techUK is a membership organisation that brings together people, companies and organisations to realise the positive outcomes of what digital technology can achieve. We collaborate across business, government, and stakeholders to fulfil the potential of technology to deliver a stronger society and more sustainable future. By providing expertise and insight, we support our members, partners and stakeholders as they prepare the UK for what comes next in a constantly changing world.
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1. Overview
This is the fifth State of the Connected Home report and it covers what has been an extraordinary year. The events of spring 2020 onwards do not need to be introduced and just as COVID-19 has transformed how we live, socialise and work, it has had a dramatic impact on the tech in our homes.
Sales of devices and smart home tech rising sharply help to illustrate how tech has never been so instrumental for communities and families as it is now. In this report, we look at exactly what COVID-19 meant for connected homes during 2020.
To gather the insights and data behind this year’s report, GfK carried out a nationally representative survey of 1,000 people, asking them about their awareness, interest and ownership of smart home tech, as well as their purchasing behaviour, views and reservations about this technology. This was combined with GfK sales data gathered weekly from retailers. We are grateful to GfK for conducting the fieldwork and data analysis.
This report comes under our Connected Home Group, the community of techUK members interested in accelerating the adoption of smart home tech. The group has a particular focus on how: smart home tech can be used to support those in need of assistance or deemed vulnerable; in ensuring privacy and cyber security are built into connected home products from the outset; and, how it can contribute to emissions reductions, energy efficiency and support the delivery of the country’s net zero target.
2. The connected home market during COVID-19
2.1 The size of the market
The global smart homes market continues to grow and can be expected to grow by from $78 billion this year to $182 billion by 2025 (statista). The pandemic shifted spending habits for many away from travel and leisure to durables, with smart home tech sales rising at an impressive rate and ahead of the wider durable goods market.
Demand and consumer appeal rose across all categories during the pandemic and COVID-19 saw UK consumers buying 21.8 million smart home devices, a 22% rise in volume compared to 2019. Even when excluding TV, wearables and printers this was a 17% increase. However, there is still huge opportunity for further growth, as smart home tech still only accounted for less than a fifth of “home technology", with strong growth in other consumer electronics and IT/office equipment as people adjusted to home working.
A new question for the GfK consumer panel this year related specifically to the impact of COVID-19 in connected home purchasing decisions. The answers give clear evidence that – on balance - the pandemic has caused consumers to bring forward and increase purchasing, with 21% of consumers believing the pandemic made them more likely to purchase a smart entertainment product, 19% wearables, 18% smart lighting and energy, and 17% smart security.
This makes it clear that many higher-income consumers diverted spending towards home entertainment and fitness devices. However, in the context of what has been a financially uncertain period for many consumers, a notable minority will not have been able to make purchases or say they are now less likely to invest.
2.2 Consumer awareness and sales drivers
Consumer familiarity with connected home remains high. 80% of consumers are now aware of smart home technology and is second only to mobile payments in consumer awareness of a basket of tech trends.
Since the first GfK report on smart home tech, consumer understanding has slowly risen with 36% of consumers (from 34% in 2016) feeling like they understand smart home tech. Crucially, the number of people claiming they have never heard of/don’t know much about smart home has reduced from 34% to 20%.
24% of consumers now tell us that they own more than three smart home products (up from 17% in 2020), with 25–44-year-olds leading the charge in multiple device ownership.
This supports a rise from 67% to 76% in the proportion of consumers who recognise owning any smart home products.
Drivers of interest in smart home devices are largely consistent with previous years, with confidence, ease of use and fun all significant factors. Interoperability (discussed in more detail below) has risen as a buying consideration and is now cited by 53% of consumers as important.
Also of interest is the increasing appeal of smart home products in 2020, potentially because of lockdown seeing people invest more in technology and understanding a bit more about it.
Some statistics of note relating to different categories include:
- Mobiles are ubiquitous. Mobile phones remain the number one method to control other smart home devices.
- Smart speakers: tasks such as playing music, searching and news/weather updates are still the standout uses. 54% use these devices to tell jokes, while 43% of people use it to control other devices. This suggests more people are using smart speakers as a gateway to other smart speakers, though remains far behind mobiles as a gateway.
- Lighting and energy: The most advanced users of smart home tech are more likely to have smart lighting and energy control in order to make the most of smart meters and PV electricity generation.
- Smart appliances: smart appliances take up is still low, perhaps due to the higher costs and high percentage of renters who don’t purchase white goods.
Case study | Tata Consultancy Services
Tata Consultancy Services worked on the SHINE Seniors connected home project in Singapore 2014-2019. The project focused on understanding how connected home technologies can help with healthy ageing. The project involved tracking activities of daily living via ambient sensors, and establishing patterns for physical and social wellness and constructing interventions based on the patterns. The project has won awards across the globe. From 2019 TCS worked with HSE Ireland and Dublin City Council to run a pilot in Ireland, and a second pilot is in progress in Singapore. Further areas of focus include gait analysis, cognitive wellness, and more.
One of the participants in the Singapore project hurt himself and was unable to move. The system noticed this and alerted his carer to check in and he was found and hospitalised. There are many such anecdotal examples, even before we look at the impact of machine learning and pattern recognition. In Ireland project, TCS uncovered the interesting phenomenon of data liabilities – where professionals who currently provide oversight of the wellbeing of residents, do not want to receive alerts as it creates a perceived personal liability. This is an area of further study.
2.3 Barriers
Despite the increase in sales, the barriers to purchase remain stubbornly fixed compared to previous years. Cost remains the biggest barrier (59% overall, fluctuates 59-61% by category) and privacy (51%) are the biggest with other concerns remaining very similar to 2020’s data.
Recommendation: while “smart home” is a familiar concept to consumers, tech firms and retailers should focus on communicating the tangible consumer benefits of smart and connected home devices and to reassure around ease of use, interoperability, and privacy.
2.4 Most popular devices and features – TV leading the way
Smart TVs have always been the most widely owned smart home device in the UK and 2021 has seen a strong rise in the proportion of consumers who say they have a smart TV at home. While TV sales have been strong through the pandemic, it is also very likely that increased use of streaming services through periods of lockdown triggered an increased understanding among consumers of the smart capabilities of their TV sets.
Smart speakers, the poster child of the smart home market in the last few years, have seen a further rise in ownership – up to 38% having been at 7% in 2017.
Other categories enjoying strong increases in ownership are fitness trackers – buoyed by the focus on maintaining physical and mental health through the pandemic – smart doorbells and smart lighting.
Some emerging categories such as smart kitchen appliances saw substantial growth, albeit from a relatively low baseline. Against a context of “panic buying” as lockdown arrived, it’s unclear how much of this growth is stimulated by desire for smart products specifically.
2.5 Consumers care about interoperability
Another key message from the 2021 data is about interoperability, the importance of which is increasingly recognised by consumers. As the number of smart/connected devices per household rises, half of consumers said it was important that these devices are complementary and easy to set up and configure to work together.
Recommendation: with interoperability a mainstream concern for consumers, it needs to be a priority for manufacturers within the realm of usability and user experience. Failure to address this risks reducing demand, increasing frustration and creating a perception that smart home tech does not meet expectations.
3. The wider ecosystem
The ecosystem for the delivery of connected home is essential for not only the backend delivery of the services, but the wider environment it will operate in, with policies, international supply chain disruption and challenges that has and will impact the adoption of this technology.
3.1 Regulation in flux
The regulation underpinning the delivery of smart home tech is in flux following the UK’s exit from the European Union. Below we set out some key issues that need resolving:
- Secure by design. The Department for Culture, Digital, Media and Sport (DCMS) is legislating in 2021-2022 on smart home cyber security. While techUK members already make their tech as secure as possible and believe that efforts to raise the standard can help address negative perceptions held by some consumers, the exact scope is yet to be determined and this represents an expensive compliance exercise for those developing smart home services.
- Future product safety. With the UK leaving the EU, the UK is reforming product safety rules, with OPSS looking to replace ‘outdated’ legislation that is in fact well understood by the value chain. This uncertainty about product liability and extending rules to AI, IoT and connected products presents risks to smart home adoption and government will need to ensure all policies remain aligned.
- Data privacy and data usage. Recent strategies and the recent data adequacy decision with the EU are welcome steps and should accelerate innovation on data analytics, enable new business models and be transformative. With the newly established energy digitalisation taskforce, the UK has a chance to be truly world leading on digital, flexible and responsive energy systems, with smart appliances potentially playing a key role. Government needs to be as joined up and consistent as possible, and drive the domestic adoption of these products, in order to deliver benefits to consumers. We are also seeing this come to the fore in the marketplace as some manufacturers place privacy and non-sharing of data at the forefront of their consumer marketing.
- Circular economy. As the UK establishes new circular economy rules for products, the government needs to make sure use, remanufacturing and innovation is allowed, without the need for targets or rules that prohibit reuse. For example, the Information Commissioner’s Office recommends device destruction to remove the chance of an accidental data breach. With data wiping now standard this guidance needs to change.
- Green Homes Grant. A replacement is still outstanding following the abolition of the grant, which supported deployment of smart thermostats among other heat-saving interventions. This represents a missed opportunity embed smart products into building to reduce reliance on heat in homes.
Recommendation: regulation and policy on product safety, cyber security and net zero needs to be aligned. All the various policies and strategies need to complement each other and be trusted by stakeholders. With the UK developing so much policy post-Brexit, there needs to be real care and attention to consistent approaches and shared goals.
Recommendation: government should promote smart appliance adoption in the UKs future product policy framework. Smart appliances that save energy and offer safety advantages should be seen as routes to meeting environmental and product safety targets so should be the same.
3.2 International supply chains and semi-conductor supply
With Asia-Europe shipping now costing over ten times what it did before COVID-19 and significant capacity constraints, moving product in and out the UK has become a lot more expensive. GfK data already shows that prices are increasing for consumers and it is reasonable to expect price rises to dampen demand.
The huge demand for electronics during the pandemic caused capacity constraints in manufacturing impacting smart home products. The well publicised shortage of semiconductors and processors has already resulted in factory stoppages and order delays, which will mean not everyone will be able to get the tech they want so easily.
3.3 Inter-relationship of smart home with energy and electric vehicles
As smart home products enjoy greater market penetration, it is becoming increasingly important for smart home products to interact with smart metering to support the move to flexible energy systems and electric vehicle take up.
The first major opportunity is smart appliances. Smart appliances could form an important part of the future net zero energy system by plugging into new tariffs that support energy flexibility. The challenge for industry though is not just how to sell these appliances but getting consumers to actively use the smart features and benefit from future interlinkages with their energy provider.
On a more systems level, industry, property developers, government (both local and national) must increasingly to work together to make buildings and homes ‘smart enabled’. The role of the home in the net zero transition needs to move the traditional scope of the building fabric and reflect the capabilities needed to unlock a flexible energy system.
Recommendation: there needs to be a stronger understanding of the role of the Connected Home in delivering a fully flexible energy system.
Case study | SmartThingsEnergy
SmartThings Energy is helping consumers to better understand their home’s energy usage, by showing the energy consumption of their Smart Appliances within the SmartThings app - empowering them to make better energy decisions.
Launched in the UK on the 1 July, SmartThings Energy gives a clear and digestible overview of the energy used by compatible appliances. For the first time, consumers are able to see exactly how much energy their appliance uses, and can take positive actions to reduce their energy consumption.
For example, SmartThings Energy shows the cost and consumption of running a cycle in a compatible Samsung Washing Machine, so a user can actually see the difference between washing at 30 vs 40 degrees, empowering them to save money and energy.
It has some other handy energy saving features too – it lets consumers create budgets, set up alerts (like letting them know if their appliances are using energy whilst they’re out), or even automating their routines, all within the app.
SmartThings Energy works with any compatible Samsung domestic appliance such as Air Conditioning, Laundry and Fridge Freezers. No extra hardware is required and can be used on Android or iOS devices.
SmartThings Energy is available to download for free today by downloading SmartThings in your app store.
The fundamental concept of the smart home though remains confusing and ambiguous for many. While device penetration is rapidly increasing, we are still not at the stage where products work together seamlessly, and thus where the tech is working at its full potential.
The barriers to adoption and drivers for sales have not shifted since from last year: industry must work harder to shift the needle on true interoperability and game changing propositions for consumers. Where manufacturers have managed to do so, they have been rewarded with high uptake and impressive sales.
Entertainment still leads the way in product features, so the manufacturers, telecoms networks, and service providers should look at how this area is succeeding. In many ways we have done the hard part and industry has persuaded more people to adopt smart home tech – the challenge now is to encourage them to really adopt the full range of services and smart features on offer.
Recommendations
While “smart home” is a familiar concept to consumers, tech firms and retailers should focus on communicating the tangible consumer benefits of smart and connected home devices and to reassure around ease of use, interoperability, and privacy.
With interoperability a mainstream concern for consumers, it needs to be a priority for manufacturers within the realm of usability and user experience. Failure to address these risks seeing reducing demand, increasing frustration and creating a perception that smart home tech does not meet expectations.
Regulation and policy on product safety, cyber security and net zero needs to be aligned. All the various policies and strategies need to complement each other and be trusted by stakeholders. With the UK developing so much policy post-Brexit, there needs to be real care and attention to consistent approaches and shared goals.
Government should promote smart appliance adoption in the UKs future product policy framework. Smart appliances that save energy and offer safety advantages should be seen as routes to meeting environmental and product safety targets so should be the same.
There needs to be a stronger understanding of how smart home tech can play a key role in delivering a fully flexible energy system.