According to Huajing Securities’s data, the CAGR (复合年均增长率) for the domestic smart homes market is expected to be 14.65% from 2016-2020 which is made up of the Internet of things and big data, attracting traditional household appliance enterprises, Internet giants, and startups to the pursuit of tuyere (风口) in the tech industry.
On the other side, the global annual consumer spending of smart home in 2018 seems to be on the verge of USD 96 billion, including intelligent device, intelligent system, and related intelligent services, according to a report by Strategy Analytics. It will rise to USD 155 billion in 2023 along with a 10% CAGR increase as well.
Meanwhile, there will be 293 million households with smart systems in the global smart home market in 2023 as shown in the data above.
The brief classification of smart home industry in China
In China, the smart home industry consists of three big sectors from the product classification according to the report of EO Intelligence, such as intelligent household electrical appliance (智能家电) , home security products (家庭安防产品) , intelligent connection control platform (智能连接控制平台) .
Intelligent household electrical appliance mainly contains both electrical appliance with large volume and small volume, especially the intelligent upgrade of all home appliances. Home security products compose of intelligent door locks, switches, sockets, alarms, cameras, etc.
Intelligent connection control platform provides a variety of the connection between products and as well as the connection of products and platform. It consists of intelligent lighting system, electrical control system and system software control system.
Each section contain a variety of different types of products, among which the influence of smart appliances is gradually expanding. It shows great possibilities for expansion because of the large market for the appliance industry in the past.
A big developing market in China: Intelligent household electrical appliance
The domestic smart home market is divided into the hardware market and service market among which the hardware market includes two major markets: the market of existing stock (存量智能家居市场) and incremental market (增量智能家居市场) .
The smart upgrade market is the most important part of the market of existing stock for a smart home, which is caused by the intelligent upgrade of the existing traditional home appliances market. It is popular that most appliances in China are regarded as driving on an intelligent express, such as air conditioner, TV, washing machine, kitchen appliance and other traditional big appliances.
The incremental market for the domestic smart home market is called emerging market along with the influence of consumption upgrades, loT and Artificial Intelligence in recent years.
It is widely distributed in a variety of smart home scenes which is mainly about newly emerging products like a smart speaker, a sweeping robot, smart camera and smart vacuum cleaner. It is in the lower position comparing to the market of existing stock for smart home due to the weak market accumulation and short development period for the product.
The market of existing stock for smart home has great performance among them with the largest share, which is mainly composed of upgrading smart home appliances, such as TV, air-conditioner, fridge, washing machine, and others. There is an obvious change that the intellectualization of upgrading tradition household appliance industry is becoming a huge industry trend at present.
According to the report from Huajing Securities, the smart home market will be worth more than CNY 1120 billion (USD 163 billion) in 2020. Meanwhile, it shows huge development that the market for intelligent household appliances upgrades in China will reach CNY 926 billion (USD 134 billion) in 2020, which means the latter will grab a market share of almost 83% for the whole smart home market.
Four types of developed electrical upgrading appliances in China
The penetration rate (渗透率) of the smart home appliance industry shows great development in the near future, which includes a variety of electrical appliances product. Smart TV, smart air conditioner, smart fridge, and smart washing machine are among intelligent products with loftiest sales among these years.
For instance, Chinese domestic smart television sold almost 173 million units in 2016 and by 2020 this number is expected to reach 210 million, which will cause the penetration rate to grow from 85% to 93%. Nowadays, Smart Television is becoming one of the three strategic zones of the war within the smart home entrance for consumers.
Xiaomi is leading the industry by grabbing a market share of 20%, both shipments and sales of the Xiaomi TV product line exceeded 4 million units in H1 2019.
Smart air conditioner, smart fridge, and smart washing machine
It seems that the market of the smart air conditioner, smart fridge and smart washing machine has more potential in the field of the smart home market especially air conditioner and fridge.
The penetration rate (渗透率) of the smart fridge market is the lowest field among them, which only captured 17.4% in 2016 showing the largest growth space in the future. With promoting consumption upgrading, it will grab a penetration rate of 37% in 2020, and sales volume will reach almost 107 million units over the same period.
As a result of the popularity of smart air conditioners in recent years, many giants of the industry such as Haier, Gree and Midea took action at an intelligent air conditioning strategy, which seemed to be getting very popular in the industry.
Internet giants like Xiaomi did not miss this opportunity. It formally launched an Internet air conditioner in 2017 with a low-price strategy which has become its second-largest home appliance category after the layout of smart TV.
The main competition war: loT
Nowadays, each home appliance products are likely to become the entrance of the smart home as the advent of the IoT.
“In the future, 5G and AIoT will be the next generation of super-internet. The reserves of Xiaomi in the field of IoT has developed lots of years which will give us a head start on opportunities of the war.” Lei Jun, co-founder&CEO of Xiaomi Inc, said on Second Session of the 13th National People's Congress (十三届全国人大二次会议) .
EqualOcean expects that the Internet of things will be the main competition in smart home appliances war. Besides, intelligent household electrical appliance is the next battlefield of the “IoT war”.