Mapping the Smart-Home Market

Many observers speak of the smart-home market as if it were a single entity, but analysis of companies in the sector founded over the past ten years shows that subsectors have peaked at different times in terms of investment value and volume. Investment volume in the components sector, for instance, peaked in 2010, while the peak year for smart-kitchen startups was 2015. Virtual assistants--AI companions in the form of smart speakers--clearly caught on in 2017. This is still an emerging, immature market because use cases are limited and the cost of entry is high. But we anticipate that demand for voice-activated assistants will continue to grow rapidly over the next three to five years as AI capabilities mature. We also expect a virtuous cycle to help drive growth: the more smart-home gadgets connect to these devices, the more popular both the devices and the gadgets they enable will become.