The notion of an Internet of Things (IoT) includes some very practical applications within the home. The global smart thermostats market is expected to grow from 1.3 million in 2013 to 8 million unit shipments in 2018 -- that's a CAGR of 43 percent, according to the latest market study by ABI Research.
Disruptive innovation in thermostats from new entrants such as Nest Labs, ecobee, and EcoFactor has significantly raised the bar for product design and innovation in a device category that had seen little change over several decades.
As demand grows in the coming years, smart thermostat global revenues are expected to experience five-fold growth to reach $600 million by 2018.
Currently, North America is the most lucrative market for smart thermostats, contributing more than half the worldwide total.
Driving this region’s dominant market share is a tech-savvy population adopting smart mobile devices packed with low-cost wireless sensors, an expanding install base of buildings connected with smart meters, home automation initiatives from Telco and Cable companies, and a slowly recovering housing market.
However, smart thermostat shipments to Europe will exceed North American shipments in 2017 to become the biggest market worldwide over the forecast period.
"The prolonged economic recession in Europe, EU directives on household energy efficiency and regional utility provider conservation programs are changing European consumer views on energy usage," said Adarsh Krishnan, senior analyst at ABI Research.
Smart thermostats are serving a growing and increasingly thrifty base of energy conscious customers in this region -- as more Northern Europeans seek effective ways to save money on their high utility bills.
Wi-Fi controls the lion's share of the market at present and will continue to be the popular choice among device manufacturers -- in fact, shipments are forecast to exceed 3 million units in 2018.
The ubiquity of Wi-Fi as a residential HAN technology and its penetration in smartphones make it an ideal choice for consumers and device manufacturers.
ZigBee enabled smart thermostats will witness growing market share with over 2 million units shipped annually in 2018.