For low-voltage contractors eager to seize more market share in the residential sector, home automation may be where ground can be gained. A BCC Research study revealed that the U.S. market for home automation systems and devices is expected to see strong growth over the next several years. The market is forecast to exceed $5.5 billion in 2016, the result of a compound annual growth rate (CAGR) of 10.5 percent between 2011 and 2016. In 2010, security systems, home entertainment and lighting made up nearly 58 percent of the country’s residential market, and those sectors are estimated to enjoy a higher CAGR than heating, ventilating and air conditioning and energy management, reaching $3.8 billion by 2016.

Frost & Sullivan has also conducted research in the sector, and the research body’s studies point to end-users who are more aware and educated when it comes to home automation systems and who have a better understanding of the benefits they can reap from adopting those systems. The research firm expects that the greater availability of what they term “products specifically designed for the mainstream market” (meaning products that aren’t aimed exclusively at the high-end segment) will lead to a recovery of the sector, resulting in “steady growth until 2017.” This expansion is expected in spite of the fact that Frost & Sullivan says consumers still typically consider home automation to be a nice optional feature, rather than something they must have.

Tom Kerber, director of research at Dallas-based Parks Associates, confirmed those upward market trends.

“Despite slow growth and low consumer confidence, home automation is growing in all channels,” Kerber said.

He also cited a recent market sizing report released at CEDIA, which he said showed “growth in both the number of projects and the average project cost.”

The metrics are good news for contractors interested in boosting their existing home automation revenue streams and may serve as a wake-up call to business managers still on the fence about the viability of the home automation market.
Still not convinced the average consumer has an interest in home automation? Consider this: the Museum of Science and Industry in Chicago says that more than 300,000 guests have toured its Smart Home exhibit since its debut in May 2008. Visitors come to learn more about automation technologies. The exhibit offers a glimpse of home automation goodies from energy usage monitoring to plants that water themselves.

In addition, residential customers are becoming increasingly aware of home automation technologies through the marketing efforts of broadband operators as well as system and equipment manufacturers, which are delving deeper into the consumer market. Crestron, for example, has showrooms across the country that give contractors and customers alike a way to see the latest home automation technology in action. In Houston, consumers will soon be able to wander through a dozen tech-enabled model homes at MainStreet America, in addition to a dedicated Home Automation Experience Center designed to showcase automation technologies under almost real-world conditions.

It’s no secret that manufacturers have started putting more energy behind consumer-focused marketing campaigns, and consumer behavior likely is one top-level reason.

“Broad ownership of tablets and smartphones allow manufacturers to move down market, expanding offerings to a broader audience,” Kerber said.

As more consumers adopt mobile devices and make them a part of their everyday lives, there is a potential they will also see connected home automation technologies that use those devices as a natural progression.

Just how widespread is mobile device usage? If the anecdotal evidence provided by the cellphone in your pocket isn’t enough, consider the statistics that the Pew Research Center’s Internet & American Life Project gathered. According to Pew, 46 percent of American adults owned a smartphone in the first quarter of 2012, an increase of 11 percentage points from a similar study conducted just 10 months earlier. The Consumer Electronics Association reported tablet ownership at 29 percent in July 2012, an increase of nine percentage points from the end of the previous quarter.

For low-voltage firms wondering where to focus their efforts in the residential sector, Kerber said there are several areas for growth in the home automation market. First, he encouraged a greater emphasis on value-added services as opposed to product sales—a suggestion many electrical contractors have already embraced. Each project should also be viewed as a growth opportunity.

“Leverage [an] entry point into the market, whether it is home cinema or lighting controls, and add accessories that enhance the user experience,” Kerber said.

Customizing solutions to meet the specific needs of each homeowner is also a good strategy that will enable electrical contractors to cement ongoing and mutually rewarding relationships with customers.


KNUDSON worked in facilities and telecom management before becoming a freelance business writer. She can be reached at www.julieknudson.com.