U.S. Smart Thermostat Market Size, Share & COVID-19 Impact Analysis, By Product (Connected, Standalone, and Learning), By Technology (Wired and Wireless), By Application (Residential, Commercial, and Industrial) U.S. Forecast, 2021-2028

The U.S. smart thermostat market size was USD 937.2 million in 2020. The market is projected to grow from USD 1,088.9 million in 2021 to USD 3,280.3 million in 2028 at a CAGR of 17.1% in the 2021-2028 period. The impact of COVID-19 has been unprecedented and staggering, with smart thermostat devices witnessing a significant impact on demand all over the country amid the pandemic. Based on our analysis, the U.S. market exhibited a lower growth of 16.1% in 2020 compared to the average year-on-year growth during 2017-2019. The rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.  

The products considered in the scope are Sensi Touch Smart Thermostat ranging from (ST75S), (ST75W), and (ST55) provided by Emerson Electric Co. Also, T9 and T10 Smart Thermostat, Wi-Fi Smart Color Touchscreen Thermostat provided by Honeywell International Inc., and others.

A smart thermostat is an app-enabled smart home device that allows occupants to control home’s temperature through internet-connected devices remotely. This device can be connected through wired and wireless technologies, and are used in residential, commercial, and industrial spaces. This device uses advanced artificial intelligence (AI) to learn home schedules and preferences over time, conserving energy and significantly minimize utility bill. This capability of the device makes operation more convenient and seamless, offering greater control of cooling and heating, thereby saving electric energy. Google Nest, Ecobee, Honeywell, and Johnson Control tend to be the most well-known connected thermostat devices in the U.S. market.

COVID-19 Impact

COVID-19 Pandemic to Accelerate Demand for Smart Thermostat among Customers

The COVID-19 outbreak has disturbed regular life and prompted individuals, governments, and organizations to rethink their activities and priorities. These developments are proven to be a driver for technological advancement and creativity. The construction industry is critical to the country's economic development and progress. The global construction sector, particularly smart home, building, and city projects has been impacted by the COVID-19 pandemic. Delays in construction projects had a cascading effect on the economy. The delay was primarily due to supply chain issues and a lack of investment in commercial and retail properties. Government-imposed strict lockdown procedures to prevent the spread of the virus and have dramatically reduced foot traffic in buildings, culminating in the bankruptcy of several well-known offline retailers, including Brooks Brothers and Ascena Retail Group in the U.S.

COVID-19 negatively impacted the smart thermostat market in 2020, leading to a decline in its unit shipments and revenues. As a result, the market's growth trajectory in the first half of 2020 was slow. This trend slightly improved with the relaxation of all restrictions. The demand for the device rose as consumers became more concerned about energy efficiency. The pandemic had a significant influence on the value chain channels. For instance,

• In March 2020, Ecobee laid off 10% of its staff and canceled a new product line owing to the economic environment developed by the COVID-19 pandemic in the market.

Production of the device is heavily reliant on China. According to Business Standard, Covid-19 significantly impacted Chinese exports, with shipments falling by 6.6% in April 2020. However, in recent years, the home automation industry has rapidly gained popularity, boosted by pandemic, and lockdown limitations forced individuals to spend more time in their homes. As a result, a greater number of merchants entered the market. Thus, although the construction of smart buildings and cities have reduced their investments due to the financial crisis, providers of the device are trying to deploy business strategies that are important to mitigate the impact of coronavirus on their businesses.

LATEST TRENDS

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Increasing Demand for Smart Building and Smart City Projects to Increase Market Share

The urbanization of society continues to increase, with a focus on smart cities, where connected technologies and Internet of Things (IoT) solutions are used to improve critical infrastructure, public safety, city lighting, energy efficiency, traffic flow, and traffic congestion. The aim is to lower cities' carbon footprint while making cities better places to live, work, and play. A smart city must use technology to facilitate long-term growth to live up to its name. Technology must maximize resource efficiency while encouraging government and people to make wise decisions. The U.S. smart thermostat market share is anticipated to increase from 16.1% in 2020 to 17.5% in 2028. This factor includes city-owned structures and businesses, universities, hospitals, non-profit organizations, and individual citizens. This factor will almost certainly require sensor technology, behavioral economics, and gamification to alter physical infrastructure and encourage positive resource allocation decisions. In order to become more energy-efficient, these cities could start adopting devices that use algorithms and sensors and improve heating and cooling efficiency over time. As a result, it could directly contribute to the market growth. For instance,

• According to February 2020 report by Project Drawdown, residential energy uses for heating and cooling—which accounts for 9% of total energy use in the U.S.—is managed by thermostats. Most thermostats are either manually operated or preprogrammed, and studies show that people are highly inefficient at doing either. The device eliminates the unpredictable nature of human behavior, resulting in more predictable energy savings.

The rapid development of the Internet of Things (IoT) has recently led to new devices being introduced, tested, and integrated into building/HVAC applications such as low-cost/versatile sensors, communicating thermostats, occupancy sensors. One of the main tasks of smart cities is to maintain a comfortable temperature in buildings and homes. By integrating IoT sensors with thermostats, smart HVAC systems can save families, businesses, and government’s money on energy expenses and improve productivity. Thus, to ensure proper energy optimization in smart buildings and city projects, the government and companies could enhance the devices and applications. This increased focus and usage of the device could propel demand.

DRIVING FACTORS

Rising Adoption of Internet of Things (IoT) Solutions and Smart Homes to Accelerate Market Growth

Smart thermostats are being used in homes to control temperature and humidity while also enabling fresh air intake, assisting in preserving air quality. Further, one can monitor system performance from local or remote locations and respond to system-generated alarms. This device can help reduce the amount of energy used by an HVAC system to a great extent. It uses wireless communications, internet connectivity, mobile devices, and cloud computing to save energy and control the operation of HVAC systems, lowering expenses. Customers' demand for the device in smart homes has grown as technology has advanced, and quick innovation in numerous devices has developed.

• In August 2021, according to IDC, the U.S. Smart Home Survey report, smart homes are now firmly mainstream in the U.S., as over 75% of Wi-Fi homes have adopted them.

According to February 2020 survey report by Alarms.org, Most Americans who have smart gadgets in their homes are rapidly increasing, with 47% of millennials reportedly owning some smart devices, and 70% of customers who currently own one product are planning to purchase another one. Furthermore, 63% of respondents wanted to purchase the communicating thermostat and fans, 63% wanted smart locks and alarms, and 58% wanted smart lighting.

The IoT platform is one of the most significant global economic drivers for the smart home market. At home, IoT-based equipment provides energy-saving features. According to GSMA Intelligence 2020 report, the IoT connections are expected to reach approx., 5.1 billion in North America by 2025, up from 2.8 billion in 2019. Thus, the increasing demand for smart homes is expected to boost the market in the coming future.

RESTRAINING FACTORS

High Manufacturing Cost and Installation Complexity to Hamper Market Growth

Upgraded control systems and innovative connected thermostats require high investments. As a result, it could be difficult for small and medium-sized businesses (SMEs) to break into the market. Also, consumers with low spending power could find it difficult to afford the price.

For instance, according to a December 2020 report by Brinks Home, in most cases, smart thermostats pay for themselves in around two years. They save around 11% on heating and 15% on cooling costs on average. On the other hand, the initial cost can be four times that of a standard thermostat. The percentage user may save on heating and cooling bills doesn't apply to their property. How much they save will be mostly determined by how often they're at home, what temperature they want, and the type of climate they reside in.

Furthermore, learning the software and using the touchscreen display panel might be challenging. This product may not be for someone who does not enjoy reading manuals and figuring out all of the buttons and software. If the device is not correctly installed and configured, the user might not realize any savings. Thus, the high manufacturing cost, installation complexity, and various compatibility requirements are expected to hamper the U.S. smart thermostat market growth.

SEGMENTATION

By Product Analysis

Rising Adoption of Connected Smart Thermostat among End-user to Propel Market

Based on the product, the market is segmented into connected, standalone, and learning. Connected is expected to hold maximum market share during the forecast period. The technologies such as WiFi, Bluetooth, Zigbee, NFC, among others, are used to provide connected thermostat devices. Considering the growing demand for wireless connected devices, various companies are investing and introducing new products. For instance,

• In September 2021, VTech Communications, Inc. launched a new E-Smart W960 wireless thermostat based on WiFi and Zigbee 3.0 technologies.

The learning thermostat devices witness rapid growth during the forecast period due to its intuitive and intelligent features offering excellent customer experience. The demand is growing for learning products owing to their efficiency in saving maximum energy. As per the report of Google Nest, learning smart thermostats helps lower the substantial percent of energy bills and is compatible with 95% of systems.

By Technology Analysis

Growing Demand for Wired Thermostat to Drive Market Development

Based on technology, the market is bifurcated into wired and wireless. Wired thermostat to gain maximum segment share during the forecast period. A wired thermostat device is an early product implemented across industries, commercial, and some residential applications. For instance,

• In April 2021, Crestron Electronics, Inc. launched Horizon Thermostat with a two-wire design and touch screen high-resolution display. It can be integrated with the Crestron Home platform that offers intelligent operations and connections.

The wireless thermostat is expected to gain rapid growth during the forecast period. The wireless thermostat provides direct control of the temperature through apps and smartphones via internet connection. The capability to remotely control the thermostat to drive wireless device demand from any location.

By Application Analysis

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Increasing Demand for Smart Buildings to Propel Adoption of Smart Thermostat in Residential Buildings

Based on the application, the market is categorized into residential, commercial, and industrial.

The residential to gain dominant share during the forecast period. The rapidly growing smart home concept is expected to boost communicating thermostat demand across the U.S. Similarly, the growing demand for smart and connected devices for homes are likely to drive the product demand in residential application. It plays an important role in helping homeowners with minimum energy bills by efficiently monitoring the temperature required.

Commercial to gain rapid growth during the forecast period owing to the growing trend of smart and intelligent commercial spaces in the U.S. The key players are offering a dedicated commercial ST product to manage business and smart building operations. A commercial ST device offers easy integration with the building HVAC systems, and it is highly efficient in energy saving. Thus, the adoption of commercial thermostat devices is expected to propel market growth.

KEY INDUSTRY PLAYERS

Key Companies Aim to Offer Technologically Advanced Smart Thermostat by Expanding Their Portfolios

Several companies are investing in new product development and improvisation to match the changing needs of residential, commercial, and industrial buildings. They are engaged in collaboration and acquisition processes with other manufacturers to expand their product offerings. This strategy helps key vendors fulfill the requirements of the customer. Key players such as Emerson Electric Co., Lennox International Inc., Honeywell International Inc., Johnson Controls, Schneider Electric, Vivint Smart Home, Inc., Alphabet Inc. (Google LLC), Daikin Industries Ltd., and Alarm.com Holdings, Inc. are also vastly investing in enhancing their product portfolio. These market players are entering into partnerships and integrating various advanced technologies in the connected thermostats to deliver energy-efficient products.

July 2021 – Vivint Smart Home, Inc. partnered with Freedom Forever, residential solar system provider. The collaboration aims to provide Vivint Smart home systems to Freedom forever solar customers and offer a solar offering to Vivint customers. 

October 2020 – Emerson Electric Co. collaborated with Ameren Services, an electric and gas service provider. The partnership aims to provide Missouri customers with an energy-saving Sensi Smart Thermostat. With the ST device, the users can control the thermostat from smartphones and save money & electricity consumption.

LIST OF THE KEY COMPANIES PROFILED:

• Emerson Electric Co.  (Missouri, U.S.)


• Lennox International Inc. (Texas, U.S.)


• Bosch Thermotechnology Corp (Stuttgart, Germany)


• Honeywell International Inc. (California, U.S.)


• Johnson Controls (Cork, Ireland)


• Alarm.com Holdings, Inc. (Virginia, U.S.)


• Schneider Electric (Rueil-Malmaison, France)


• Vivint Smart Home, Inc. (Utah, U.S.)


• Alphabet Inc. (Google LLC) (California, U.S.)


• ecobee (Toronto, Canada)

KEY INDUSTRY DEVELOPMENTS:

• June 2021 – Honeywell International Inc. launched its new Commercial Connected Thermostat, TC500A-N, for small and medium buildings. The new thermostat offers advanced features such as easy commissioning, wired and wireless connectivity, security, and energy-saving features for heat pumps and rooftop.


• September 2020 – Venstar Inc. launched a new ultra low power Wi-Fi Temperature Sensor Pro to improve the alarm setting and monitoring based on Supply Air Temperatures. The new sensor is compatible with Explorer, Explorer Mini, and ColorTouch Wi-Fi Thermostats. In addition, the Wi-Fi Temperature Sensor Pro enables users to monitor indoor and outdoor temperatures remotely.

REPORT COVERAGE

An Infographic Representation of U.S. Smart Thermostat Market

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The U.S. smart thermostat market report highlights leading regions worldwide to offer a better understanding of the user. Furthermore, it provides insights into the latest industry growth trends and analyzes technologies that are being deployed at a rapid pace at the U.S. level. It further highlights some of the drivers and restraints, helping the reader gain in-depth knowledge of the market.

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