26 Mar 2021
IDC Forecasts Double-Digit Growth for Smart Home Devices as Consumers Embrace Home Automation and Ambient Computing
NEEDHAM, Mass., March 26, 2021 – Worldwide shipments of smart home devices reached 801.5 million units in 2020, an increase of 4.5% over 2019, according to the International Data Corporation (IDC) Worldwide Quarterly Smart Home Device Tracker. Shipments are forecast to surpass 1.4 billion in 2025 with a five-year compound annual growth rate (CAGR) of 12.2% as consumers seek out additional conveniences brought about by home automation products and ambient computing through smart speakers and other products continues to rise.
"Sales of smart home devices have remained fairly resilient during the global Covid-19 pandemic," said Adam Wright, senior research analyst, Smart Home. "The market faced some challenges in 2020, the result of high unemployment, an uneven economic recovery, and lockdown measures, among other factors. But nonetheless, 2020 saw positive year-over-year growth across all device categories. Consumers have shifted their spending priorities from other areas like vacations, going out to eat, or visiting cinemas to focus on adding more comfort, conveniences, and entertainment at home. As such, we have seen that smart home devices like streaming sticks, smart speakers, security devices, smart lights, and others have performed well over the past year."
The United States will represent the lion's share of unit shipments during the next several years and will grow at a compound annual growth rate of 3.8% over the forecast period with more than 451.3 million units shipped in 2025. China will be the second largest market by shipment volume through 2023 but will overtake the United States by the end of 2024 with its five-year CAGR of 21.9%. Canada and Western Europe will experience five-year growth rates of 17.7% and 14.7% respectively.
"While developed markets will undoubtedly lead in terms of shipment volumes, emerging markets such as India and Latin America are expected to quickly become the next battle grounds for companies such as Google and Amazon who currently dominate the smart home market," said Jitesh Ubrani, research manager for IDC's Mobile and Consumer Device Trackers. "The emergence of newer vendors, particularly tier 2 and 3 smartphone brands, will also help drive additional competition within the home."
Video entertainment devices are expected to deliver the largest volume of shipments, accounting for 27.6% of all shipments in 2025 as falling prices and advances in functionality – such as 8K, higher refresh rates, HDR, larger sizes, and integration with smart assistants and streaming platforms – lead many consumers to upgrade their television sets. Home monitoring/security devices like smart cameras and smart locks will account for 21.2% of the shipments in 2025 with a CAGR of 13.0%. Growth in smart speakers and displays is expected to slow over the next few years as the installed base of these devices approaches maturation and consumers look to other form factors to access smart assistants in the home, such as thermostats, appliances, and TVs to name a few.
Inhibiting the market's growth over the next several years are ongoing concerns about security and privacy, consumers' price sensitivity to upfront and ongoing costs of devices and services, and the economic uncertainty stemming from the volatility of labor and financial markets across the world.
Smart Home Devices, Shipments, Market Share, and Growth by Category, 2020 and 2025 (shipments in millions)
2020 Market Share
2025 Market Share*
Source: IDC Worldwide Quarterly Smart Home Device Tracker, March 25, 2021
* Note: Data represents forecast values.
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