Pricing Pressure Threatening Smart Home Margins, Says ABI

Smart home services revenue is lagging the pace of sensor device and controller sales, reported ABI Research Thursday. Smart home hardware revenue is expected to grow 20.3% this year from 2020, and set-up fees and subscription services for home installations are forecast at $32 billion, up 3%. “Keen price pressure continues to threaten manufacturers' margins,” said analyst Jonathan Collins. The two-stage growth reflects “a growing divide” within the smart home market as smart home hardware shipment growth outpaces revenue growth by 6% due to price pressure. Service revenue will face “similar price pressure as close to 15 million homes will become smart homes this year, but the value of services sold to those homes declines,” Collins said. The smart home market is at a “key inflection point,” with hardware and service provider players requiring both sides of the market to be healthy, Collins said. Increasingly, the upfront investment to secure long-term revenue is a model that serves only a handful of major players, such as Apple, Amazon, and Google, he said: “With interoperability coming to hardware and system management thanks to the emerging Matter specification, vendors across the smart home space will have to reassess their long-term strategies and engagement.” New services and technologies, such as ultra wideband; low-power, wide-area wireless; and 5G “will all play a part,” along with smart appliances and consumer robotics, Collins said.