Smart Thermostat Market - Growth, Trends, and Forecast (2020 - 2025)

The Smart Thermostat Market is segmented by Type of Thermostat (Wired and Wireless), End-User (Residential and Commercial Sectors) and Geography

Market Snapshot

Study Period:

2020-2025

Base Year:

2019

Fastest Growing Market:

Asia Pacific

Largest Market:

North America

CAGR:

23.1 %

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Market Overview

The smart thermostat market was valued at USD 849.14 million, in 2019, and is expected to reach a value of USD 2858.63 million by 2025, at a CAGR of 23.1% during the forecast period (2020- 2025). Lighting and other household appliances consume a considerable amount of energy and presently there is a dire need to use these energy resources efficiently. Therefore, governments are emphasizing on the use of smart devices in homes.

  • The main factors driving the need for smart thermostat are the convenience, energy conservation, energy tracking, and need for an increase in potential savings. For example, Ecobee claims its gear can save an average of 23 percent off bills whereas Google's Nest claims its systems can save between 10 and 12 percent on heating and 15 percent on cooling.
  • The BYOT (Bring-your-own-Technology) trend is expected to stimulate the growth of the market over the forecast period. Consumers have independently begun purchasing smart Wi-Fi enabled thermostats capable of receiving demand response control signals. Additionally, with a wi-fi connection and smart thermostats, virtual assistants, like Amazon Alexa, or Google Assistant, are increasingly being used to control and monitor the home temperature, program schedules, or manage the Air conditioning.
  • It was estimated that around 60.5 million Americans used virtual personal assistants and voice-controlled speakers at least once a month, according to an investment firm Cowen & Co. Also, in 2017, 24% of Americans used Amazon Echo and 31% used Google Home for home control settings following music, shopping, and requesting information applications. With the increase in the use of virtual assistants in home control, the forecast period is likely to witness the exponential adoption of smart thermostats.
  • Covid-19 Impact: Smart thermostat market is highly dependant upon China for hardware manufacturing. According to Business Standard, the Chinese exports were badly affected by Covid-19 as the exports declined by 15.7% in April. The decline in the exports put Smart thermostats manufactures in a tough position. Furthermore, the rise in tariffs on Chinese manufactured product by U.S. has also added pressure on Smart Thermostat manufacturers like Ecobee who are dependent on China for hardware.

Scope of the Report

These thermostats are termed as 'smart‘, due to the inherent capabilities of being able to communicate with IoT devices within a smart building, ability to learn with AI capabilities, active geo-fencing features, reduce energy consumption, and ability to communicate with emerging virtual private assistants. Smart thermostats refer to the devices that allow remote connectivity and can be managed through a handheld device, finding its applications in residential and commercial sectors. These thermostats can be wired and wireless with same features but different installation process.These are the devices that are connected and allow remote connectivity in the consumer sector.

By Type
Wireless
Wireless
By End-User Vertical
Residential
Commercial
Geography
North America
Europe
Asia-Pacific
Rest of the World

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Key Market Trends

Increasing Demand for Energy-Saving Devices

  • According to the US Energy Information Administration (EIA), the global energy demand grows at 2.1 % per year to 2040 with the current stated policies scenario. The demand surge will raise the electricity share in 2040 to 24 %. The use of technologies, changes in government policies, developing economies and market conditions are driving the growth of low-carbon sources to maintain the environment levels. Electricity consumption has a direct effect on the carbon footprint as electricity generation requires the burning of non-renewable resources and leads to the carbon footprint.
  • HVAC systems consumed 38% of the delivered energy in buildings in 2019, this percentage is going to grow in the coming years. The need to save electricity expenses and unnecessary energy consumption made by HVAC systems has to lead increase in the usage of Smart Thermostats. There are various brands in the market with the aim of sustainable future Ecobee, Nest Labs, Siemens AG, Emerson electric to name a few. The usage of smart thermostats is also backed up by governments of the United States, Germany, United Kingdom, etc.

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Asia-Pacific to Witness a Significant Growth Rate Over the Forecast Period

  • Consumers are adopting the smart assistant devices, such as Amazon Echo and Google Home for many purposes, with almost one-third of people using it as an information provider responding to questions, and over 40% as an audio speaker for listening to streaming music. The smart thermostats find application among the smart assistants, thereby, fueling its demand across the residential sector across the region.
  • Moreover, the Chinese government launched the 'New-Type Urbanization Plan,' focusing primarily on new-type, smart, and humanities city construction from 2014 - 2020.
  • Besides, in India, the IGBC (Indian Green Building Council) Green Homes are the first rating program that has been developed, exclusively for the residential sector, whose objective is to facilitate the effective use of site resources, water conservation, energy efficiency, handling of household waste, optimum material utilization, and design for healthy, smart homes.
  • This will encourage industry players to invest in smart home space, thus, having a positive impact on the smart thermostat market growth.

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Competitive Landscape

The smart thermostat market is not very fragmented, and competitive. Due to the government's support and promotion for the uptake of smart devices in residential buildings, many smart home vendors have entered into the market, making it competitive. Some of the key players in the market include Alphabet Inc. (Nest Labs - Google), Honeywell International Inc., ecobee, Schneider Electric SE, and Lennox International Inc., among others. Some recent developments in the market include:

  • January 2020- Nest labs rolled out a new feature that alerts the customer about any potential HVAC issues. It also assists the customer in booking an HVAC professional to fix it. This new feature is because of Nest labs partnership with Handy.

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Table Of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions and Market Definition

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET INSIGHTS

    1. 4.1 Market Overview

    2. 4.2 Industry Value Chain Analysis

    3. 4.3 Industry Attractiveness - Porter's Five Forces Analysis

      1. 4.3.1 Bargaining Power of Suppliers

      2. 4.3.2 Bargaining Power of Buyers/Consumers

      3. 4.3.3 Threat of New Entrants

      4. 4.3.4 Threat of Substitute Products

      5. 4.3.5 Intensity of Competitive Rivalry

    4. 4.4 MARKET DYNAMICS

    5. 4.5 Market Drivers

      1. 4.5.1 Increasing Demand for Energy-Saving Devices

      2. 4.5.2 Effectiveness & Convenience in Controlling HVAC Devices at Home

    6. 4.6 Market Restraints

      1. 4.6.1 High Product Price and Installation Costs of Smart Thermostats

    7. 4.7 Market Opportunities

      1. 4.7.1 Proliferation and Integration of Smart Home Devices

      2. 4.7.2 Internet Penetration and Demand for Smart Phones

  5. 5. MARKET SEGMENTATION

    1. 5.1 By Type

      1. 5.1.1 Wireless

      2. 5.1.2 Wireless

    2. 5.2 By End-User Vertical

      1. 5.2.1 Residential

      2. 5.2.2 Commercial

    3. 5.3 Geography

      1. 5.3.1 North America

      2. 5.3.2 Europe

      3. 5.3.3 Asia-Pacific

      4. 5.3.4 Rest of the World

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Key Vendor Profiles

      1. 6.1.1 Nest Labs Inc.

      2. 6.1.2 Resideo Technologies, Inc.

      3. 6.1.3 ecobee

      4. 6.1.4 Emerson Electric Co.

      5. 6.1.5 Lennox International Inc.

      6. 6.1.6 Alarm.com Inc.

      7. 6.1.7 LUX Products Corporation

      8. 6.1.8 APX Group Inc.

      9. 6.1.9 Johnson Controls PLC

      10. 6.1.10 Netatmo SA

      11. 6.1.11 Tantalus Systems Corporation

      12. 6.1.12 tado GmbH

      13. 6.1.13 Centrica Hive Limited

      14. 6.1.14 Siemens AG

  7. *List Not Exhaustive
  8. 7. INVESTMENT ANALYSIS

  9. 8. MARKET OPPORTUNITIES AND FUTURE TRENDS

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