Tuesday, November 4, 2014

The sneak peek: Market research

Home automation has become commonplace very quickly. And everywhere!
Or has it? We asked ourselves the same question several times over the past year and a half.

To see if we were right about this, we commissioned a market research study in October this year. We asked people with different backgrounds from Finland, Germany and United States to answer questions related to home automation. A total of 4,000 people responded to the survey: 1,000 from Finland, 1,000 from Germany and 2,000 from the United States. In other words, the survey sample is comprehensive.

A brief note on the geographical differences

Home automation is prominently featured in the United States. New companies and products are popping up every week, and megalomaniacal acquisitions are attracting a lot of attention. For this reason, we expected that home automation had already found its way into many homes in the United States.

The findings, however, showed quite the contrary.

Based on our research, less than 20% of households in the United States have acquired home automation. In Finland, the figure is about 22% and in Germany, the locomotive of home automation, it is just under 25%. Finland and Germany did not surprise us, but the low relative figures in the United State certainly did. This includes products and systems related to the control of safety, energy efficiency, lighting and household appliances.

"The Internet of Things (IoT) is currently receiving a lot of coverage that can be attributed to its great power to revolutionise the operating practices. The results, of course, should always be treated with some degree of caution, but the industry is going through a major transition. Although more than 50% of Germans do not intend to buy home automation in the next two years, there are still 16 million households seriously considering it. In Finland, the corresponding figure is approximately 700,000 households. Hence, the Internet of Things will very soon affect the everyday behaviour of many of us at home.” Antti Vihavainen, Business Development & Sales, Cozify Oy

Antti Vihavainen
Business Development & Sales, Cozify Oy

Why is the penetration rate for home automation in the United States so low?

Although home automation in the product range of shops, operators and other service providers is represented more widely in the U.S. than it is, for example, in Finland, the products have not yet become mainstream.

The fanfare associated with the launch of the Internet of Thing (IoT) easily creates the impression that IoT and new generation home automation have already entered many homes. Particularly in the United States. In this context, it is worth mentioning that IoT is not the same as home automation. And vice-versa.

There is no right answer to this question, but the biggest reason is probably associated with building an image and creating hype. SmartThings, purchased by Samsung for about $200 million dollars, has predicted to be supplied less than 20,000 product packages. This was before the deal was announced this summer. At the beginning of the year, Forbes estimated that the Nest's smart thermostat was found in about 1% of U.S. homes. The numbers are still low. 

Age and home automation

The research reveals an interesting point related to age, particularly in Finland: 25% of people age 56 and older have already purchased products or services in some sector within the scope of home automation. Nearly half of the people have bought products to control lighting, entertainment or home appliances.

The interesting thing here is that exactly the opposite holds true when we check the responses from Germany and the United States. In Germany, by far the largest group to acquire home automation included 18-22-year-olds. In the United States, the differences even out a bit, but younger people there have also purchased more products and services related to home automation than older respondents.

What is the preferred method to acquire home automation

Now we get to a very interesting topic. If respondents were going to buy home automatic, what purchase model would they choose? Don't peek at the answer yet. I challenge you to choose the option below that in your opinion received the most answers:

Purchase model:
  1. Equipment is purchased and paid in full, no monthly payment
  2. A service fee, which covers the equipment starter pack and support for future technologies and equipment
  3. A combination of the above, with a low initial payment to cover at least part of the equipment. The monthly service fee covers additional paid services and support for future technologies and equipment


In each country, the result was the following: about half of the respondents would rather buy the whole package as a one-off purchase while the other half liked the model with no initial payment or a low initial payment and a monthly charge.

Young people preferred the one-time purchase option. A majority of respondents 36 and older liked the continuous service model.

What do you think of these results? Did they surprise you? Join the discussion in the comment section below or on our Facebook page and tell us what you would like to hear more about.

- Antti, Business Development, Cozify

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Cozify’s blog covers topical issues related to smart living, construction and property management. Articles come from our own team as well as other experts in the field.

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