A Million-Plus Smart Homes in Germany By 2020

New products, services, and manufacturer alliances as well as favourable conditions are stimulating the German smart home market.
Published: Wed 12 Nov 2014

A new study from Deloitte projects indicates that there should be one million intelligent and networked smart homes in Germany in the period 2018 to 2020 and potentially as many as 1.5 million by 2020.

This corresponds to a compound annual growth rate (CAGR) of from 18% to 24%, from the approximately 315,000 smart homes in 2013.

Growing smart home interest

The study, which was carried out for the Connected Home focus group at the national IT summit, found that smart homes have gained increased public interest in recent months. This can be attributed to five factors:

● New market offerings, such as internet-enabled retrofit solutions, attracting the attention of new customer groups

● New start-ups demonstrating a vision of the future smart home

● Industry alliances to jointly develop smart home standards and products

● Macrofactors such as the potential for the smart home in areas such as assisted living and energy management

● A dynamic housing market offering the possibility to include smart home installations in new builds, in addition to the traditional retrofit after-market.

The study considers two scenarios to 2020. In the conservative scenario, with its 18% CAGR, growth is driven by the increasing popularity of established players, as well as a developing service landscape and product price reductions. In the progressive scenario, in which CAGR reaches 24%, there is an integrated service landscape, with the inclusion of key players from different sectors such as energy, healthcare, telecommunications, housing, finance, etc., and the emergence of new innovative smart home solutions.

"The smart home market is no longer a niche,” comments Vodafone’s Stephan Schneider, chief executive of the focus group. “Consumer electronics companies, classical ITC companies, the electrical installation industry as well as home appliance manufacturers and energy suppliers, supported by dynamic start-ups, are working together and developing at an amazing pace new, smart devices."

Germany’s smart home market

Germany’s smart home market structure has three components. At the base is the gadget market, dominated by smartphones and tablets. The middle, price sensitive volume market is dominated by smart home services and platforms. The high price segment, aimed at individual consumers, is mature with established suppliers and is currently benefitting from the construction boom.

The report indicates that policy options for a smarter Germany to accelerate smart home deployment include continuing the development of a national digital infrastructure with high speed broadband networks, developing a smart home policy, and developing the necessary skills base.  

Within the smart home market, companies must be aware of the market dynamics. The emphasis of products should be on added value with a strong focus on usability. Product positioning needs to be unique, with transparent and innovative pricing.

Further reading

Connected Home Focus Group: Before the Boom – Smart Home Market Outlook (in German)