With the development of 5G and IoT technologies, people’s living spaces are transitioning from single smart devices to a systematic smart approach, where all powered devices will be interconnected and systematized, integrating all home devices into a complete whole-house comfortable smart system. This means comfort + intelligence will become a fusion development entity. On one hand, the comfort system will break through the current market definitions, integrating all categories of home products that can enhance living space comfort and quality.
Comfortable Smart Homes Have Become a Market Trend
Comfortable smart homes have undoubtedly become a market trend, which is an inevitable trend in the overall social intelligence upgrade. Currently, applications on the market are also expanding, gradually evolving from single products to systems, to scenarios, to ecosystems, to community and urban scenarios, with smart applications becoming deeper and broader.
Currently, various types of enterprises are actively laying out the smart home market:
The first category includes traditional home appliance brands, such as Midea, Haier, and A.O. Smith, which are building a smart home ecosystem based on their hardware products by launching appliances with smart modules and mobile applications.
The second category consists of ecosystem + hardware integration suppliers represented by Huawei, Xiaomi, Alibaba, and Apple. By allowing products from other manufacturers to connect to corresponding mobile applications after meeting the requirements of protocols like Apple HOMKIT and Huawei HIGHLINK, they achieve remote control and scenario management, creating scenario-based services through resource and product integration.
The third category is suppliers of smart home devices, such as Google, Philips, Yale, Duya, and Bosch, whose smart home systems may not be popular in the domestic market, but most of their standalone devices can be remotely controlled via mobile applications.
The fourth category includes manufacturers specializing in smart home systems, such as Orvibo, Unisoc IoT, Aite, Leiyang, and Taichuang. These manufacturers, similar to Xiaomi and Huawei, create a smart home network by installing various sensing devices and connection devices in homes, enabling control via mobile phones for products that originally lacked smart features.
The fifth category represents integrated service providers focused on installation, such as Suning Integration, Chengdu Meijing, Haoxiangjia, and Tiansheng Intelligent, which promote system integration through their advantages in design, service, and installation, achieving integrated services.
No matter which model is adopted, it ultimately reflects the enhancement of consumer purchasing power, the rise of quality living, and the changing market demand, compelling manufacturers to transition from single product services to integrated and comprehensive services to meet market and consumer needs. Currently, there is no distinction of superiority among models, as they are all still in the initial phase of development, with each company leveraging its strengths, aiming to satisfy new consumer demands.
Comfortable Smart Systems Transition from Smart Connectivity to Seamless Intelligence
From the overall market development status, the smart home industry has entered an explosive phase after its early cultivation. Despite the mixed quality of the industry, leading brands, products, technologies, and services have increasingly matured.
For instance, functions like mobile control and voice control have gradually become transitional methods toward seamless intelligence in the market, as consumers need such transitions to adapt to a more intelligent lifestyle. The system utilizes the underlying technology architecture of IoT + artificial intelligence + big data, which has now achieved a seamless whole-house intelligent system. This means that after the system memorizes users’ living habits, it will automatically provide intelligent living services based on the habits of each family member.
For example, the A.O. Smith AI-LiNK smart IoT system connects the underlying logic of devices to achieve intelligent interconnection, reconstruct scenarios, and create new experiences and values that cannot be provided by a single device. In A.O. Smith’s heating and cooling water system, the wall-mounted boiler and central air conditioning are linked for control, cleverly addressing key pain points in the heating field, such as insufficient warmth, slow temperature rise, and high floor heating costs, enabling users to turn off and on as they go, achieving rapid heating. In extremely cold weather and at startup, the wall-mounted boiler is prioritized as the heat source, switching to the lower energy-consuming heat pump once the temperature rises to a suitable level, maximizing energy savings while ensuring user comfort. Moreover, A.O. Smith also has corresponding linkage solutions for fresh air and whole-house water use, with all device interconnections being fully automated, requiring no effort from users.
Additionally, the industry is evolving from emphasizing connectivity to creating a comfortable and healthy life. For instance, due to the impact of the pandemic, life has changed significantly, making healthy and comfortable air a necessity in everyday life. In the past, people primarily bought air conditioners to solve cooling and heating issues, but now there is greater concern for family health and the comfort of living environments. Air safety and health require sterilization and disinfection, addressing humidity issues during the rainy season and heating season, as well as problems like ventilation and formaldehyde removal in new homes. Haier’s air industry is positioned as an expert in health smart air for all spaces, all scenarios, and all cycles, creating a good air environment with constant temperature, humidity, cleanliness, and oxygen throughout the house.
Scenario Experience and Services Are Effective Ways to Drive Implementation
The comfortable smart home industry currently has an average annual growth rate far exceeding that of home furnishings, home appliances, and mobile phones, but market penetration remains in single digits. Looking ahead, the smart home industry is about to enter an explosive growth phase, with the entire market expected to mature and explode, leading to geometric growth in the coming years.
After all, from various industries, the early growth from 1% to 10% may be slow, but the growth from 10% to 100% will be very rapid. For example, the popularity of smartphones, digital TVs, and refrigerators and air conditioners, the smart home industry will also experience rapid growth driven by four forces: new infrastructure construction, national policy initiatives, leading brand influences, and the upgrade of residential demands in the next three years, making it the best time for distributors to enter the market.
In terms of residential housing, the existing market sees an average of 30 million new houses each year. With the guidance and requirements of national policies, when the penetration rate aligns completely with the proportion of finished homes, the market capacity will reach trillions. However, this is not the largest market space; the largest market space lies in the existing housing stock. Smart homes will ignite and explode the old housing market just like smartphones did, with this market’s capacity starting at tens of trillions, not including the market capacities of offices, hotels, and elder care.
From the perspective of profitability models, the smart home industry has a wide range of profitability options due to its industry characteristics. From the distributor’s perspective, they can engage in both C-end and B-end businesses. The C-end business can tap into both incremental and existing markets. The B-end market can cater to large B-end property companies as well as small B-end service providers, commercial offices, smart hotels, and smart elder care. In terms of sustained profitability, each user has at least four opportunities for profit: the first is the initial product sales opportunity, the second is the sales opportunity for complementary products, the third is the opportunity for product expansion, and the fourth is the opportunity for installation and maintenance services.
Thus, the smart home industry is currently a hot industry and will become even hotter in the future, with significant profits now and potentially greater profits ahead. Of course, the key point is that it is easier to enter now than it will be in the future, making this the best time to enter the smart home industry.
However, the concept of intelligence remains vague, especially regarding how the intelligent interconnection of devices will change living quality, whether it is safe and healthy, and whether it is comfortable and intelligent. It is essential to experience it in a scenario-based manner; merely discussing products without showing real effects will not gain user acceptance. Moreover, solutions must truly be intelligent and not “dumb,” ensuring usability for the elderly, children, and pregnant women. Some solutions overly emphasize technology, becoming overly complicated and resulting in poor user experiences.
It is evident that the industry is investing in terminal experiences; for example, in 2020, Haier launched the industry’s first scenario brand in Beijing and upgraded it to the San Wing Bird City Experience Center No. 001. In 2021, it collaborated with ecosystem partners to build the Nanjing San Wing Bird City Experience Center. Iterating scenario solutions repeatedly and continuously attracting user experience upgrades, a comprehensive digital platform was built on this foundation, and on May 10, 2022, the latest 1+3+5+N scenario system was launched to provide users with customized smart home solutions.
A.O. Smith is focusing on promoting the AI-Link heating and cooling water professional integration system experience center, which differs from traditional retail showrooms by utilizing professional immersive scenarios to allow consumers to experience the charm of one-stop professional services, truly witnessing the value of whole-house smart homes.
Moreover, Orvibo, a highly representative brand in the domestic smart home field, has been promoting the construction of offline experience stores in recent years. Currently, it has established 1,000 offline experience stores and has launched the “Starry Sky” plan, aiming to create 10,000 offline smart home experience stores within three years, hoping to allow users to experience Orvibo’s whole-house intelligence within a 10-kilometer radius.
Objectively speaking, the development of smart homes still faces many challenges: unstable basic connections, varying quality of devices, simple patchwork lacking interconnectivity value, absence of standards and technical support, and poor consumer experiences due to multiple interfaces. These issues indeed restrict the development of the comfortable smart home industry and affect consumer reputation. Therefore, when distributors enter the comfortable smart home market, they should choose cooperative brands that have strong and sustained R&D capabilities to ensure continuous product competitiveness; secondly, they should have robust and stable systems; and thirdly, they should possess practical store operation guidance capabilities.
Especially since the majority of target users for comfortable smart products are high-end consumers who pay great attention to quality and aesthetics, requiring personalized and customized services. Without digital marketing tools to assist stores, it is challenging to provide high-value services to high-end clients. This detail is also a crucial point in selecting brands.
For instance, A.O. Smith not only achieves full interconnectivity through AI-LiNK but also ensures that system design, construction, and services are digitally controlled throughout the process, making the design plan, construction process, and maintenance services visible and controllable, ensuring reliable delivery to users. Thus, A.O. Smith, through AI-LiNK, achieves system standardization and service standardization, ultimately creating a good living environment with good air and water for consumers.
Professionals must handle professional tasks; smart comfortable homes are not standardized products and require professional tools, techniques, materials, and teams for construction, with comprehensive supervision and final scenario debugging, acceptance, and delivery to users. By leveraging digital tools, user experiences are integrated throughout the process, ensuring everything centers around user satisfaction.
With the upgrade of consumer demands and changes in the competitive environment, the industry is undergoing transformation and market changes. The most evident shift is that the era driven by single products and product supremacy has passed, and the new trend in the industry is providing integrated comfortable smart services based on scenario integration of more categories.
Based on the market trends of comfortable smart integration and the channel pain points of brand integration sales, Modern Home Appliance Media and Sanbu Cloud have jointly planned the “Seizing New Markets, Empowering New Channels” project along with the first “White Paper on the Development of the Comfortable Smart Home Industry in China.” This aims to help manufacturers grasp the market accurately through forward-looking research and predictions while leveraging accumulated resources and advantages in innovative channels to empower enterprises, assist in resource docking, and help brand enterprises break through new channels, mastering new operational models, understanding the pain points and needs of home decoration companies and designers when promoting system integration solutions, and building systematic entry capabilities around new channels to seize opportunities. This will help enterprises build systematic service capabilities in the comfortable smart field, better guide industry development, and promote healthy and orderly market advancement.
The first “White Paper on the Development of the Comfortable Smart Home Industry in China” will be officially published in September, stay tuned!