Smart Thermostat Market

Smart Thermostat Market Outlook (2023 to 2033)

The smart thermostat market is rapidly growing and is expected to continue in the coming years. FMI estimates that the smart thermostat market size could reach from US$ 4.18 billion in 2023 to US$ 35.70 billion by 2033. From 2023 to 2033, the market is expected to increase significantly, exhibiting an astonishing CAGR of 23.9%.

A smart thermostat is a device used to control the heating and air conditioning in residential and commercial buildings. A smart thermostat allows users to control the room's temperature throughout the day using a schedule, for example, setting different temperatures during the daytime and night.

Smart thermostats are connected to the internet, enabling users to control the heating setting using different internet-connected devices, like smartphones, tablets, etc. It also allows users to easily switch on/off a room's heating or air conditioning, even when not inside the home or office.

The key drivers of the market are the rising adoption of smart homes and the rising need for energy-efficient solutions. Government programs to promote the use of smart devices and reduce energy use are also helping the industry expand. The market is also expanding, given the rising use of voice-activated virtual assistants and the integration of smart thermostats with these products.

The incorporation of AI and machine learning algorithms is one of the key trends in the market. As a result, the thermostat could understand the user's preferences for temperature and make automated temperature adjustments compliant with their routine and habits. Another breakthrough is the creation of smart thermostats. This can recognize when people are inside a house and change the temperature accordingly. Smart thermostats use advanced sensor technology and predictive analytics more frequently.

The market offers various opportunities, including creating smart thermostats for business and hotel buildings. Smart thermostats that can connect with these systems are becoming increasingly feasible as the usage of renewable energy sources, such as solar electricity, grows. Moreover, integrating smart thermostats with other smart home technologies, like smart security and lighting, is anticipated to open up new market expansion prospects.

More market opportunities include introducing fresh features and connections with other smart home devices. For instance, certain smart thermostats now allow voice control and can be connected to virtual assistants like Amazon Alexa and Google Assistant. The expanding role of machine learning and data analytics in energy management represents another great opportunity. Smart thermostats can gather information on energy use and offer suggestions for how users could reduce their energy use.

2018 to 2022 Smart Thermostat Market Outlook Compared to 2023 to 2033 Forecast

The global smart thermostat market size was US$ 3.37 billion in 2022. The market is growing due to the increasing use of home automation systems, rising energy expenses, and the demand for energy efficiency. Government incentives and integrating smart thermostats with other devices have also contributed to market growth. Smart thermostats have also gained popularity, given their user-friendly nature, convenience, and capacity to learn users' preferences for adjusting temperature settings.

Many companies like Nest, Honeywell, ecobee inc, and tado° GmbH emerged as key players in the smart thermostat market during the historical period. These companies introduced features like voice control, remote access, and integration with other smart home devices. Overall, the market experienced significant growth and innovation between 2018 and 2022, which is expected to continue.

The smart thermostat market has experienced rapid growth in recent years. The estimated valuation of this market is US$ 4.18 billion in 2023. The market is driven by increasing demand for energy-efficient and connected home technologies. Here is a synopsis of the short-term, mid-term, and long-term growth opportunities for this market:

Short Term (2023 to 2026): The market is anticipated to continue growing during this period, supported by factors such as rising energy prices, government restrictions aimed at cutting energy use, and growing consumer awareness of the advantages of smart home technology. More rivalry between existing firms and new entrants in the market is also likely to result in more inventive goods and services.

Medium Term (2026 to 2029): Significant growth is anticipated as more people use smart home technology and the industry matures. The cost of smart thermostats is anticipated to drop while offering more sophisticated functions and better compatibility with other smart home gadgets. Voice-activated smart thermostats provide more convenience and usability and are also anticipated to experience strong market adoption.

Long Term (2029 to 2033): Market maturity and widespread use as a household unit in many homes are anticipated. Artificial intelligence and machine learning technologies are projected to get more widely used in the industry. This is likely to allow smart thermostats to pick up on user preferences and behavior and react accordingly. As more homeowners look to decrease their carbon footprints, the market is also anticipating more integration with renewable energy sources, such as solar panels and wind turbines.

These factors are anticipated to support an 8.5X increase in the smart thermostat market between 2023 and 2033. The market is projected to be worth US$ 35.70 billion by the end of 2033, according to FMI analysts.

Key Market Trends

Increasing Demand for Energy-Saving Devices

The United States Energy Information Administration (EIA) estimates that, under the current set of regulations, the world's energy demand is likely to l increase by 2.1% annually through 2040. The demand spike is likely to increase the power share to 24% in 2040. The development of low-carbon sources is fuelled by the usage of technologies, government regulation adjustments, developing economies, and market conditions to preserve environmental levels. Since producing energy necessitates burning non-renewable resources, which increases the carbon footprint, consuming power directly affects the carbon footprint.

In 2019, 38% of the energy given to buildings was consumed by HVAC systems; this number is likely to rise. The use of Smart Thermostats must rise due to the need to reduce electricity costs and wasteful energy consumption by HVAC systems. Several brands on the market strive for a sustainable future, including Emerson Electric, Siemens AG, Nest Labs, and Eco bee. The governments of the United States, Germany, the United Kingdom, and other countries support using smart thermostats.

According to smart thermostat trends, the self-learning mode of smart thermostats and their ability to be controlled remotely via tablets and smartphones make them ideal for residential and commercial applications. Market participants should have the chance to enhance their share of the residential vertical as the usage of these self-learning devices in residential applications rises.

Even though governments worldwide require the construction of new buildings to meet energy efficiency standards, a significant amount of infrastructure still uses outdated systems with thermostats. Since traditional HVAC equipment is typically wired and furnished with outdated hardware, replacing the present thermostat systems with smart ones entails replacing the thermostats and the related equipment they operate.

Smart thermostats are typically utilized in the home market to regulate various heating, cooling, and ventilation aspects. These thermostats come with a wide variety of features. Remote room sensors, voice assistant support, and compatibility with other smart devices are a few of the standout features. The market for smart thermostats is covered in a crimson carpet of development thanks to all these characteristics. There is likely to be significant development potential due to technological advancements relating to smart thermostats. The thermostats' easy installation and automatic heating settings have drawn a sizable customer base. The market for smart thermostats is likely to expand due to ongoing research and development efforts. The gamers' thermostats can be updated with up-to-date features thanks to these actions.

Strategic partnerships receive a lot of attention from smart thermostat manufacturers. These partnerships increase the participants' influence, raising the growth rate. They are also helped by expansion efforts to efficiently meet customer demand. The SARS-CoV-2 pandemic has had a significant impact on the development of the smart thermostat market. Due to the restrictions put in place by several nations in response to the rising COVID-19 prevalence, the market for smart thermostats suffered significantly. However, easing restrictions put in place by many nations to boost the economy is likely to be a fantastic development opportunity for the market for smart thermostats.

Sudip Saha

Principal Consultant

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Smart Thermostat Market: Drivers and Restraint

The smart thermostat market is expected to grow rapidly over the period forecast. Factors that are responsible for the growth of the global market are increasing awareness among consumers about the various advantages of smart thermostats, technological developments, growing urbanization, rising demand for connected homes or smart homes, growing demand of energy-efficient devices and availability of configurable and reconfigurable thermostats.

Factors restraining the growth of the global market are incorrect triggering of switches by sensors and incongruity issues in wireless networks. However, demand for automated self-learning devices is expected to create great growth opportunities for the growth of the smart thermostat market over the forecast period.

Exploring the Geographical Patterns of the Smart Thermostat Market: An In-depth Examination at the Country Level

On the basis of region, the global smart thermostat market can be segmented into seven regions: North America, Latin America, Western Europe, Asia Pacific (excluding Japan), Eastern Europe, Japan, and Middle East & Africa region. Further, the market is sub-segmented as per the key countries of each region to provide a better regional analysis of the market.

Regions like North America and Western Europe are expected to dominate the market as demand for home and office automation is high. However, the Asia Pacific region is expected to grow rapidly over the forecast period.

Smart Thermostat Sales Skyrocket as Consumers Seek Sustainable Living Solutions in the United States

The desire for energy-efficient and connected homes has been propelling market growth in the United States in recent years. By 2033, the United States smart thermostat market is anticipated to reach US$ 37.24 billion, expanding at a CAGR of 30.6%.

The increased use of smart home technology in the United States is one of the main drivers fueling the market expansion. Customers are increasingly using smart thermostats for a home to lower their energy costs and enhance the ease and comfort of their homes.

The market is also expanding due to government programs to encourage energy efficiency. For instance, the government's Energy Star program incentivizes people to buy energy-efficient equipment, including smart thermostats. On the other hand, in 2019, California approved legislation mandating smart thermostats to be included in all new houses constructed after 2020. This could serve as a template for other states to follow and is anticipated to accelerate the adoption of smart thermostats.

In the United States, Nest, Honeywell, ecobee Inc., and Emerson are a few companies competing in the market. Several businesses are investing in research and development to develop new device features and functionalities. This includes voice control and machine learning algorithms that recognize user preferences and automatically regulate the temperature. Also, numerous startups and smaller businesses are joining the smart thermostat industry in this country with cutting-edge fresh features and goods. For instance, tado° GmbH offers a smart thermostat with geofencing features that automatically modify the temperature based on the user's location. Conversely, Flair provides a smart vent system that integrates with current HVAC systems to deliver zoned heating and cooling.

Government in the United Kingdom Mandates Smart Thermostat Installation in New Homes

Given the increasing prevalence of smart homes and rising awareness of energy saving, the smart thermostat industry in the United Kingdom has been expanding significantly. The United Kingdom smart home market is anticipated to generate US$ 5.63 billion in sales in 2023, with smart thermostats as a key contributor.

Several manufacturers actively populate the United Kingdom smart thermostat market. Nest, Honeywell, tado° GmbH, Netatmo, Hive, and British Gas are a few of the market's top companies. To keep ahead of the competition, these businesses constantly create new features and products. For instance, tado° GmbH provides different smart thermostats that utilize artificial intelligence to learn customers' habits and preferences. Moreover, Nest offers diverse smart thermostats that can be operated using a mobile app.

To encourage the use of energy-efficient devices, such as smart thermostats, the government in the United Kingdom has launched numerous projects. The Energy Company Obligation scheme is one such program that offers households funds for installing energy-saving devices like smart thermostats.

The government also launched the Green Homes Grant program, which provides homeowners with vouchers to install energy-saving fixtures like smart thermostats. The government has also set a target to achieve net-zero emissions by 2050 in addition to these initiatives. As a result, energy efficiency is receiving more attention, and smart thermostats are viewed as a critical piece of technology to achieve this goal.

The prevalence of subscription-based models is one of the distinctive characteristics of the United Kingdom's smart thermostat industry. Several manufacturers, like British Gas and Hive, provide smart thermostats as part of a subscription package that includes other smart home products and services. Owing to the lack of upfront fees, this approach enables homeowners to utilize recent technologies.

Smart Thermostat Industry Gains Traction in Germany amid Climate Change Concerns

Germany's market for smart homes and energy-efficient products is expanding quickly, driving the market. The German smart thermostat market is expected to grow at a CAGR of 31.3% between 2023 and 2033. Companies like Bosch Thermotechnik GmbH, tado° GmbH, Nest Labs Inc., and Honeywell International Inc dominate the market. These businesses invest heavily in research and development to provide clients with cutting-edge goods and services.

The German government is also taking steps to encourage energy-efficient and smart home solutions in addition to the actions taken by manufacturers. For instance, to assist the development of smart home technology, the German Federal Ministry for Economic Affairs and Energy has introduced a project called "Smart Living - Innovative Services for an Intelligent Energy System." The German Energy Agency has launched various campaigns to boost the adoption of smart thermostats and other energy-saving technology. The German government has also set a goal to cut carbon emissions by 55% by 2030, which is anticipated to accelerate the use of energy-efficient devices like smart thermostats.

The adoption of smart homes and rising consumer awareness of energy-efficient solutions are two further variables driving the market growth in Germany. Many advantages, including remote control, energy savings, and increased comfort, encourage customers to embrace smart thermostats.

Smart Thermostats Revolutionize Home Automation in China's Tech-Savvy Cities

During the forecast period, China's smart thermostat market is anticipated to expand dramatically. The demand for energy-efficient and smart home technology is on the rise. Moreover, government programs to cut carbon emissions and advance sustainable development contribute to this trend. The market in China was expected to grow at a CAGR of about 35% during the forecast period.

The Canadian business ecobee inc is one of the industry leaders in China for smart thermostats. It sells smart thermostats with features like remote access, voice control, and automated temperature adjustment based on occupancy patterns. To increase its footprint in the Chinese market, ecobee inc has teamed with the Chinese appliance maker Haier.

Nest, a Google company that sells various smart home devices, including smart thermostats, is another significant competitor in the sector. Recent years have seen Nest's activities in China flourish, and it has partnered with significant Chinese businesses like Xiaomi and Alibaba.

Several local businesses, including BroadLink, Tuya, and Lonsonho, are also active in the smart thermostat market in China, in addition to these international players. These businesses provide a selection of smart thermostats with different features and pricing points.

The government has also actively promoted the adoption of smart home technologies, including smart thermostats. This is part of broader initiatives to cut energy usage and carbon emissions. In order to encourage the use of smart home technologies in new residential construction, the government launched a program in 2019. This program is anticipated to increase demand for smart thermostats in the following years.

Smart Thermostat Brands Compete for Market Dominance in Japan's HVAC Industry

The Japan smart thermostat market is still nascent but expected to grow significantly in the coming years. Smart thermostats are gaining popularity in Japan because they provide energy savings, increased comfort, and convenience to homeowners. The market in Japan is expected to grow at a CAGR of around 25% during the period.

Both domestic and overseas competitors populate the market in Japan. Nest, Honeywell, ecobee inc, Johnson Controls, and Panasonic are a few of the notable players. To keep ahead of the competition, these firms are always working on creating new goods and technology. For instance, Panasonic has unveiled its smart home platform, which includes a smart thermostat, to give consumers a complete home automation solution. Similarly, Honeywell has introduced its Wi-Fi-enabled smart thermostat that works with Google Assistant and Amazon Alexa in Japan.

The Japanese government has launched numerous programs to encourage energy saving and efficiency. The government introduced the "Super Cool Biz" initiative in 2016 to reduce summertime energy usage. In order to save costs on electricity, the scheme encourages businesses to set their office air conditioning at 28 degrees Celsius (82.4 degrees Fahrenheit). With subsidies and tax breaks, the government is also encouraging the adoption of smart homes and energy-efficient equipment. This is anticipated to accelerate the nation's adoption of smart thermostats.

The elderly population and growing need for energy-efficient residences in Japan are anticipated to drive the market nationwide. The demand for energy-efficient heating and cooling systems is also anticipated to rise as the focus on lowering greenhouse gas emissions increases.

Exploring the Smart Thermostat Market: An In-Depth Segment Analysis

The global smart thermostat market can be segmented on components, network technology, and application. Based on components, the global market can be segmented into the display, motion sensor, humidity sensor, temperature sensor, and others.

Based on network technology, the global market can be segmented into wired technology and wireless technology. Wireless technology is expected to create great growth opportunities for the global smart thermostat sensor market growth.

Based on application, the global market can be segmented into residential, commercial, Industrial, and others. The commercial application segment includes office buildings, healthcare, retail, etc. Other Segment includes educational buildings such as school and colleges.

Among all these applications, residential applications are expected to grow significantly over the forecast period because of advancements in home automation technology, growing demand for connected homes or smart homes, and increasing consumer awareness about energy-saving devices.

Wireless Smart Thermostats Outpacing Wired Options in Sales

In recent years, wireless smart thermostats have risen to prominence and now represent more than half of sales of smart thermostats. The convenience they provide is one of the main factors contributing to their prominence. Using wireless technology, consumers can remotely modify the temperature in their homes using a smartphone or other devices. This gives them the freedom to do it whenever and wherever they choose. People who are frequently on the road and cannot be at home during conventional office hours find this flexibility and convenience very appealing.

The capacity of wireless smart thermostats to assist users in energy conservation and bill reduction is a further element in their appeal. Several versions have advanced capabilities like learning algorithms that can gradually learn the user's preferences and change the temperature. Moreover, they can offer useful information and energy consumption reports, enabling customers to manage and monitor their energy use more efficiently.

Wireless network technology can be further sub-segmented into Wi-Fi, Z-Wave, Zigbee, and Bluetooth. These wireless technologies each have benefits and drawbacks. For instance, Wi-Fi-enabled smart thermostats have become particularly popular since they offer rapid and consistent connectivity. At the same time, ZigBee and Z-wave-enabled devices are better suited for large houses or buildings because of their longer range. On the other hand, Bluetooth-enabled smart thermostats are often more compact and suited for usage in smaller rooms.

Residential Smart Thermostat Sales Skyrocket as Homeowners Seek Convenient Home Automation Solutions

Millions of homes that could adopt the technology offer a sizable potential customer base for smart thermostats in the residential sector. Manufacturers and suppliers can take advantage of this significant market potential. By automatically altering temperature settings based on consumption patterns, weather forecasts, and other variables, smart thermostats also allow homeowners to conserve energy and lower their utility costs. The cost savings have the potential to be enormous and have a significant impact on household budgets.

Smart thermostats are an appealing alternative for house owners interested in adopting energy-efficient technologies since they are reasonably simple to install and operate. Further encouraging their adoption in the domestic sector, certain utilities now give their consumers incentives to install smart thermostats. Lastly, more people want to combine their heating and cooling systems with other smart home gadgets. As a result, the demand for smart thermostats has grown along with the rise of the smart home industry.

Battle of the Titans: Top Companies Vying for Dominance in the Smart Thermostat Market

The global smart thermostat market is a highly competitive space, with a range of manufacturers and key players vying for market share. The key players in the global market are Nest Labs, Inc., Emerson Electric Co., ecobee inc., tado° GmbH, Schneider Electric, Honeywell International Inc., and Carrier Corporation. Over the past few years, manufacturers have implemented various strategies to strengthen their position in the market. Here are a few strategies adopted by key players in the market:

• Product innovation: The innovation of products to fulfill the changing wants of consumers is one of the main methods manufacturers use. The Smart Thermostat Premium and Smart Thermostat Enhanced, ecobee inc's latest series of smart thermostats, were released in May 2022. The new thermostats include Radar, ecobee inc's more advanced sensor technology. The new technology delivers improved temperature, occupancy, and motion-sensing capabilities. The Nest Learning Thermostat, introduced in 2018 by Nest Labs, a Google company, utilizes cutting-edge machine learning algorithms to learn user behavior and preferences and automatically change the temperature. The T9 and T10 Pro Smart Thermostats from Honeywell were also released in 2019. These thermostats employ cutting-edge sensors and geofencing technology to identify when users are at home and automatically change the temperature.
• Partnerships and collaborations: In order to increase their market share and improve their product offerings, several firms have entered into partnerships and collaborations with other businesses. In March 2022, Emerson Electric Co. and Itron, Inc., an American technology business that provides goods and services for managing water and energy resources, entered a partnership. With the aid of the most recent smart thermostat technology, Emerson Electric Co. can boost demand response programs and improve the sustainability and dependability of the grid. To include Microsoft's Azure Digital Twins technology into its OpenBlue digital platform, which offers smart thermostat solutions, Johnson Controls announced cooperation with Microsoft in 2020. Similarly to this, ecobee inc and Amazon collaborated to provide Alexa voice control to its smart thermostats, enhancing consumer convenience.
• Focus on energy efficiency: Manufacturers are concentrating on developing smart thermostats that are more energy-efficient as consumers become more aware of their energy usage. Emerson unveiled the Sensi Multiple Thermostat Manager in 2019, enabling customers to control several thermostats in various locations via a single smartphone, reducing energy wastage. Honeywell introduced its Home Energy Management Solution in 2021, which optimizes energy use and lowers energy costs by utilizing AI and machine learning.
• Expansion into new markets: Several firms are entering new locations to grow their clientele and earnings. tado° GmbH launched its smart thermostat solutions in Japan in 2019 to broaden its market beyond its European origins. Similarly, ecobee inc declared its intention to enter the European market in 2021 and start selling its goods to German customers.
• Improved user experience: Many manufacturers are working to make their smart thermostats easier to operate. The Nest Thermostat E, which has a straightforward, user-friendly interface that is simple to use and navigate, was introduced by Google in 2018. The SmartThermostat with Voice Control, which ecobee inc introduced in 2020 and has an enhanced touchscreen interface and voice control features, makes it much easier for consumers to regulate the temperature of their homes.
• Price Competitiveness: To appeal to price-conscious clients, certain manufacturers are concentrating on providing their goods at more affordable costs. To provide consumers more cheap alternatives for smart thermostats, Honeywell, for instance, introduced the T5+ Smart Thermostat in 2019 at a lower price point than its previous versions.
• Customization: Another tactic used by a few manufacturers is to provide customers the option of customizing their smart thermostats to suit their own preferences. The Nest Thermostat E was introduced by Nest Labs in 2019 with various interchangeable color options, offering consumers greater flexibility over the look of their smart thermostats.
• Artificial Intelligence (AI) Integration: To enhance the capabilities of their smart thermostats, several manufacturers are looking for ways to incorporate AI and machine learning into them. For instance, tado° GmbH introduced its Smart AC Control V3+ in 2019, which utilizes AI to understand users' routines and preferences and automatically alter the air conditioning's temperature as necessary.
• Integration with other smart home devices: Several producers are combining their smart thermostats with other smart home appliances, like lighting and security systems, to provide a complete smart home ecosystem. ecobee inc introduced the SmartCamera with Voice Control in 2020, which pairs with the company's smart thermostats to provide customers with a complete smart home solution.
• Marketing and Branding: In order to raise brand recognition and set their products apart from the competition in the market, manufacturers are concentrating on effective marketing and branding methods. For instance, Nest Labs started a marketing effort to advertise its Nest Learning Thermostat in 2020, promoting its cutting-edge features and usability to draw in more consumers.

Key Segments

By Offering:

• Hardware
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• Services

By Application:

• Warfare Platform
• Cyber Security
• Logistics & Transportation
• Surveillance & Situational Awareness
• Command & Control
• Battlefield Healthcare
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