Smart home era is here – 451 Research Voice of the Connected Landscape survey

The era of the smart home is here, with seven in 10 respondents having at least one connected product in their home, according to 451 Research's Voice of the Connected User Landscape: Endpoints & IoT, Connected Products 2023 survey. Driven by a desire to enhance the at-home experience, increase personalization or cash in on energy savings, connected products are ushering in changes in the ways consumers interact with technology in their homes. As adoption of smart home technologies continues to increase, manufacturers are looking to alternative service models such as subscription as a service to realize recurring revenue from in-home devices such as cameras, TVs and appliances.

The COVID-19 pandemic led to increased demand for smart home services, as more people worked from and spent time in the home. Stakeholders from the service-delivery side, including internet service providers (ISPs) and connected product manufacturers, saw increased demand for high-speed internet and introduced new consumption models for connected devices. The smart home space has also seen an increase in standards, the most prominent of which is Matter. The local IP-based protocol had its 1.0 release in October 2022, as industry stakeholders looked to increase device interoperability, simplify device setup and management, and improve security through standardization. While Matter offered a promise of a unified smart home standard, many manufacturers and devices are not supporting the new protocol, and users have expressed frustration with its fragmented nature.

Key findings

➤ Consumers are most likely to cite lower pricing (50%), faster speeds (42%) and improved reliability (23%) as drivers that would convince them to switch ISPs. Smart homes require faster internet to support seamless connectivity and enable real-time communication between multiple connected devices, all while supporting existing phone and streaming demand. With the proliferation of in-home devices, so too comes a demand for reliable high-speed connectivity.

➤ TVs/connected game consoles (40%), speakers and hubs (28%), and cameras/motion sensors (23%) have the highest rates of connected product adoption. Smart TV adoption has increased 5 percentage points from last year's survey, while adoption of smart speakers decreased 5 points year over year. Cameras and motion sensors are now among the top three use cases, unseating wearables from last year. These use cases likely enjoy higher rates of adoption due to their ease of use and setup relative to more complex or nascent connected device types.

➤ Cost (40%), lack of interest (35%) and privacy concerns (18%) are among the top reasons cited by those who have no plans to buy connected products. The cost, whether it is up front or paid across a monthly or per-use subscription, remains a deterrent to smart home device adoption as budgets tighten and discretionary spending slows. The proportion of respondents citing lack of interest has grown by 5 points year over year, reflecting technology fatigue in the home. Privacy and security concerns are each cited by just under one in five respondents. Both are down year over year, suggesting consumers are getting more comfortable with the idea of historically offline devices becoming internet-connected.

➤ Consumers are warming up to alternative service models, led by younger Americans. The three service models that respondents are most likely to consider are subscription/product as a service (28%), pay-per-use (23%) and bundled adjacent services (21%). Despite consumers easing into the idea of paying for access to their devices in new ways, 40% say they are not interested in any alternative models, preferring to pay up front for products. This share drops by half for Generation Z and millennial respondents (20%), who tend to be more open-minded about new ways to pay for access to products.

➤ Devices that are self-learning may have more success than those that are not. Self-learning devices use AI and machine learning algorithms to understand user behavior and optimize user experience. Thermostats that learn temperature preferences throughout the day and lighting systems that automatically adjust to natural light levels are two examples of AI-powered smart home devices. More than two-thirds (70%) of respondents say it is very (30%) or somewhat (40%) important that their connected products are "smart" or "self-learning." This figure rises to 85% for Gen Z, 80% for millennials, and 78% for Gen X.

^{451 Research's Voice of the Connected User Landscape: Consumer Population Representative Survey conducts a population representative survey of US consumers about technology adoption, usage and buying intentions to understand how various tech trends are materializing in the mass market.
451 Research's quarterly US consumer population representative survey asks consumers about connectivity-related devices, services, digital media and applications, including current ownership and use, attitudes and purchase plans going forward. All respondents are asked a set of questions on core demographics and device ownership. Each respondent is also randomly assigned to one of four sections that dives deeper into current ownership, usage trends and future buying plans for specific topic areas.
The Connected Products 2023 survey was fielded July 7-21, 2023, among approximately 5,071 US respondents.
This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.
451 Research is part of S&P Global Market Intelligence. For more about 451 Research, please contact 451ClientServices@spglobal.com.}