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The smart thermostats market size is forecast to increase by USD 5.51 billion at a CAGR of 24.07% between 2023 and 2028. The market is witnessing significant growth due to the increasing number of users of heating, and cooling devices in both residential and commercial sectors. Energy efficiency standards and infrastructure upgradation are key drivers propelling market growth. Traditional thermostats are being upgraded to wireless network-enabled smart thermostats, offering features such as energy savings, comfort, and convenience. Geofencing technology is a notable trend, enabling thermostats to automatically adjust temperature settings based on the location of occupants. The residential segment, particularly in residential construction, is expected to dominate the market due to the growing focus on energy efficiency and integrated building management systems. However, the high initial prices of smart thermostats may hinder market demand.
Smart thermostats, a key component of HVAC systems in the IoT era, have gained significant traction in both residential and industrial sectors. These advanced gadgets offer customer-centric services, enabling remote appliance control through smartphones and cloud-based platforms. Integration of motion sensors, temperature sensors, and networking technologies facilitates energy efficiency and optimizes electricity consumption. AI technologies and sciences bring personalized comfort and energy management solutions. Cloud control is a crucial feature, allowing users to monitor and manage their heating and cooling systems from anywhere. API integration, such as the ecobee API with an HTTP-based interface, enhances compatibility and flexibility.
Furthermore, smart thermostats contribute to energy savings and substantial return on investments. Household adoption is on the rise, driven by the convenience and cost savings. Industrial adoption is also increasing, as these systems optimize energy usage and reduce operational costs.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024-2028, as well as historical data from 2018-2022 for the following segments.
The wi-fi segment is estimated to witness significant growth during the forecast period. Smart thermostats, a significant segment of the energy saving devices market, have gained significant traction in both residential and commercial applications due to their integration of AI technologies and sensors. The market is projected to experience strong growth during the forecast period. This growth can be attributed to the experience offered by these devices, which allow users to control temperature settings via cloud control through skilled professionals or even through AI-powered assistants.
Furthermore, the use of Wi-Fi connectivity is the predominant technology powering smart thermostats, with this segment commanding the largest market share in 2023. Wi-Fi-enabled smart thermostats, which typically cost up to USD 250, provide users with the ability to automatically connect and monitor their smart home devices in a convenient and easy-to-use manner. These thermostats are driven by a whole-home network with a high bandwidth, which is power-intensive. However, they are effective in reducing energy consumption by striking an optimal balance between temperature settings and energy usage. The ease of use and convenience offered by Wi-Fi-enabled smart thermostats is expected to continue driving market growth, particularly among older people who may benefit from the temperature regulation and energy savings these devices provide.
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The Wi-fi segment was valued at USD 963.10 million in 2018 and showed a gradual increase during the forecast period.
North America is estimated to contribute 56% to the growth of the global market during the forecast period. Technavio's analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
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The market in North America is experiencing significant growth, driven primarily by the expansion of the residential and commercial construction sectors and regulatory initiatives promoting energy efficiency. Governments in the region are emphasizing the adoption of smart thermostats for energy conservation in homes and buildings. Eligibility criteria include the smart thermostat being combined with another retrofit under the initiative, all equipment being purchased from Canadian suppliers, and online purchases being made only from Canadian distributors. The integration of advanced AI technologies and sensors in these devices enables temperature control via cloud-based platforms, making them great solutions for both residential and commercial applications. Companies are driven by the pleasant balance between technology and user experience to offer energy-saving devices.
Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The growth in number of HVAC equipment users is the key driver of the market. The global market is experiencing significant growth due to the increasing adoption of Internet of Things (IoT) technology in Heating, Ventilation, and Air Conditioning (HVAC) systems. These advanced devices enable customer-centric services such as remote appliance control and energy efficiency.
Furthermore, smart thermostats are integral components of HVAC systems, allowing users to monitor and manage temperature settings from anywhere, using cloud-based technology. Motion sensors and power usage analytics further enhance their functionality. The construction sector's expansion in regions like Europe and the US is fueling the demand for energy-efficient HVAC systems, thereby driving the growth of the smart thermostat market during the forecast period.
The increasing focus on integrated building management systems is the upcoming trend in the market. The market for Smart Thermostats is witnessing significant growth due to the increasing emphasis on energy efficiency and cost savings in both residential and commercial sectors. Integration of Internet of Things (IoT) technology in HVAC systems has enabled customer-centric services such as remote appliance control and smart homes.
Furthermore, motion sensors and power usage monitoring are key features that enhance the functionality of these systems. Cloud technology facilitates seamless networking and data exchange, enabling real-time analysis and optimization of energy consumption. The integration of HVAC systems with lighting and other building management systems is a major trend, reducing energy wastage and improving overall efficiency. This integration enables the regulation of internal building environments in terms of temperature, humidity, and light, leading to significant energy savings and improved comfort levels.
The high initial prices affect demand for smart thermostats is a key challenge affecting the market growth. The market has witnessed significant growth due to the integration of Internet of Things (IoT) technology, enabling customer-centric services such as remote appliance control and energy efficiency. Smart thermostats are a key component of smart homes, offering advanced features like motion sensors, cloud connectivity, and power usage monitoring.
However, the high initial cost of these devices remains a barrier to entry for many consumers. While DIY installation is an option for some, the majority of consumers may require professional installation, leading to additional expenses. Traditional thermostats, which typically cost under USD50, present a more affordable alternative. Despite this challenge, the benefits of energy savings, convenience, and enhanced functionality continue to drive the adoption of smart thermostats in both residential and commercial applications.
The market forecasting report includes the adoption lifecycle of the market, covering from the innovator's stage to the laggard's stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Alphabet Inc. - The company offers Nest Learning Thermostat, which is the first thermostat to get Energy star certificate.
The market research and growth report includes detailed analyses of the competitive landscape of the market and information about key companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
Smart thermostats are IoT-enabled HVAC devices designed to provide customer-centric services and remote appliance control in both residential and commercial applications. These devices utilize cloud, and AI technologies to optimize energy efficiency and reduce power usage. Motion sensors, temperature, and humidity sensors are integrated into these devices to enhance their monitoring capabilities. The market is witnessing significant growth due to the increasing adoption of smart homes and the desire for energy savings. Energy efficiency standards and infrastructure upgrades are driving the upgradation from traditional thermostats to these advanced devices. The residential segment, particularly in residential construction, is leading the adoption of smart thermostats, with heating, cooling devices, air conditioners, and coolers being the primary applications.
The average disposable income, energy conservation, and power cost are key factors influencing household adoption. Industrial adoption is also on the rise, with energy management solutions, smartphone usage, API, and http-based interfaces becoming increasingly popular. Data security concerns and the cost of devices are potential challenges, but the return on investments in terms of energy savings and user behavior analysis make up for it. The market is segmented into Wi-Fi, standalone, and connected segments, with the commercial segment showing considerable growth. Smart thermostats offer geofencing capabilities, wireless network connectivity, and temperature and humidity control through IR, temperature sensors, and humidity sensors. Overall, the market is expected to continue its growth trajectory, driven by the increasing demand for energy-saving devices and the integration of AI technologies.
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Market Scope |
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Report Coverage |
Details |
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Page number |
154 |
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Base year |
2023 |
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Historic period |
2018-2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 24.07% |
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Market growth 2024-2028 |
USD 5.51 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
19.08 |
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Regional analysis |
North America, Europe, APAC, Middle East and Africa, and South America |
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Performing market contribution |
North America at 56% |
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Key countries |
US, Canada, Germany, China, and Mexico |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Alphabet Inc., Carrier Global Corp., Centrica Plc, Computime Group Ltd., Control4 Corp., ecobee, EcoFactor Inc., Emerson Electric Co., GridPoint Inc., Honeywell International Inc., Johnson Controls International Plc., Legrand SA, NETATMO SAS, Nortek, Radio Thermostat Co. of America, Robert Bosch GmbH, Robertshaw Controls Co., Schneider Electric SE, tado GmbH, and Venstar Inc. |
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Market dynamics |
Parent market analysis, market growth inducers and obstacles, market forecast, fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, market condition analysis for the forecast period |
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Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Technology
7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Opportunity/Restraints
10 Competitive Landscape
11 Competitive Analysis
12 Appendix
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