×

Why 2017 will finally be the year of the smart home: Consumers figure it out

There are tons of high-tech gadgets to make homes "smarter" today, but homeowners are not asking for them as much as you might think.

Full home automation is not high on the average house hunter's priority list. That may be about to change. The trouble so far has been the technology itself: Consumers aren't sure how to integrate it into existing home systems. Plain and simple, they don't know how to use it.

"It's been a lot of fragmentation in the industry, a lot of confusion among consumers as to which devices are the best to go with. Is there longevity here? If they install a system tomorrow, will it be around in the next year," said Blake Kozak, principal analyst at IHS Markit.

Smart Home
Hero Images | Getty Images

In 2016, 80 million smart home devices were delivered worldwide, a 64 percent increase from 2015, according to IHS Markit. That includes Nest thermostats and smoke detectors, August smart locks, Ring video doorbells. A big chunk of it was personal home assistants like Google Home, Bosch's Mykie and Amazon's Alexa. Analysts say despite the growth last year, 2017 will be the year of the smart home because the companies behind the technology will be smarter about educating their consumers.

"The consumers today are incredibly confused as to what's the value that they're getting. A consumer could be spending upwards of $1,000 if they go to the retail market and they don't understand what's the value. Are they getting energy savings? Is it simply fun and they're not going to want to use it in a couple weeks' time?" said Kozak.

Consolidation in the industry has brought smaller home-tech companies under big umbrella home-service providers. That should help consumers feel more comfortable with the new devices.

"What the large players in the market like a Comcast, AT&T, and security providers like Vivint, what these companies can do is provide more marketing and provide more opportunities for consumers to use these products first hand. Get these products in front of them, because it's very difficult just watching advertisements on TV, as to what the true value is," said Kozak.

Real estate agent Theresa Taylor said her buyers in Maryland are not asking for home technology. They tend to expect it in new construction, but not in existing homes, which are the vast majority of the market.

"They're not willing to pay a premium for it. If the house has it, that's fine, but it's nothing that's on the top of their list," said Taylor.

Most buyers, she said, know that if they want a smart doorbell or thermostat, they can simply buy it on their own relatively inexpensively. The idea of a complete smart home is beyond their grasp.

"I think it's definitely an opportunity for the electronics companies to educate them more that this could be a savings, not just simplicity and making your life easier and being able to use your phone to do everything," said Taylor. "I think if they knew the benefits about how it could save them money, it would be a more attractive feature and instead of being at the bottom of the list of what people want, it would probably move up to the middle."


To that end, CNET, a consumer technology news and review website, is launching its Smart Home Matrix at the Consumer Electronics Show this week. It is a new feature on the site designed to walk consumers through the latest smart home technology.

"We've seen smart home technology increasingly take prominence at CES with more products announced each year," said Mark Larkin, SVP and GM at CNET. "From our own testing in the CNET Smart Home, we understand one of the largest hurdles in adopting smart home technology is getting multiple devices to work together. Our Smart Home Matrix helps consumers do just that by letting them know what devices are compatible with each other."

The year ahead will likely bring more innovations, but the focus, according to analysts at IHS Markit, will be lowering prices, educating consumers and enhancing security, so that no one can hack your fridge. Voice assist will become much more commonplace, and the smart home will integrate with the smart car — so as you drive away, your home will know to turn the heat down. They predict at least 130 million smart home devices will be shipped worldwide this year.

DISCLOSURE: Comcast is the parent company of CNBC.