Smart home in Western Europe: Northern countries ahead of the rest

Tuesday 12 December 2017 | 12:43 CET | Background
The northern European countries (Scandinavia, UK, Netherlands) are generally ahead of the southern ones in terms of smart home adoption and interest. Across the countries, energy management and smart entertainment are the most popular segments. In several countries, telcos are involved in developing the smart home, but only Deutsche Telekom (DT) in Germany has so far managed to make smart home a prominent part of its total offering.

Following its recent research on smart home in the Netherlands Telecompaper has carried out desk research to look at the state of smart home in other western European countries. Comparisons on this topic are complicated by a lack of a common definition of what smart home entails, leading to for example higher percentages if smart TVs are included. However, looking at both research from other parties as well as news from those countries gives an idea of the current level of ownership and interest in smart home in each of those countries.

Nordic countries leading

In Norway, Sweden and Denmark, penetration is highest and most households own a smart home device. The Nordic region is followed by the Netherlands and the UK, according to Statista (see graph). Deloitte also sees relatively high shares of ownership for wireless speakers and connected cameras in the Scandinavian countries. In Sweden, large international manufacturers such as ABB and AssaAbloy have been at the forefront of creating smart home devices such as smart locks and ABB’s Free@Home range of lights, blinds, heating and air conditioning products. Swedish retailer Ikea also recently added smart lighting to its global range of products, helping to increase awareness in its home country and beyond.

In Norway, a group of 47 mainly regional utility companies called Nettalliansen have started to use the Deutsche Telekokm Qivicon platform. They will use the platform to offer assisted living services for seniors and professional health services under the brand name Hitch. Furthermore, smart home functionalities for managing energy consumption will be available. There are also many small companies offering smart home solutions, and several builders are focused on constructing smart homes, such as FutureHome, which recently struck a deal with building supplier Bravida. Energy companies are required by the Norwegian government to roll out smart meters and at least one, Lyse, has taken this as an opportunity to promote its smart home services by giving its customers a free home gateway when installing the smart meter, reducing one of the barriers to smart home adoption.

According to Danish energy management solutions provider Qees, "Denmark was one of the first countries to develop smart home technologies in the early 1990s, and the industry is therefore relatively mature compared to other countries". On top of this, many cities in the three Scandinavian countries have developed smart city initiatives, helping to familiarise consumers and businesses with connected devices and services.

Statista estimates that just under 12 percent of Finnish households have a smart home device at the moment. Finnish manufacturer Fibaro is a major player in the Z-Wave products industry, and sells its products globally. Telco provider Elisa sells some products too, and smart hub manufacturer Cozify recently struck a deal with Finnish insurer LocalTapiola.

In the Netherlands, energy companies have been pushing the take-up of smart thermostats. Telecompaper’s recent report showed that about 13 percent of consumers own a smart thermostat and 12 percent already have a smart speaker like Sonos. Statista comes to an overall smart home penetration of 16 percent for the Netherlands, led by energy management applications.

In the UK, smart speakers seem to have also captured the public’s attention, especially since Amazon's Alexa and Echo launched on the market. Smart energy management is also gaining ground; British Gas’ brand Hive launched a specific marketing campaign during the 2016 Christmas period to promote its various smart home products and services. A study from MoneySuperMarket found that three-quarters of UK consumers had heard of a connected home, but also three-quarters were worried about smart home devices collecting data without approval.

Germany coming up strong

Statista estimates the smart home penetration at nearly 12 percent of households in Germany, and Splendid Research’s Smart home in Deutschland report puts it at 36 percent of the German population, with energy management and entertainment the largest segments. German consumers are largely satisfied with their smart home products, according to a survey by industry group Bitkom. This ranges from 79 percent satisfied with smart lighting systems to 86 percent for smart music systems, 89 percent for smart TVs and meters and 90 percent with automatic window shades. Around one in two smart home product owners (52%) are already planning their next purchases for the networked home. Even among those who do not yet have a smart home application, 41 percent want to buy a corresponding product in the next 12 months. At the top of the list are smart heating systems, music systems and TVs.

Furthermore Germany is the one country where the incumbent telco, Deutsche Telekom, started with smart home many years ago and has since developed a large ecosystem of supported devices and manufacturers. Earlier in 2017, DT increased its customer exposure to smart home by integrating features of its Magenta SmartHome offering in its Speedport Smart router. This means the routers do not just manage phone calls, internet and TV, they can also control smart home devices. DT also plans to launch its own smart speaker in 2018. DT has seen its number of smart home customers grow from 68,000 in Q1 2016 to 211,000 in Q3 2017.  

Around 12 percent penetration is estimated for Austria, where incumbent A1 recently entered the smart home market. A1 conducted research beforehand that showed 76 percent of Austrians knew the term smart home and 51 percent indicated that smart home will be the future of living.

France and Belgium are a bit further behind, with around 7 percent of households owning a smart home product according to Statista. In France, some telcos and energy companies are offering smart home products, and it is home to two manufacturers of smart home products: Netatmo and Somfy. Research from Objectconnecte shows that many French are interested, with more than half saying that they believe a smart home would be useful. Research from GfK in Belgium showed that about a third of the population is very interested in smart home solutions, but the high costs are cited as the most inhibiting factor.

Spain, Italy and Portugal show less than five percent of households own a smart home device, but initiatives are taking place. This includes growing interest from the telcos, such as Orange Spain and TIM in Italy.

Across all the European countries, international manufacturers such as Samsung, Siemens, ABB, Philips and LG are also helping drive interest in smart home products. Their degree of marketing depends both on the local conditions and interest in smart home, as well as their individual positioning in the market. 

While smart home penetration clearly varies across Europe, each country faces the same obstacles as identified in Telecompaper's report on the Netherlands: many consumers are worried about security and privacy issues, and the large array of products on offer combined with issues of interoperability increase consumer confusion. The current high cost of many products is another inhibiting factor.

The differences in take-up stem from a variety of factors, but it's clear a lead actor in the supply chain can play a role in stimulating interest and demand. Examples include DT in Germany really pushing its smart home solutions through partners and integration and the energy companies in the Netherlands and UK helping to kick off the adoption of smart home products. In Scandinavia, the smart home has been embraced by several sectors, from energy to building to telecom. Several actors, instead of just one sector, help increase consumer exposure and acceptance and could be key to the higher adoption of the smart home in Scandinavian countries and elsewhere.

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