HIGH PRICES MEAN THE SMART HOME MARKET WILL DRAG ON CONSUMER IoT ADOPTION: Lack of consumer demand will inhibit IoT adoption, as many consumers are turned off by the high prices of many consumer IoT products, a recent Motley Fool article predicts. The article questioned the reliability of forecasts predicting billions of IoT devices will be deployed over the next few years, citing a consumer survey by Accenture in which 62% of respondents called IoT devices too expensive. The Motley Fool article points out that enterprises will be faster than consumers to adopt IoT devices, as the data extracted from these devices will be extremely valuable for them.
BI Intelligence agrees with the assessment that enterprises will adopt IoT devices faster than consumers. We predict that 24 billion IoT devices will be connected by 2020, with enterprise IoT devices making up the biggest share of that installed base, followed by the government and then consumer sectors. The consumer sector will make up only about 20% of the IoT devices connected in 2020, according to our projections. Additionally, we believe that the smart home market will slow overall consumer adoption of the IoT because of the price concern that Accenture found, but other consumer IoT device categories will flourish.
The connected car, smart home, and wearables categories will make up the majority of the consumer IoT market. The connected car market is set for fast growth as automakers are connecting more and more of their models. Between 35-40% of cars shipped in the US last year were connected, and we expect about two-thirds will be connected in 2016. Typically, the car’s connection is already built into its overall cost, and consumers can often get their car added to their mobile data plan for around $10 per month.
BI Intelligence also predicts that annual wearable shipments will grow by 39 million over the next four years. Fitness trackers (the most popular category of wearables) can be bought for less than $100. To compare that to a popular smart home device, the Nest thermostat costs $250. The majority of consumers are not willing to pay $250 for Nest’s product when they can buy a non-connected thermostat for $20 or less. So we expect the smart home market to grow slowly in the near-term until device manufacturers can bring down the cost of their products to make them more affordable for consumers.