The terms smart home and smart living are synonyms for the digitization of living environments. The expansion of the internet and the spread of networkable (and sensory) household components as well as mobile and wireless communication devices create entirely new applications for private households as well as new business models for companies. The digital transformation leads to major changes in value chains and the shares in value-added trade. Software and internet-based platforms for complex smart living applications make components that were previously important domains of German manufacturers interchangeable. Successful platform operators are becoming the determining factor in the use of standards, among other things. There is a danger that manufacturers and suppliers of components will find themselves playing only a secondary role in the market.
Experts believe that the market for smart home technologies is going to experience a strong increase in growth and sales levels. A study by the BMWi estimates that the achievable Smart Home market volume in Germany alone will rise to around 20 billion euros in 2025.
It is not only in Germany that the market is still characterized by a multitude of proprietary and isolated solutions that are not interoperable. The biggest market barriers are a lack of investment security, insufficient confidence in data security (data protection, IT security) and a vague sense among many users of the numerous functionalities of smart home technologies, which in addition are often difficult to operate (poor usability). The chief concern in the housing industry, which constitutes a large application potential for smart living solutions, is new models for refinancing investments. Architects, engineers and the construction industry, in turn, require security to plan ahead. And in the skilled trades industry the most important matter is, above all, new qualification requirements.
Removing market barriers is crucial if German small and medium-sized suppliers and manufacturers are not to lose promising market opportunities. Over the last few years, the BMWi has carried out a number of R&D funding measures that demonstrate the feasibility and benefits of smart home applications in areas such as living comfort, home security, energy management and health services.
It has become apparent, however, that further efforts are urgently needed to stimulate the transfer of the achieved results into marketable products and, in particular, into the development of a mass-oriented German lead market for smart living products to the benefit of German manufacturers and suppliers. This includes the creation of common standards such as defining universal criteria for the quality and safety of smart living products, developing qualification measures in the skilled trades industry and creating a location label as a unique selling point in exports.