July 5, 2023 – When it comes to their homes, owners are demanding simplicity and a tailored experience. This market is witnessing a growing awareness of safety and security, and expanding use of cloud-based technologies. These are key market drivers behind today’s smart homes, reports Precedence Research, which puts the global smart home market size at $80.45 billion US in 2022.

Homebuilders, too, are delving into smart home solutions to differentiate themselves from their competitors.

And once a home is made smart, it opens up a world of possibilities through home automation. Whereas a smart home contains devices and sensors that can be controlled by users (via an app or online), home automation enables the smart home to run automated services.

In an automated home, electronics, appliances and systems are controlled through a platform via various communication protocols to automatically manage things such as temperature, lighting, security access, home entertainment, and energy.

This market is registering a 21.88% CAGR (compound annual growth rate) between 2023 to 2032, Precedence continues, with the new construction segment expected to claim the largest share during the projected period.

Without a doubt, making a home smarter and energy-efficient while it is being built is easier than post-occupancy retrofit, which is why this segment is expected to capture about 3/5 of the business. However, that still leaves some $32 billion on the table globally for those engaged in retrofit activity.

“If we look at Canada, I’ve seen reports that place the value of the home automation market at something like $3 to $4 billion per year,” says Robert Mowles, president of smart home and security supplier Aartech Canada.

Smart homes started decades ago

Mowles traces the smart home’s roots back to 1984 with the introduction of The Clapper—a sound-activated electrical switch (you may even remember the commercials).

“That was probably one of the earliest smart home technologies, as we no longer had to get up and turn on the light switch,” he says. “Since then, we’ve gone from simple things—like TV remotes and The Clapper—to automating our lighting, introducing advanced controls for heating and air-conditioning, and security and energy monitoring. All of these combine to form a full ecosystem.”

“We now even have voice assistance, which I couldn’t even imagine when I first started working with home automation solutions,” Mowles adds.

Solutions as diverse as the customer

While technological adoption is bring driven by the factors mentioned earlier, the solutions that homeowners desire are as diverse as the owners themselves.

“The drivers for home automation are dependent on that particular individual’s circumstances,” Mowles says, adding that what works for one owner may not work for (or be needed by) another.

“For an older person, a smart home may only involve something as simple as having a switch near the bed to turn on the lights and get to the bathroom safely at night,” he notes. “But what if that person had had a bad experience? Maybe their house had been robbed. In that situation, they are more likely to install a security system that may also tie into some of their lighting.”

Or it could be something as simple as automating something that all of us have overlooked or forgotten about. “If you have a vacation home, chances are you have forgotten to turn off the baseboards or furnace at some point—until you got the bill!. Then you realize: ‘I could automate the heating to make sure that never happens again’.”

If you’re like Mowles, you enjoy snowmobiling in the winter. “Wouldn’t it be great to turn on the heat in your cottage before you get there?”

By and large, home automation technologies are addressing inconveniences and problems that have been waiting for solutions. In other cases, they exist simply to make our lives easier. Take the TV remote: it is not something we need, Mowles points out, “but when’s the last time anyone ever got up from the couch to adjust the volume on the TV?”.

Same thing with video doorbells. We could get up to see who is at our door, or we could simply display them on our phone and choose whether to open the door. This solution has become especially valuable in recent years with the rise of deliveries to our doorsteps and combating (or identifying, at least) pesky “porch pirates”.

Importantly, home automation solutions are not just for the ultra-rich.

“Smart home technology/automation takes on a lot of different forms. We’ve been involved with smart home installs that are worth tens, even hundreds of thousands of dollars. Sometimes, though, it may just be a $100 voice assistant with a couple of smart switches that provide some convenience to the homeowner,” Mowles says.

For example, the builder of a home may have neglected to install a light switch at one end of a hallway where the owner could really use one. We can use today’s tech to add an extra light switch where it is needed without having to run any new wires.

“Do we consider this particular application ‘smart’? No, but it is part of that technology ecosystem can that can be used for solving problems.”

While Mowles has been involved in large custom-home projects, a huge chunk of the home automation market “is happening at the small to mid-size levels”.

Protocols and communications

While a home could have any number of smart devices that could be automated, we don’t achieve a truly smart home until these devices become connected through a common platform, and possibly automated. Now we’re getting smart!

For that to happen, we need a common language or, at the least, something that serves as the “universal translator” for these disparate components and systems. Here is where we get into questions of platform, communications protocol, interoperability, etc.

When asked about open versus proprietary technologies, Mowles chuckles. “Today’s home automation technology is not unlike the Beta versus VHS war back in the day, where we did not have a common platform for recording onto a tape.”

Smart home technologies subscribe to any number of platforms. Open specs include things like Z-Wave, ZigBee, Wi-Fi, etc. Proprietary or brand-specific protocols include things like Insteon, Lutron, etc.

“So what do we do when we have all these different technologies? Well, it may not even matter when all the customer wants is a few automated pieces. You don’t have to really plan it out a lot.” However, when the homeowner is undertaking a larger project—door locks, thermostat, cameras—then some more thought is required.

“As a smart home distributor, we look at the big picture and try to provide guidance. The solution usually involves some way of bridging all of these different protocols, typically via the cloud, dedicated home automation software, or smart hub—all of which serve as a kind of one-stop ‘universal translator’.”

The smart home hub or automation software brings all these pieces together under one user interface. The electrical contractor/integrator needs to know about the different technologies so as to figure out which one is best for the application at hand, first and foremost, and then worry about interoperability.

But Mowles is not too concerned over varying protocols; in fact, it would be fair to say he appreciates them.

“When we try to bring in everything under one umbrella, we often end up removing some of the features that made a new technology cool in the first place,” Mowles muses.

The important thing is to not get too hung up on whether something is ZigBee, Bluetooth, Ethernet and so on. Instead, Mowles suggests, “Pick the best of each technology to incorporate into the project. Don’t worry too much over sticking to just one protocol”.

Getting smarts for smart homes

Home automation, integrating disparate systems, understanding smart technologies are not really taught to those who are chasing their C of Q, so where do both apprentices and journeys go to learn more?

“Finding and gathering information is so easy these days,” Mowles insists. “For a lot of things, you can just google or YouTube the answer you need. But, in truth, it’s a combination of things.”

Besides the information you can find online, industry tradeshows are great places for learning about new products and solutions, and they usually provide learning opportunities, too.

“Distribution channels also play an important role because they work with many different vendors offering various technologies, and they usually offer training… maybe even tradeshows of their own that help with education.”

Although Mowles has seen some education on smart home technology at the post-secondary level, “I’m not sure if they’re quite keeping up with the technology, but at least they give the students some idea of what’s out there”.

Electrical contractor is perfectly placed

To Mowles, the electrical contractor is “perfectly placed” to be the prime provider of home automation solutions.

“One of the most impactful and most visible aspects of home automation is the lighting. And those solutions range from one-touch scene lighting to creating a desired ambiance, to something with more of a security focus—say, an automation scheme that brings up the lights as someone pulls into their driveway. In both cases, convenience is an important driver.”

Automation can also play an aesthetic role. “Owners of larger homes often face banks of 5, 6, even 10 light switches on the wall, which can all be replaced by a single keypad,” Mowles says. “And who is installing those keypads, that wiring? The electrical contractor.”

Electricians are already performing “the hard work”, says Mowles, as they design and/or install the wiring, switches, fixtures, controllers for the lighting. Electrical pros are already trained and licensed, and typically involved in home automation on some level. “So why not take that job to the next level and be a bigger part of the process instead of just installing the wiring? Why not work on the bigger picture—or partner with someone who does?”

Making money in home automation

A quick search of Amazon.ca for “home automation” returns over 10,000 results.

I presented Mowles with this hypothetical: I’m an electrical contractor with two employees. We want to differentiate ourselves with our knowledge of smart, automated home technologies. How do we win work?

“I’m a big believer in not over-selling. Instead, focus on offering solutions that solve problems or enhance someone’s quality of life,” Mowles advises.

Again, the solutions you suggest and install should be customized for each customer. “I’ve seen installers customize the buttons on a keypad for their customer without even checking whether those buttons made any sense. If you don’t ask the homeowner what they need, they’re not going to be satisfied with the result.”

Instead, ask the homeowner questions like: When you come home, what do you do first? OK, you open the front door and walk in. Then what? Next you turn on the lights, and throw your keys over there? “Now you know what they need, where they need it, and when. From that knowledge, you can create an automated solution or a simple keypad that checks all the boxes.”

The customer is delighted, and the referrals will start coming in. “But if you’re trying to shoehorn a solution to a problem that doesn’t exist in the first place, your client won’t be as inclined to recommend you to others.”

This all speaks to the importance of working with the homeowner, which means being flexible with your business model.

“Some homeowners want to buy their own product, some of them want to install the products themselves—and almost all of them need some degree of help.”

Mowles works with one installer who serves as a kind of final piece to the homeowner’s automation puzzle… and it’s not always the same piece. Whether it’s performing a full or partial installation, or programming the components to ensure they work, “At the end of the day, it doesn’t really matter. By making himself available, he always gets enough of the project to make money and garner additional referrals”.

Instead of forcing his way into a home and insisting on only one set of products, his business model is to be flexible with a homeowner’s specific needs. When you make the homeowner an integral part of the project, Mowles says, you’ll have the most success. “Don’t fight them. We all hate to be told what to do.”

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