Why Some Consumers Have Not Adopted Smart Home Devices

While smart home devices have grown rapidly throughout the past decade, a recent report from the Consumer Technology Association (CTA) suggests that 2021 may be a relative down year for these technologies, with flat revenues and just 11-percent growth in unit sales.

In a recent article published in Fast Company, a journalist “aired his grievances” against the smart home and cited several reasons for why he (as a long-time owner of several smart home devices) believes that these technologies have not taken off as many thought they would.

He notes that his Alexa-enabled smart blinds have failed to roll down at their scheduled time, that his smart thermostat has gotten stuck on the same temperature on several occasions and that “every Echo speaker owner has experienced Alexa playing the wrong music at least once.”

In addition to these occasional challenges with certain products, he also mentions the confusing ecosystem of available smart home products and issues with getting them to work together; he writes that “you can easily end up with a pile of devices that don’t work together”.

While his experiences are understandable, most smart home device owners don’t share the same frustrations, according to the “Smart Home and Energy Data: What Do Consumers Want?” report that the Smart Energy Consumer Collaborative (SECC) published earlier this summer. This nationally representative survey reached 1,520 consumers, with 796 being current owners of at least one smart home device, and found that 97 percent of current owners are either “very” or “somewhat satisfied” with their devices.

When asked about challenges that they have experienced, the majority of current adopters said that they haven’t experienced any, though 11 percent of smart thermostat owners stated that the device was difficult to set up and 10 percent of smart speaker device owners stated that the device was unreliable.

While current owners appear to be content with the devices that they have in their homes, the survey did reveal some notable insights on why non-adopters have not yet purchased any smart home devices, and the top reason – at 57 percent – was that these consumers do not see a need for buying them.

While tech-savvy early adopters may purchase novel technologies because they’re cool or fun to use, these non-adopters – who tend to be over 55 years old and overwhelmingly belong to SECC’s less-engaged Movable Middle and Energy Indifferent customer segments – haven’t been shown a clear value proposition that would justify the upfront costs and the time that it takes to learn about and set up these devices.

In addition, about half (45 percent) of non-adopters cite concerns that these devices “will share private information without my knowledge”. These concerns over data privacy are not anything new in SECC's consumer research. In several other studies over the past few years, data privacy has been a concern for many of respondents – most notably, among those who are slower to adopt new technologies or participate in energy efficiency programs.

When we look more closely at why non-adopters would be reluctant to share information specifically with their electricity providers, we see that these consumers are most concerned with who would have access to their data. This concern is notably higher for smart speakers (62 percent), which may be due to the fact that this device is capable of sharing more than just energy-related data. The second-highest concern is that consumers “do not know what the benefit would be” of sharing their data – again, there’s no clear reward to offset any risks.

Finally, the third-highest hurdle for why consumers have not yet purchased any smart home devices is that “the upfront costs to purchase them is too high”, which is understandable as many smart appliances can cost thousands of dollars and even high-end smart thermostats can cost consumers over $200 before any required installation costs. On the other hand, smart plugs and smart lighting can be relatively inexpensive entry points to the smart home.

While 2021 may be a relative down year for the smart home by some measures, it seems likely that the growth trajectory for smart home devices will continue upward in the years to come. As consumers continue to consider these devices for their homes, electricity providers and other industry stakeholders can play a pivotal role in helping consumers better understand these technologies and weigh the risks and rewards.

For example, education around the benefits that consumers can receive will help those in the Movable Middle segment take action – especially if the next steps are simple and easy. And clear information on how data will be collected and used will likely be welcomed by all consumers, whether they’ve already adopted smart home devices or not. Finally, the issue of upfront costs is easily addressable through rebates, incentives and online marketplaces.

Actions along these lines by providers and their partners can ensure that the smart home benefits consumers and helps them meet their energy goals – rather than becoming a source of frustration.