Smart Home Devices Market Will Grow Until 2022 at 12 Percent CAGR

The worldwide smart home devices market, inclusive of smart speakers, digital media adapters, lighting, thermostats, and more, is forecast to ship 549.5 million devices in 2018, growing 26.8% over the prior year, according to IDC. The hottest two categories, Smart Speakers and Video Entertainment products, are expected to represent 71% of the market in 2018 and will see a compound annual growth rate (CAGR) of 12.0% from 2018-2022.

The video entertainment category, comprised largely of smart TVs and digital media adapters, will be the largest part of the smart home market throughout the forecast period. However, the number of smart assistant-enabled TVs and digital media adapters shipped remains relatively small as the smart speaker overshadows other form factors in which smart assistants can be accessed in the home. This trend is expected to change in the near future as more vendors come to market with smart assistant-embedded entertainment devices, as witnessed by the release of Amazon's Fire TV Cube with Alexa and LG's lineup of 2018 OLED and Super UHD LCD TVs with Google Assistant.

Outside of Video Entertainment and Smart Speakers, IDC expects tremendous growth in the Home Monitoring/Security category as Amazon's recent acquisition of Ring comes to fruition by driving prices down and making the category more accessible. Meanwhile, Google's move to maintain Nest as a premium, subscription-based service will hinder growth in the short term as consumers struggle to see the benefits of reccuring payments.

However, as the market evolves, subscription services from the likes of Nest or other smart home products are likely to steal share from traditional home monitoring service providers. Other devices like connected thermostats, smart lighting, and other products will round out the rest of the smart home market. Growth for these categories is expected to be 25.3% from 2018-2022 as these products are often the second or third purchases on a consumers' smart home journey.