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Connected Home Device Market Growth has Slowed

While all technology adoption will typically follow a somewhat predictable growth path, sometimes progression falters at the early-adopter stage of market development. Home Automation was gaining attention and experiencing robust growth in 2014, however a new market study by Argus Insights reveals that demand has slowed.

Data show that as of May 2015, consumer demand for connected home devices -- such as thermostats, light bulbs, locks, sensors and cameras -- experienced its first drop below the level of a year ago, a sign that consumer interest has apparently stalled.

"Based on our review of consumer interest, the state of home automation in 2015 is not looking good for anyone who sells or makes these devices," said John Feland, CEO at Argus Insights. “Even though Google and Samsung made big purchases in this space by buying Nest thermostats, Dropcam and the suite of SmartThings products demand is stagnating."

Feland believes that it's obvious that the early adopters have bought what they want and other consumers are expressing frustration that these products are complicated and difficult to set up and use.

Even the analysis of social conversations regarding the Internet of Things (IoT) supports waning interest and investment in the Connected Home market. Within IoT conversations, Wearables dominate the mind-share -- mentioned 10 times more frequently than Connected Home.

The Argus Insights analysis of over 12,000 consumer reviews of security cameras from Feb 1-May 31 discloses major negative issues, such as persistent problems with reliability as well as trouble with network connectivity.

Earlier Argus Insights research highlighted that most consumer animosity arose from the frustrating and time-consuming challenges of connecting these devices to the home Wi-Fi network. According to the consumer responses, the reliability problems associated with security cameras led to higher returns than expected.

As new customers investigate their options and find products that are difficult to set up and fail after just a few days of operation, much of the market is passing on purchasing new Connected Home devices this year.

"Consumers are not seeing the value yet from these home automation devices," said Feland. "There is a lot of confusion about standards with Google introducing Brillo and Apple's new HomeKit. Add in WiFi, Bluetooth, Zigbee and Z-Wave and there is a lot for any consumer to grapple with during installation.

Feland concluded, "Until things become easier and consumers don't have to cobble together a total solution, I believe we will continue to see this stagnation continuing for the rest or 2015 unless a new offering addresses these issues and revitalizes the market."

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