One of the biggest challenges to expanded growth for the smart home market in Europe is a lack of education and consumer engagement. Despite the many players actively involved in the region, consumers are not being properly educated on smart home devices and how these systems could improve quality of life, either through security or convenience and peace of mind. The immediate concern is explaining and showing customers why they would want a smart home.
Although security is the focus of companies such as Comcast, Vivint and MONI — which cannot be replicated in Europe — their model of building awareness around smart home can be reproduced. Examples of this include partnering with mobile carrier providers and retailers to place kiosks in airports and other high-traffic areas to demonstrate products. Alternatively, MONI has partnered with DIY supplier Nest for professional services, and Nest has also recently teamed up with T-Mobile to offer cellular backup for Nest Guard. IHS Markit expects that players involved in smart home in Europe who focus on smart home messaging through marketing and strategic partnerships will have the most success — and not necessarily the companies with the largest footprint.
In the short term (the next 12 to 18 months), the growth opportunities for the smart home market across Europe is heavily dependent on marketing and education. For marketing, this means using existing channels to push smart home technology. On the education front, this means conducting demos in retail and also putting forward use cases, not just smart home technology. By presenting use cases and solutions to problems, consumers will gravitate toward the best products, but they first need to understand how these devices can improve their lives.
Long-term growth (more than 24 months in the future) will focus primarily on insurance companies and aging in place. Device manufacturers and service providers in the region agree that smart home will be driven partially by insurance companies and helping the elderly age in place. Security will not be a driver in most countries in Europe — and although each country has its nuances, IHS Markit expects the common theme that will bring the European region together for smart home will be insurance providers, aging in place (elder care) advocates and government bodies such as housing authorities.
Over the next five years (through 2021), multiple system operators (MSOs) and telcos will be in a unique position to increase market share and awareness of smart home. To accomplish this, many telcos will begin to offer routers and gateways with embedded smart home connectivity such as Bluetooth, ZigBee or Z-Wave. Deutsche Telekom has already made available its Speedport router, and IHS Markit expects that many more telcos will offer smart home routers in 2018 and 2019. The benefit of the smart home router is that it can be installed in a home and the features and functions can be turned on whenever the customer is ready to install smart home technology, making the process simple for the consumer. Additionally, this places the telcos in a unique positon to provide additional value-added services such as network monitoring for botnet and malware attacks.
Despite the favorable position of many telcos and utilities in Europe, the smart home market remains fragile. Device manufacturers and service providers that have been successful have found methods to closely interact with consumers through value-added services and smart home technology combinations. Although there are variations among countries in Europe for smart home adoption, these variations are not insurmountable and there are common threads that suppliers and service providers can rely on to provide a compelling smart home platform.