Analyst firm Telsyte claims that the Australian will generate $160 million in device revenues in 2014 and is expected to grow to $917 million by 2017.
They said that the arrival of new, affordable DIY smart home automation products is expected to make 'the Internet of things at home' a reality for many Australian consumers over the next few years.
Telsyte believes there is a groundswell of pent-up demand for home automation products that work easily with Wi-Fi in the household.
Len Wallis of Len Wallis Audio in Sydney believes that dangers are emerging for the automation industry. He claims that electricians who are now working on premium homes worth between $5M -$10M are moving to install low cost automation gear which he says over time will fall over. "How would you like it if a major lighting, air conditioning or security system are reliant on cheap low cost components installed by a sparkie fall over"?
"Automation is becoming a DIY nightmare and a lot of electrical and IT companies are now pushing cheap bottom end automation kits which while working over a network have still to perform in a home".
The Telsyte study reveals that energy management, lower cost devices, and unobtrusive wireless DIY installations are key drivers for the adoption of smart home automation systems.
Telsyte believes the Australian smart home automation market will evolve through a number of stages over the next decade. Within two years, there will be a significant opportunity to unify the large installed base of disparately connected devices under a master control system. Telsyte defines the master control system as a "smart home hub". This hub will give service providers an opportunity to generate annuity and subscription revenue, such as security monitoring.
Wireless hubs enabling the smart connected home
Telsyte has determined that smart home automation systems are appealing to mainstream buyers, regardless of house type (house or apartment), ownership type (renters or owners), and house age.
Home owners are also positive about home automation with the majority of survey respondents believing that home automation systems can increase the value of homes.
According to Telsyte's research, the successful centrepiece of home automation enablement will be a multi-purpose, multi-connected hub that is standards-based and manufacturer agnostic.
Telsyte Senior Research Manager Sam Yip says these hubs will be controllable and programmable via the cloud and mobile computing devices such as tablets and smartphones.
Telsyte expected that by 2017, smart hubs - connectors for disparate networked devices - will be the largest segment of the smart home with nearly 40% of the total market value.
The findings are part of the Telsyte Australian Smart Home Automation Market Study 2014, the first comprehensive industry study of its kind for the local market. The independent study is based on interviews with key market participants and a survey of a representative sample of 1,018 consumers conducted in late 2013.
A new study by ABI Research forecasts that over 500 billion smart sensors will be integrated into homes worldwide by the end of 2018 and that traditional IT Companies like Belkin, Google and Apple are set to expand their offering in the automation market.
The bad news is that the new wave of home automation products made by Companies like Nest which was acquired recently by Google, Philips Hue, Belkin and LightwaveRF, aren't compatible with each other or when users try to link together.
Some say what is needed is a standalone home automation OS that allows all brands of HA gear to talk to each other.
While CEDIA members keep pushing custom programming and proprietary gear, the consumer market is slowly getting smarter with networking Companies like D Link now launching control systems that work on their wireless gear.
Bluetooth is turning out to be a stronger "standard" for communications and content sharing than anyone ever thought it would. Now we see more and more companies adopting ZigBee (more than 600 at last count) and Zwave (200+ now) wireless protocols and some companies integrating both at the same time, Gary Kayye an automation specialist and Editor of the Rave publication said recently.
He went on to say that this means that the thermostat can now be controlled by an iPhone or TV today and in the future by a car key sensor.
AV manufacturers who have traditionally sold their products via the specialist channel are now selling their gear at JB Hi Fi, Harvey Norman and Dick Smith.
Companies like Klipsch, Polk, SpeakerCraft, Niles and Russound are now cutting deals with mass retailers as opposed to the specialist dealer with mass retailers now moving to set up established home automation areas in their stores where they can promote home automation controllers along with the sound gear that attaches to a wireless network. They are also moving to sell home health measurement gear that can be installed onto the same network.