Smart Home Industry Outlook

 

Speaker Introduction
Issue Commentary	Lee Su-min, Reporter (e4ds News Editorial Department)	-
Presentation	Kim Min-young, Senior Research Fellow (LG Economic Research Institute)	Smart Home Industry Outlook: Connectivity and Beyond—Customer Value

 This event will be held as an e4ds planning webinar.

The outlook suggests that smart homes will evolve beyond merely providing convenience through device-to-device connectivity. They will progress to a stage where data collection and information provision enable service providers to deliver the services consumers actually want, thereby generating revenue for providers.

Historically, smart homes have been perceived as remote control and home automation through product interconnection, and over the past decade, various service providers have made efforts to implement connectivity.

Through these efforts, the base costs for implementing IoT technologies—including smart devices, sensors, integrated circuits, and network servers—have declined rapidly, and many devices have been automatically connected to platforms.


Currently, the smart home market is growing at an annual average rate of 11%, and interest in smart homes has increased further following COVID-19, with 51% of consumers purchasing one or more smart devices during the pandemic period.

However, it is questionable whether customers genuinely desired smart products when they made their purchases.

A significant portion—50%—of purchases involve products that manufacturers included as standard features, with customers unaware they were purchasing smart appliances. In the case of smart speakers, over 80% are used exclusively for music listening. This reflects an approach to smart homes as an upselling means, with vendors expanding through the inclusion of smart features.

Notably, current smart home devices demonstrate limitations not only in connectivity functions but also in platform revenue models. Consequently, leading smart home companies are prioritizing qualitative improvements over quantitative expansion within connectivity, strengthening third-party support to enable customers to use products easily and intuitively.

While existing products have centered on connectivity from a communication perspective, an era has arrived where integration with external services whose customer willingness to pay has been validated becomes increasingly important.

Leading smart home companies such as Amazon, Google, LG, and Samsung are connecting killer services—shopping and content—with smart homes and expanding into new services such as security and healthcare. Going forward, products and services in wellness, healthcare, beauty/fashion, home tasking, entertainment, food/cooking, energy, security, and cleaning are expected to converge, evolving into platforms that resolve each category end-to-end.

Consequently, an environment is being created where each device becomes a sophisticated computer, and the entire home is anticipated to transition into an autonomously operating computer system. Additionally, a business model is expected to spread in which inexpensive devices are provisioned through this environment, and revenue is generated by delivering services through the provisioned devices.

For those who wish to learn more about the future outlook of the smart home industry, we encourage your participation in the e4ds webinar on July 27, where Kim Min-young, Senior Research Fellow at the LG Economic Research Institute, will present on the topic "Smart Home Industry Outlook: Connectivity and Beyond—Customer Value."