Allure Of Lifestyle-Enhancing Qualities Boosts Home Automation Market

Changing lifestyle patterns and consumer willingness to invest increasingly significant amounts in home improvement fuel the desire for intelligent, fully automated living space.

Discerning home owners' perception of their dwellings as a technological comfort zone, with a strong focus on convenience, comfort and safety aspects, contribute to the broadening appeal of the home automation concept.

However, the penetration of the home automation market across existing and new homes is still negligible. If the potential for acceptance by households represented only a few per cent of all dwellings, the market would experience significant expansion.

A new study by Frost & Sullivan, the international market consultancy, pegs the number of home automation installations in Europe at 14,900, equating to equipment and associated software sales worth $172 million in 2002.

The rising sophistication of electronic home control options, providing remote control and automatic regulation of heating and lighting, audio-visual entertainment systems, information technology products and security features, will push revenues to $399.3 million in 2009.

The current market value represents only a small part of the market's ultimate potential when considered against the stimuli for future development and the connection capabilities with other home service provisions.

The dream of a networked home through interlinking the various functional systems becomes a reality with home automation, as it opens up greater possibilities for the optimisation of household operations.

While many individual home products have basic built-in control functions, the essential improvement provided by a home automation system is the ability of the network to take account of operations and performance within the various control and monitoring functions. The network can then effect any appropriate interactive programmed actions. At the same time, the network provides facilities for internal and external communication and the acceptance of new commands.

An important characteristic of the home automation market is the rapidity which technical developments are impinging on the market. These developments arise from both the introduction of new electronic techniques and also the marrying of some of the operating systems which govern the various networks employed.

These benefits, whilst enhancing the possibilities and capabilities of home automation, also introduce an element of caution into the market. Some users or facilities may hold back to some extent if they felt that new developments are in the pipeline. Moves towards open systems are a popular trend, however, a single international and unified system for home networking is an ideal which will take many years to realise.

Many of the earlier home automation systems have been directed at the luxury end of the market and have very much been the reserve of individuals in the higher-income brackets.

The average cost of equipment for home automation has seen some decline, however, installation and set-up charges, which are generally customer-specific and site-dependent, may represent a limitation, unless standardised packages are introduced.

Frost & Sullivan warns that future expansion of the home automation market will hinge on the ability of suppliers to offer packages to installers and property developers at competitive and reduced prices.

The study points out that a high number of home automation systems installed in recent years have been provided by refurbished or new property developers as a sales incentive feature and an opportunity to improve margins on property deals.

In order to tackle the market for smaller properties and the retrofit business, alternative avenues must be developed for serving the wider market. Companies determined to capture a greater chunk of the overall market may have to operate on lower margins from individual projects, but will enhance overall turnover and profits through the development of the market in quantitative terms.

Consumer understanding of the technology and appreciation of the benefits associated with home automation underpins sales growth. The study points to the importance of educating the customer and effectively communicating the advantages of implementation to the broader public. Furthermore, market participants must ensure that the technology is readily available to consumers through local distribution and sales support.

Cooperation between system suppliers in the marketplace is becoming increasingly accepted as an ideal route to promote greater awareness of home automation.

Compatibility within networks and similar operational practices are going to facilitate the installation of systems and enhance user-friendliness and general ease-of-use. Although the industry is moving in this direction, the practical realisation of the technology and improvements in the ergonomics of the systems will take time to manifest themselves, the study cautions.

Honeywell, Siemens and the Schneider Group are the most prominent forces in the European home automation market, jointly accounting for a 38.0 per cent share of the total 2002 European home automation market. Each player has a particular historic advantage in the market derived from the activities of their parent groups. In the future, a lowering of prices in the marketplace and moves to develop the middle market may disturb the current patterns.