MOUNTAIN VIEW, Calif. — According to Frost & Sullivan, manufacturers of home automation systems have taken steps to educate distributors and end-users about its user-friendly features and ability to reduce energy consumption, and customers are increasingly becoming aware of the benefits of adopting home automation systems. New analysis from the firm, North American Home Automation Markets, finds that the market earned revenues of $955.1 million in 2010 and estimates this to reach $1.4 billion in 2017.

“Besides training and educating the dealers and installers about the technology, establishing a broad dealer network and partnerships with other industry participants has become a key to success in this market,” said Alejandra Lozano, Frost & Sullivan research analyst. “Although in the past, much of the focus has been on the high-end market segment, manufacturers are slowly realizing the growth potential in the mainstream market segment.”

Another key competitive factor in the market is the price, noted Frost & Sullivan. Particularly in recent years, price competition has intensified, placing additional pressure on manufacturers to deliver cost-effective solutions. Other major competitive factors are ease-of-use, reliability, quality, the ability to integrate with other devices as well as features, aesthetics, and brand reputation.

Home automation’s ability to control various systems in the home, creating a comfortable and enjoyable environment, is expected to support revenue growth in this market, Frost & Sullivan stated. Understanding this, market participants are actively developing products that allow the homeowners to integrate all their systems and reduce energy consumption. However, home automation systems are not considered a must-buy and have to compete with many other products and services for the end users’ disposable income.

“Offering more affordable solutions is not only essential to remain competitive in this market, but also to increase penetration in the mainstream market,” said Lozano. “Although the installed system costs are declining, price is often still high enough to act as a deterrent to more wide-scale adoption of home automation in the mainstream market.”

Some market participants have already introduced products specifically designed for the mainstream market, to increase product adoption. Due to these market development efforts, the home automation market is anticipated to recover from the decline in the construction of new homes after 2010 and witness steady growth until 2017.

Publication date: 08/01/2011