By R. Srivatsan, Research Analyst, Building Technologies Group

With frenzied itinerary, kids, work and ceaseless tasks, many families are finding it increasingly difficult to manage the daily routines that happen within their homes. Most people tend to forget simple tasks like turning on the security system, switching off the lights or lowering the thermostat level.

Overseeing the functions of a home shouldn’t be this arduous notably with technologies that can help. A simple yet powerful system to take charge of your entire home is the home control system or the home automation system which ties up all the individual gadgets and can manage them under one roof.

Home automation systems have been around for quite sometime now but it is always exciting to ponder where this industry is headed for. The North American home automation market witnessed healthy growth rates during 2003 and 2004 due to economic rebound and greater market acceptance of the these systems. This growth continued into 2005 with the total market estimated to be over $1.0 billion and experiencing a growth of almost 8.5 percent over the previous year.

The North American home automation market has witnessed strong growth during the period 2002 to 2005, due to increase in awareness among homeowners about the benefits of the system, increased comfort consciousness and robust growth in the residential construction activity. The single family housing construction especially saw a measured increase in 2005 due to the overall improving economic conditions and lower interest rates.

More homeowners are shifting towards home automation since it offers perpetual benefits such as:

• Convenience & comfort
• Reduces energy bills
• Enhances Safety & Security
• Ideal retrofit solution

The integration aspect has been one of the main driving factors for the North American home automation markets since the retrofit market is a key application area for these systems. The convenience factor of these systems being a one touch point control for the entire home increases the penetration levels of these systems and further enhances the potential of the home automation market.

The home automation systems are also bound to make inroads into non-residential segment in areas such as small office spaces and other establishments in the light commercial space. With the ever growing awareness and the apparent benefits offered by these systems the market is expected to witness constant growth thereby dismissing fears of slowdown in the near future.

Stake and Competition

The construction industry has been experiencing favorable trends for the past few years with more young people preferring single family housing units. These young techno savvy people are often aware and eager to adopt these home automation and the comforts offered by them which in turn enhances their lifestyle.

Due to constant demand for these systems the North American home automation markets has become more competitive with a growing number of companies emerging in this space in the recent past. Some companies act as one-stop shop for all home automation issues and some others manufacture individual control units or units which can also perform the integration function. Many of these companies are involved partnerships or associations among themselves for supply of equipments. Effective dealer network and proper installation of systems are some of major competitive factors involved with this market.

Home automation have for long been identified as systems which are exclusive for high-end homes. One real question always lingering in the minds of people is "Is a home automation system affordable?" In the present day market, many companies manufacture systems of low cost catering to the needs of the mass market or the lower end of the market thereby breaking the myth of the unaffordable home automation system.

The entertainment aspect presents a major entry point for the market participants since it is easy to sell, making up for about 30.0 percent of the total home automation markets. Chart 1 illustrates the percent of revenues generated by the different controls segments of the total North American home automation market in 2005.

Home theatre and audio systems have been one of major factors for the elevated growth in the home automation markets. One key reason for this growth is due to the fact that these systems are relatively easy to sell and there is no major learning curve restraining growth. A growing number of North American homeowners enjoy and value a top of the line home entertainment center that is designed to help relax, create family time, and escape the daily outside pressures with either music, sports, movies, etc.

The entertainment aspect has proved to be a major avenue for the market participants to penetrate a majority of homes. Many market participants provide integration of other systems coupled with the entertainment systems. This in turn has further propelled the growth of the home automation market.

At the end of the day this is a great time to be involved with the North American home automation markets and the only thing that matters is satisfying the customer’s requirements. The future of home automation is vivid and unstinted for those who avail themselves to the changes in the industry and also for those who cater to the needs and preferences of homeowners. Certainly it is time for the industry to capitalize on and make giant strides forward.