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July 23, 2021

Automated Home in Consumer: Macroeconomic Trends

North America accounts for the vast majority of the global automated home market, and this is set to continue up to 2025, with a 74.5% share of the entire market.

By GlobalData Thematic Research

The second largest automated home market in 2025 is projected to be the Asia-Pacific region, unsurprising considering that this market is projected to account for around half of global GDP by 2025.

Macroeconomic Trends

Listed below are the key macroeconomic trends impacting the automated home theme, as identified by GlobalData.

Economic

The development of the automated home industry is intrinsically linked with the performance of both the economy and real time wages. Whilst consumers can install relatively inexpensive devices such as Amazon’s Alexa or Google Assistant, the installation of integrated automated home systems is an expensive endeavour for the average consumer. Whilst wages have seen strong growth in developing markets, especially in Asia, real wages in most western markets have generally stagnated when accounting for inflation.

The rising wealth inequality across the globe will further limit the widespread adoption of the automated home industry unless there is a significant disruption to the industry by competitors regarding price. Nevertheless, if manufacturers can bring down the costs of manufacturing and installing integrated automated home systems over the next decade, this should be able to counteract stagnated wages.

Demographic

Increasing urban populations across the world in economically developing countries such as China and more recently India over the last few years has facilitated the need to incorporate the automated home concept in order to address arising challenges. China’s urbanisation rate has seen strong growth over the last few years, growing from 56.7% of the population in 2016 to 60.3% in 2019. India has seen a slower urbanisation rate, but still represents a significant portion from 33% in 2016 to 34.5% in 2019.

Urban consumers are more likely to seek investments in automated home automation, compared to more traditional consumers in rural areas. The opportunities for automated home automation systems using mobile, applications and other systems is expected to be enormous, especially for the consumer industry, in large part to the increasing urbanisation rate. The future of automated home automation will revolve around the development of smart cities, and this increasing urbanisation rate will increase the scope and size of these new blue-sky metropoles, with the potential to supersede those currently developing in western markets.

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Social

Social attitudes towards the automated home industry, and how these evolve over the next few years will be a key factor in whether consumers are willing to adopt appliances into their homes en masse. Much of this revolves around consumer trust in the products they are buying, considering that they will be installed in the most personal of places for any customer, their home. Recent scares regarding data protection and potential security flaws have proved to be earthquakes in the market’s development, especially for companies involved.

One such example is Apple, which in mid-2019 had to release a public apology following reports that its voice assistant Siri permitted third parties to listen in any time for ‘testing purposes’. What has followed from this is a slew of accusations by consumers and security researchers regarding data privacy from forthcoming apple updates, with Apple forced to clarify in mid-2020 that an update to its anti-malware platform Gatekeeper wasn’t to track users, but to improve security.

Whether these reports are true or not, these accusations damage consumer trust in adopting automated home platforms, with fears of an Orwellian ability by companies to track and listen into consumers within their homes. For this to be overcome, both policymakers and manufacturers within the automated home industry must provide a solution to allay consumer fears regarding data breaches and privacy.

Covid-19

The advent of Covid-19 in early 2020 had a profound impact on the technology sector. With the shift to working from home for most previously office-based workers, home automation software and the Internet of Things (IoT) became an integral part of home life. For many consumers, automated software grants them the ability to avoid previously unavoidable face-to-face situations, particularly beneficial during a pandemic. One glaring example of this is in ordering produce using delivery services, where consumers can pay for and receive their goods without having to come in contact.

Delivery platforms are making it increasingly easier for consumers to receive products without contact by prioritising this as the default option when ordering groceries, takeaways, and other goods. This is expected to expand post-Covid, as automated home systems can be designed to ensure that delivering both food and products is quick and convenient while ensuring an element of safety throughout the process.

Another benefit revolves around healthcare at home. Some healthcare manufacturers are considering the integration of virtual hospitals/wards in IoT systems, where outpatient and long-term care can be delivered remotely by healthcare professionals to patients in their homes, freeing up vital bed space for patients and preventing any risk of contagion. This may also perhaps be expanded post-Covid and help ease pressure on struggling infrastructure.

This is an edited extract from the Automated Home in Consumer – Thematic Research report produced by GlobalData Thematic Research.