The global smart thermostat market was valued at USD 785.4 million in 2015, and is expected to expand at a CAGR of 18.7% (in terms of revenue) from the year 2016 to 2022. Smart thermostats are electronic devices that regulate the operation of heating and cooling devices for residential or commercial applications. They constitute a part of the next generation home automation devices that form a significant part of smart homes.
The global thermostat industry has gained traction over the past few years owing to the increasing need for energy efficient solutions in the residential sectors in the North American and European regions. The proliferation of smartphones acts as an enabler toward energy management solutions. The provision of open source developer APIs enhances the usability and performance of these devices. The rise in the average energy expenditure and the need for remote access solutions to monitor and control the energy consumption are spurring the market demand. Reduction in energy bill costs and improved return on investments offered by such devices have considerably increased their demand in households. Furthermore, businesses and industries are also adopting this technology as a low-cost way to manage their HVAC systems. Data security concerns and the high cost of devices are the potential factors acting as constraints for the adoption of smart thermostats.
Smart thermostats are capable of identifying user behavior, analyzing user patterns, adjusting the HVAC systems automatically, and offering remote monitoring capabilities via wireless connectivity. The Google Nest is a self-learning device that analyzes user activities by means of motion and Infrared (IR) sensors, temperature, and humidity sensors.
The key technology segments include Wi-Fi, ZigBee, and others including Power Line Communication (PLC), NFC, Ethernet, and Bluetooth. These technologies enable thermostats to be wirelessly connected to the other home automation tools. Moreover, they enable users to manage their devices wirelessly through their smartphones. Smart thermostats based on the ZigBee technology segment are anticipated to witness a remarkable growth over the forecast period due to manifold advantages such as low power consumption and considerably inexpensive and easy mode of implementation.
North America Smart Thermostats Market Revenue, by Technology, 2012 - 2022 (USD Million)
The PLC technology enables sending data over existing power cables and is adopted as a means of communication interface in areas with poor data network infrastructure.
The North American regional market is expected to dominate the global industry due to the increasing demand for managing energy consumption solutions and a wide distribution network of key vendors in the region. The increasing average unit rate of power is encouraging household consumers, industries, and enterprises to adopt smart energy solutions, which is one of the primary reasons for the market growth.
The European regional industry is expected to gain traction over the forecast period, which is led by the favorable government initiatives in the region. For instance, the Department of Energy & Climate Change in the UK introduced the Energy Company Obligation (ECO) in January 2013 to reduce Britain’s energy consumption and support funding improvements for households toward energy efficiency.
Notable manufacturers, including Honeywell, Google Nest, and Ecobee, accounted for over 40% of the global smart thermostat market share (in terms of revenue) in 2014. Honeywell enjoys a strong position in the industry owing to its broad portfolio of products and strong distribution network; however, the company is facing intense competition from start-ups such as Nest Labs, Inc. (Google) and Ecobee. Other key participants include Schneider Electric, Emerson Climate Technologies, Radio Thermostat Company of America, Carrier Corporation, Ingersoll Rand (Trane), Allure Energy Inc., Tado GmbH, Eneco, British Gas Hive, and Lux Products Corporation.
Increasing collaborations and partnerships with utilities and energy agencies and technology giants have gained popularity for this industry. For example, SDG&E is working with Alarm.com and EnergyHub to offer products at an aggressive pricing option as a part of its peak rebate program.
In order to sustain its customer base and ensure the future growth, companies must rely on their ability to identify and exploit the emerging technological trends while developing and maintaining competitive products. Industry participants are currently focusing on product differentiation in order to prevent the commoditization of products.
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