The connected home: Just getting started has been saved
The connected home: Just getting started
These days, few people in the UK can readily quantify how many connected devices they have in their homes. Yet a decade ago, most could count them on one hand, with fingers to spare. In 2010, only PCs were mainstream, with 77 per cent of the population having access to one.. A mere 18 per cent of UK consumers had a touchscreen smartphone.1
Prior to 2010, the Fitbit, one of the earliest fitness trackers had shipped just 5,000 units. The iPad, one of the first tablets, launched in 2010. Philips’ first generation of Hue smart light bulbs went on sale in October 2012. The Pebble - the first mass market smart watch - launched in April 2013. Amazon’s Echo – the pioneering smart speaker – was first released in November 2014.
The 2020 device landscape is radically different. Many categories of domestic devices, from televisions to electric toothbrushes, incorporate connectivity and computing power by default. Connected, multi-colour bulbs are available for under £10. The static bicycle, bonded to a flat-screen, is an enabler of premium, exercise-as-a-service subscriptions.
And yet the UK home is still, most likely, at the start of its journey towards peak connectivity – when a home may have thousands of connected items.
As of 2020, there are four main categories of connected devices in UK homes:
- Computers: smartphones, PCs and tablets. These devices have long been mainstream and there is little scope for further growth.
- Entertainment: smart TVs and TV streaming devices, set top boxes, games consoles and speakers. These devices have enjoyed strong growth over the last five years, and penetration rates are likely to remain strong in the medium term.
- Health: fitness trackers and smart watches. These devices have seen strong growth from low levels over the last five years. Adoption rates should remain vibrant over the next five years, and there is even a possibility that some categories of devices become mandated as a means of controlling the impact of COVID-19.
- Home utility: smart lighting, thermostats, home appliances and cameras. While this category has experienced modest growth over the last five to ten years, it may expand sharply over the next five years, particularly for camera-based devices.
The majority of UK adults have access to smartphones, PCs and tablets. Currently over 90 per cent of respondents have use of a smartphone and a PC (laptop or desktop). Ownership levels of all three main types of computer have been relatively steady since 2015, with smartphone penetration rising from 79 to 91 per cent. The increasing size of smartphones (the latest smartphones have a 6.9 inch screen) may have softened demand for tablets, where screen size starts at 8 inches.2
While there is little scope for further growth in ownership levels in this category, there is steady and significant demand for replacement devices. The new smartphone market remains, by far, the largest consumer electronics category: nearly 1.4 billion new smartphones are likely to ship worldwide in 2021.3
Figure 1. Access to laptops, smartphones and tablets (2015-20)
Adoption of any type of connected entertainment has enjoyed robust growth over the last five years, with the smart TV being the most popular device throughout the period.
In May 2020, 58 per cent of respondents had a smart TV, up from 24 per cent in 2015. Nearly 30 per cent of respondents owned a smart speaker (in 2015 this category was in its infancy). We have categorised a smart speaker as an entertainment device because its most common application is to play music. Indeed the top five applications for a smart speaker are music, weather, news, traffic and humour, also collectively known as a radio breakfast show.
About four out of five respondents had access to some form of connected entertainment as of May 2020. This compares to 47 per cent five years ago.
Connected entertainment has thrived as, quite simply, most UK consumers enjoy being entertained, and for decades the TV set has been the primary entertainment device. On average, each person in the UK watches a TV set for four hours a day, with television programming being the predominant type of content, and movies and video games as runners up.
Figure 2. Access to connected entertainment devices (2015-20)
Adding connectivity and processing power to the TV set adds value to the viewing, offering access to a far wider range of content. Over half of all homes in the UK now have access to Netflix, and 65 per cent have access to any SVOD (subscription video on demand) service, with Amazon Prime, Disney Plus and Now TV being the most popular. All these services can be watched on different screens, but they look and sound the best on the largest screen available.
Listening to music and spoken word radio is also mass market: adding connectivity to a speaker makes the listening experience richer.
Sidebar: The eReader rebounds
The eReader, one of the first digital upgrades to an analogue format, has become less popular since 2015 when 31 per cent of respondents had one. By 2020 this had fallen to 28 per cent (see Figure 3). However, daily usage rates among owners did increase during the lockdown to 34 per cent from 30 per cent in 2019.
Figure 3. Access to eReaders (2015-20)
This category consists of smart watches (13 per cent adoption in 2020) and fitness bands (22 per cent this year). Both have grown significantly over the past five years, but from much lower bases: two and four per cent respectively (see Figure 4). In 2015, six per cent of respondents owned a wearable; by 2020, thirty per cent did. Smart watches remain relatively expensive for the majority of the population, although versions from lesser-known brands are available for under £50. Moreover, not everyone in the country with Europe’s second highest proportion of the population being either obese or overweight may want to quantify their lack of fitness.
Figure 4. Access to wearables (2015-20)
The connected home has been less well received by UK consumers with adoption rates of most categories remaining in single figures. For some devices such as the smart thermostat, this is despite major campaigns, including from utilities, to encourage adoption.4 As of 2015, seven per cent of respondents had access to any type of connected home device (see Figure 5). By 2020, this had risen to 21 per cent, or a mere fifth of respondents.
The benefits of the connected home may simply be less evident than for other categories. While a smart TV costing £300 can be enjoyed for 120 hours per month, few would spend a similar amount of time programming a smart thermostat that could cost £300 including installation.5
Figure 5. Access to connected home devices (2015-2020)
The impact of the pandemic
COVID-19 is likely to have a lasting effect on our consumption and purchasing patterns.
If people are spending more time at home, and cinemas, live entertainment or theatres are less accessible or not appealing, they may well be inclined to upgrade their home entertainment. The arrival of two new consoles from Sony and Microsoft at the end of this year may trigger a wave of upgrades among adolescents aged between 10 and 50.6 In addition, the price of 65-inch TV sets continues to fall in markets around the world.
During the first stages of lockdown about two per cent of respondents invested in a new monitor, but three times as many bought a new TV.
As long as COVID-19 remains a serious risk, some people may become far more aware of how important their health is, which may encourage them to exercise more. However, others who are well aware that they are exercising less, may stop wearing their health devices. For those that retain them, a reward for activity is quantification – closing digital rings on a smart watch is an accomplishment for some.
Governments may encourage greater adoption of fitness trackers, of any type, to encourage better fitness levels or to identify asymptomatic individuals with COVID-19. For example, Liechtenstein is planning to roll out a biometric tracker to all citizens to monitor for changes to heart rate that may indicate that an individual’s immune system is fighting the virus.7 Some employers may do the same, as a means of protecting employees and enabling them to get back to work in safe workspace.
Seeing month-on-month progress in fitness levels can often spur yet more effort for some individuals. In the UK, the National Health Service has also started to prescribe activities enabling better fitness levels, for example offering cycling classes to encourage commuting by bike rather than by car.8
The connected home may also receive a boost. If people are obliged to stay at home more, some people in higher income homes, which on average have saved a large proportion of their income since lockdown, may decide to undertake DIY projects that they had been deferring for years, including installation of smart doorbells and connected cameras.
The decade to come
By 2030, the median home in the UK may well have hundreds of connected devices.
The category that is likely to enjoy most growth is home utility. This is partly because it is the category with the lowest current adoption levels (conversely there is little scope for growth for computers, with 90 per cent penetration in smartphones and PCs). But another reason is video and connectivity. There could be a surge in video cameras over the next few years, as unit costs fall, installation becomes simpler, connectivity improves and machine vision (to analyse video) matures.
In larger homes with gardens, dozens of battery-powered cameras could be installed, guarding against human and animal intruders, monitoring home help, authenticating entry and checking in with pets.
Connected health devices could become ubiquitous if these can be useful in detecting COVID-19 cases among those who are asymptomatic and pre-symptomatic.9 While healthier individuals with COVID-19 often have no visible symptoms, their heart rate is likely to increase by a few beats during the days when their body is fighting the infection. Such individuals may not be able to tell that their heart rate is five beats faster than normal, but a fitness band may well be able to.
While all these categories will enjoy growth over the coming years, the smartphone will continue to be the most successful device in terms of units. With 1.4 billion smartphones likely to be sold in 2021, this is 3.8 times the number of wearables likely to be sold in the same period, 5.2 times the number of smart TVs and 16.4 times the number of smart thermostats.10
1 For more information see Figure 5.3, The International Communications Market 2010, Ofcom, 2 December 2010: https://www.ofcom.org.uk/__data/assets/pdf_file/0015/44133/section_5_internet.pdf
2 The Samsung Galaxy Note 20 Ultra has a 6.9 inch screen as measured at the diagonal, and is 6.5 inches tall. A smaller version has a 6.7 inch screen. For more information see Samsung Galaxy Note 20 specifications, Samsung, as accessed on 14 August 2020:https://www.samsung.com/global/galaxy/galaxy-note20/specs/
3 IDC expects worldwide smartphone shipments to plummet 11.9% in 2020 fuelled by ongoing COVID-19 challenges, IDC, 3 June 2020:https://www.idc.com/getdoc.jsp?containerId=prUS46466720
4 Hive active heating, British Gas, as accessed on 14 August 2020: https://www.britishgas.co.uk/smart-home/hive-heating.html
5 Costs from Guide to the UK’s best smart thermostats in 2020, Moneysupermarket.com, as accessed on 14 August 2020:https://www.moneysupermarket.com/gas-and-electricity/smart-thermostat-guide/
6 PlayStation 5, Sony, as accessed on 14 August 2020: https://www.playstation.com/en-gb/ps5/; Xbox Series X launches this November with thousands of games spanning four generations, Microsoft, 11 August 2020: https://news.xbox.com/en-us/2020/08/11/xbox-series-x-launching-with-thousands-of-games/
7 Liechtenstein to provide citizens with biometric bracelets to contain coronavirus, BiometricUpdate.com, 16 April 2020: https://www.biometricupdate.com/202004/liechtenstein-to-provide-citizens-with-biometric-bracelets-to-contain-coronavirus
8 Social prescribing, NHS, as accessed on 14 August 2020: https://www.england.nhs.uk/personalisedcare/social-prescribing/ Get fit for free, NHS, as accessed on 14 August 2020: https://www.nhs.uk/live-well/exercise/free-fitness-ideas/; New obesity strategy unveiled as country urged to lose weight to beat coronavirus (COVID-19) and protect the NHS, Government of the United Kingdom, 27 July 2020:https://www.gov.uk/government/news/new-obesity-strategy-unveiled-as-country-urged-to-lose-weight-to-beat-coronavirus-covid-19-and-protect-the-nhs
9Fitbit introduces ready for work solution to help employers manage workplace health and safety during the COVID-19 pandemic, Fitbit Inc., 16 June 2020:https://investor.fitbit.com/press/press-releases/press-release-details/2020/Fitbit-Introduces-Ready-for-Work-Solution-to-Help-Employers-Manage-Workplace-Health-and-Safety-During-the-COVID-19-Pandemic/default.aspx
10 For smart thermostats forecast see Customer awareness on benefits of smart thermostats will drive growth beyond residential segment, Frost & Sullivan, 18 September 2019: https://ww2.frost.com/news/press-releases/customer-awareness-on-benefits-of-smart-thermostats-will-drive-growth-beyond-residential-segment/; For Smart TVs forecast see Global Smart TVs market, forecast to 2025, Research and Markets, January 2020: https://www.researchandmarkets.com/reports/4908099/global-smart-tvs-market-forecast-to-2025 ;For wearables forecast see: Growth in wearables forecast to slow dramatically this year, for three reasons, 9to5Mac, 3 June 2020:https://9to5mac.com/2020/06/03/growth-in-wearables/
Deloitte’s Digital Consumer Trends: UK Insights
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