 (+60%) is mainly due to the new offers for the smart home promoted during the year by telco operators, which generate a sales volume of 21 million euros (6% of the market, +150 %), focused on promoting additional services and simplifying the user experience. Utilities grow less (+20%) and in the face of lower than expected numbers they are now grappling with a general repositioning of the offer, to try to regain ground in 2019. The insurance channel stops at 3% of the market (+25% ), lacking the expected leap in quality, but there are numerous trends that are found in Italy and abroad and which bode well for rapid growth in the sector.
Customers - The Smart Home is increasingly known among Italian consumers: 59% of Italians have heard of it at least once, especially through traditional media (50% from radio, TV and newspapers, up from 59% in 2017) and the Internet ( 32%). The launch of smart home speakers has led to a progressive evolution in consumer habits, increasingly willing to purchase Smart Home devices independently (online or in stores) and possibly request the help of a professional at a later time installation: only 19% of the sample, in fact, purchased the connected object through their trusted installer, against 33% in 2017. The spread of smart objects in homes is consolidating, present in 41% of homes (+3%), even if a good portion of users still does not use the smart features of these objects (42%), above all because of the low perceived utility (for 41% it is not very useful, 34% do not have the 'need) and sometimes due to the excessive complexity of the product (14%). Those who do not own connected objects do not feel the need for them (41%), consider them too futuristic (19%), do not fully understand their benefits (12%) or have never heard of them (8%).
Despite the good growth of the market, there are still few consumers who declare their interest in buying Smart Home products in the future, just over one in three (35%), and of these only 10% expect to buy in the next twelve months, while 25% within three years. The solutions that attract the most interest for 2019 concern lighting management (20% of the sample) and smart home speakers (14%). Just voice assistants can be a driving force for the entire market, because consumers rather than to obtain information or manage their daily tasks would like to use them to manage other smart objects, such as household appliances (23%), boilers and thermostats (23%) , lights (21%) and burglar alarm (16%). Much further back we find the more traditional functions, not related to the control of smart objects, ranging from the possibility of receiving information in real time (7%), to the management of the personal agenda (7%), up to the possibility of making purchases online (4%) or book dinners, taxis and hotels (4%). As Italian consumers become familiar with connected objects, sensitivity towards privacy grows. From 2014 to today, the percentage of consumers who are wary of sharing their personal data has almost doubled, going from 27% to 51%, also because they often do not grasp the benefits.
Technologies – The IoT technologies for communicating smart objects in the home are still very heterogeneous, but some signs of partial convergence are starting to emerge. This level of heterogeneity is often due to the multiplicity of application requirements required by the different connected objects. "Interoperability opens up great opportunities in terms of user experience and feasible cases and is the key to the success of the Smart Home as a system and not as a set of single independent objects - comments Antonio Capone, Scientific Director of the Internet of Things Observatory - . The road to achieving this goal is still long and complex, but some promising alternatives are emerging, such as the creation of consortia engaged in the definition of new integration application ecosystems or the use of embedded operating systems capable of offering a series of and homogeneous services between compatible devices that can be integrated at the hardware level”. The concept of interoperability is closely related to the concept of integration. This notion can be declined according to different possible approaches: local integration, directly between smart devices, through dedicated or multiprotocol hubs; integration enabled by voice assistants, which allow the user to interact with smart objects through a unified interface; and integration mediated by the cloud, through which the devices, through appropriate interfaces made available by the various proprietary clouds, manage to integrate and create common functions.
Artificial Intelligence at the service of the Smart Home – Artificial Intelligence (AI) enables the development of countless applications for the Smart Home capable of generating new business opportunities for companies and providing concrete support to people inside the home. “There are three main roles that AI can play in this market – analyzes Giovanni Miragliotta, Scientific Director of the Internet of Things Observatory -. Machine learning algorithms can act inside connected objects, improving their functionality and processing data without the need to go from the cloud. Furthermore, AI can further improve the functioning and understanding of voice assistants and, finally, is a candidate to become a real housekeeper in our homes. The three approaches are not mutually exclusive, but rather can (and must) be developed jointly and integrated with each other to fully unleash the potential of Artificial Intelligence within our homes".
