Ownership of smart devices has more than doubled in the last two years according to a new Disrupting Utilities survey by PwC.
The survey of over 2000 consumers reveals several sparks of smart tech optimism. Since the firm’s first connected home survey in 2016, buying intentions are gradually improving with around 30% of people (2016- 14%) planning to purchase a smart device for the home in the next two years. The biggest adopters are likely to be aspirational homeowners in the 18-35 years age range: 59% have invested in smart entertainment and 40% in wearables such as an Apple watch or Fitbit.
And with the advent of Google, Apple and Amazon smart home assistants - central systems that can connect and control other smart devices - and more affordable technology, it appears the penetration rate of devices could double by 2020. The survey also reveals that almost 40% of people are now entering the connected home market via smart entertainment devices.
Ronan O’Regan, PwC’s Digital Utilities leader, said:
“The indifference we encountered in 2016 to the ‘Internet of Things’ energy revolution in the home has changed for many households. Our latest analysis shows there is an increasing willingness to purchase connected homes devices and we anticipate this growth trend will continue to accelerate with the expectation that in 2019, £10.8bn will be spent on smart devices across the UK.
“While smart home assistants are relatively new to the market, we believe they could potentially be the ‘glue’ towards wider adoption. You could say they are having an ‘iPhone effect’ in the market.
“Our analysis shows that smaller ticket smart devices such as these are becoming increasingly consumed like smart phones, with their core capabilities appealing enough for consumers to invest in now and upgrade frequently as the technology matures and new features emerge.
“Crucially for energy suppliers, smart home assistants are increasingly acting as a springboard to other smart purchases from heating and lighting to smart appliances.”
The survey reveals that, with the exception of smart meters, 40% of connected home device owners expect to upgrade their devices within two years. For private renters, this jumps by 50% to three in five people, especially in relation to home appliances, lighting, plugs and assistants which can easily be taken with them should they move home.
Evolution or revolution?
Energy suppliers are increasingly turning their attention to winning the hearts and minds of consumers and converting smart home tech into a sustainable revenue stream. Tech giants are blurring lines and breaking down barriers, creating innovative products that capture data to provide differentiating insights, novel solutions and a seamless user experience. As a case in point, Amazon is embracing smart locks in direct competition with Yale, while Google Home and Apple HomePod are rivalling the Amazon Alexa.
While many traditional players need to recognise this challenge and either grow or acquire capabilities to plug this gap, a few are already off and running. British Gas’ Hive is challenging Google’s Nest while security firm, ADT, is using smart devices to augment their services, moving beyond motion detection and camera solutions to offer complete home automation solutions incorporating smoke detectors, smart locks and thermostats.
And it appears these innovations are having an impact in the day-to-day running of homes. Before making a purchase, only one in five expect to be positively impacted by a connected home device. But once purchased, they report much higher levels of actual consumer value - with positive impact ratings doubling or trebling, for example:
The perceived health benefits of a smart home assistant is rated as 13%, increasing to 43.5% after purchase, with comfort values almost doubling from 33% to 65%
Smart energy meters reported a pre-purchase impact value of 22.6% for comfort and 55.9% in financial terms, rising to 53.9% and 71.8% respectively once installed.
Since 2016, levels of trust have almost doubled across the board, with energy companies (60% - 2018 v 34% - 2016) still the most trusted, but only just. Telecoms continue to nip at their heels with 58% (28% -2016) with tech companies at 55% close behind (28%- 2016). Crucially, as devices evolve and revolutionise the home, young people are not only more likely to adopt smart devices but they also trust tech companies (67%) more than energy (60%) or telecoms (54%) to supply and install them.
And as this generation matures, this could become an issue for traditional players, as Steve Jennings, PwC energy leader, explained:
“Trust could become a major battleground for traditional players over the next few years. While trust rates overall have almost doubled, our survey shows that young people, who are more likely to adopt smart devices, lean more towards tech companies. If energy suppliers are to maintain their most trusted position, they need to ensure their propositions engage the younger market.
“When it comes to smart meters, we found that 34% of people have no plans to invest at all. However for those who already have them, the positive impact it has on their daily lives is clear - three in five enjoyed greater comfort, control and security in their homes as a result. As suppliers continue their smart meter installation drive in a bid to meet government targets, this satisfaction factor is perhaps something they could lean on to boost confidence and convert consumers.
“Traditional players are no longer able to win consumers hearts and loyalty by offering a standalone product. With a bigger shift toward customer experience and growing consumer expectations, they need to think more broadly around where threats can come from and how they can innovate, including the way they use data to deliver service offerings and better customer propositions.”
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