Smart Thermostat Market Size, Share & Trends Analysis Report By Technology (Wi-Fi, Zigbee), By Product (Connected, Standalone), By End-use, By Region, And Segment Forecasts, 2024 - 2030

Smart Thermostat Market Size & Trends

The global smart thermostat market size was estimated at USD 4.42 billion in 2023 and is expected to grow at a CAGR of 17.8% from 2024 to 2030. The growing consumer demand for convenience and control over modern technologies, as well as the rising trend of urbanization, is significantly driving the market growth. In addition, the increasing popularity of smart home technologies is driving the demand for smart thermostats by providing users with enhanced control and monitoring capabilities over their home temperature and energy consumption.

The market is undergoing a significant transformation with the integration of IoT into the HVAC industry. This integration has significantly impacted the market by providing innovative solutions that offer superior customer-centric services, remote appliance control, operational visibility, energy consumption reduction, and personalized user experiences through AI technologies. IoT-enabled smart thermostats provide real-time monitoring and control of HVAC systems, enabling users to remotely adjust temperature settings, monitor energy consumption, and receive alerts for potential issues. This increased operational visibility and remote-control capabilities have become essential features for users, driving demand for smart thermostats.

The increasing popularity of voice-controlled virtual assistants such as Amazon Alexa and Google Assistant has further propelled the demand for smart thermostats. These voice assistants enable users to interact with their smart home devices effortlessly, including adjusting thermostat settings using voice commands. The seamless integration between smart thermostats and voice assistants enhances user experience and simplifies home automation processes, contributing to the market growth of smart thermostats.

Regulatory initiatives aimed at increasing energy efficiency in buildings have propelled the demand for smart thermostats. These regulations push for the adoption of energy-saving devices like smart thermostats to reduce overall energy consumption and carbon footprint. For instance, the United Nations Economic Commission for Europe (UNECE) has developed framework guidelines for energy efficiency standards in buildings. These guidelines promote the development and deployment of standards that support the achievement of sustainable development goals. They emphasize the importance of energy efficiency in buildings and encourage the use of technologies like smart thermostats to reduce energy consumption and carbon emissions.

Companies operating in the market have adopted various strategies to enhance their market presence. Companies in this market are constantly striving to develop advanced technologies to improve energy efficiency, user experience, and connectivity features. In January 2023, Lennox Industries launched the Lennox S40 Smart Thermostat which serves as a command center for your entire home comfort system. It goes beyond traditional thermostats by offering features such as Feels Like technology, Schedule IQ Technology, one-touch Away Mode, and remote-control capabilities through the Lennox Smart Thermostat app. The thermostat is part of the Dave Lennox Signature Collection and the Ultimate Comfort System, ensuring top-notch performance and efficiency. Such strategies by key players are expected to fuel market growth in the coming years.

Market Concentration & Characteristics

The degree of innovation in the market is high. The market is driven by advancements in technologies such as artificial intelligence (AI), the Internet of Things (IoT), and wireless connectivity. In addition, innovations such as machine learning algorithms, geofencing capabilities, voice control integration, and smart home ecosystem compatibility have been driving the evolution of smart thermostats. These innovations enable smart thermostats to learn user behavior, optimize energy consumption, and integrate with other smart home devices. The constant introduction of new features and functionalities keeps the market competitive and drives growth.

The level of merger & acquisition activities in the market is expected to be moderate to high. Larger companies have been forming partnerships and acquiring smaller players to expand their product portfolios, enhance their technological capabilities, and gain access to new markets. For instance, in May 2023, Mysa, a Newfoundland & Labrador-based smart thermostat company, acquired the intellectual property of Zen Ecosystems, a U.S.-based smart thermostat firm specializing in commercial energy management solutions. This acquisition marks Mysa’s expansion into the commercial market and strengthens its position in the energy-efficient smart thermostat industry.

The impact of regulations on the market is expected to be moderate to high. Governments worldwide are implementing policies to promote energy efficiency and reduce carbon emissions. For instance, the U.S. Department of Energy has set standards for energy-efficient HVAC systems, which has driven demand for smart thermostats. In addition, tax incentives and rebates for energy-efficient devices have encouraged consumers to adopt smart thermostats. These regulations have contributed to the market's growth and are expected to continue shaping its trajectory.

The competition from product substitutes in the market is expected to be low. Smart thermostats have several product substitutes, including traditional thermostats and other smart home devices. However, smart thermostats offer unique features such as remote connectivity, energy monitoring, and automation, which differentiate them from traditional thermostats. Smart home devices such as smart speakers and hubs can also interact with smart thermostats, but they do not provide the same level of temperature control and energy management.

The end user concentration in the market is expected to be moderate, varying from the target segments served by providers. Residential users are the primary target market for smart thermostats, and they are driving market growth. Commercial and industrial users are also adopting smart thermostats but at a slower rate. The high concentration of residential users contributes to the market's growth, as they are more likely to invest in smart home technologies.

Technology Insights

The Wi-Fi segment registered the largest revenue shareof 66% in 2023. The growth is attributable to several factors. Wi-Fi technology is widely adopted and available in most households and commercial buildings, offering the convenience of remote access and control through smartphones or other devices. In addition, it enables seamless integration with other smart home devices and voice assistants like Amazon Alexa or Google Home, enhancing user experience. Continuous advancements in Wi-Fi technology have also led to improved connectivity, reliability, and energy efficiency, making it an attractive option for consumers looking to invest in smart thermostats.

The Zigbee segment is expected to grow at a significant CAGR of 18.1% from 2024 to 2030, owing to the increasing adoption of smart home devices and the growing demand for low-power, low-cost wireless connectivity solutions. The market is driven by the need for reliable and efficient communication protocols in IoT applications, particularly in home automation, industrial automation, and healthcare. The growth is also fueled by advancements in Zigbee technology, such as improved security features and increased compatibility with various devices and platforms.

Product Insights

The connected segment registered the largest market sharein 2023. The growth is attributable to its ability to offer advanced features and integrations with other smart home devices, advanced features, integration capabilities, and energy management functions that cater to consumer needs and preferences for convenience, comfort, and cost savings. Moreover, the increasing adoption of IoT technology and the growing trend towards energy efficiency are major factors driving the growth of the connected segment in the market.

The learning segment is expected to grow at the fastest CAGR from 2024 to 2030 owing to the increasing adoption of smart home technologies, rising awareness about energy efficiency, and the integration of advanced features like machine learning algorithms that enable these thermostats to learn user preferences and adjust settings automatically. This personalized approach enhances user comfort and optimizes energy consumption, leading to cost savings over time. In addition, the growing emphasis on sustainability and environmental conservation is driving the demand for smart thermostats with learning capabilities as they contribute to reducing carbon footprints and promoting eco-friendly practices.

End-use Insights

The residential segment registered the largest revenue share in 2023, owing to the increasing adoption of smart thermostats in residential buildings for energy efficiency and comfort. The residential segment is expected to continue its dominance in the market, driven by factors such as increasing awareness about energy conservation, growing demand for smart home devices, and the need for remote access solutions that monitor and control energy consumption.

The commercial segment is anticipated to witness the fastest CAGR from 2024 to 2030, owing to the increasing use of smart thermostats in commercial spaces. Smart thermostats offer critical insights to operations and building managers, enabling them to effectively manage the cooling and heating of various systems, including rooftop units, chillers, fan coil units, zone dampers, and heat pumps. By leveraging this information, they can optimize energy consumption and minimize energy waste. This growing adoption in commercial settings underscores the transformative impact of smart thermostat technology on energy efficiency and operational cost savings, driving significant market growth in the coming years.

Regional Insights

The North America smart thermostat market held the largest global revenue share of over 62% in 2023. This growth can be attributed to the increasing adoption of smart home technologies, energy efficiency initiatives, and the rising demand for IoT devices. Consumers in the region are increasingly aware of the benefits of smart thermostats in terms of convenience, cost savings, and environmental impact, leading to higher adoption rates compared to other regions.

U.S. Smart Thermostat Market Trends

The smart thermostat market in the U.S. is projected to grow at a CAGR of over 16% from 2024 to 2030. Various government initiatives promoting energy efficiency in buildings have encouraged the adoption of smart thermostats as part of broader efforts to reduce carbon emissions and combat climate change.

Asia-Pacific Smart Thermostat Market Trends

The smart thermostat market in the Asia-Pacific region is expected to witness the fastest CAGR of 25% from 2024 to 2030. Governments in various countries within the Asia-Pacific region are implementing initiatives and regulations aimed at promoting energy efficiency and reducing carbon emissions. This includes incentives for adopting smart technologies like thermostats that can contribute to overall energy savings.

The China smart thermostat market is projected to grow at a CAGR of over 18% from 2024 to 2030 owing to various factors such as increasing awareness about energy efficiency, rising disposable income, and the government’s push towards sustainable development.

The smart thermostat market in Japan is anticipated to grow at a CAGR of over 24% from 2024 to 2030. Japan has been actively promoting energy efficiency and sustainability in recent years, owing to concerns about climate change and energy security. Smart thermostats offer significant energy-saving benefits by optimizing heating and cooling systems based on occupancy patterns and external weather conditions.

The India smart thermostat market is expected to grow at a CAGR of over 20% from 2024 to 2030. The growing awareness among Indian consumers about energy efficiency, convenience, and comfort provided by smart home technologies is driving the demand for smart thermostats. As people become more conscious of their energy consumption and seek ways to reduce costs, smart thermostats offer a solution by allowing users to control their home heating and cooling systems remotely through smartphones or other devices.

Europe Smart Thermostat Market Trends

The smart thermostat market in Europe is anticipated to grow at a CAGR of 19% from 2024 to 2030. Many European countries have set ambitious targets for reducing carbon emissions and promoting energy efficiency. Governments are incentivizing the adoption of smart technologies, including smart thermostats, through various programs and regulations. This support from regulatory bodies is expected to drive the demand for smart thermostats in the region.

The UK smart thermostat market is projected to grow at a CAGR of 20% from 2024 to 2030. The UK government has launched initiatives such as the Smart Metering Implementation Programme, which aims to install smart meters in all homes by 2025. This program has created a need for smart thermostats that can integrate with these meters and provide real-time energy usage data.

The smart thermostat market in Germany is expected to grow at a CAGR of 18% from 2024 to 2030. Germans have become increasingly aware of the importance of energy conservation. Smart thermostats help consumers monitor and manage their energy usage, which has contributed to their growing adoption.

Middle East & Africa Smart Thermostat Market Trends

The smart thermostat market in the Middle East and Africa is expected to grow at a significant CAGR from 2024 to 2030. This can be attributed to the rapid urbanization and industrialization in the countries of MEA, leading to increased energy consumption. Smart thermostats help optimize energy usage, reducing waste and costs.

The Saudi Arabia smart thermostat market is projected to grow at a significant CAGR from 2024 to 2030. The Saudi Arabian government has launched initiatives such as the "Saudi Vision 2030" program, which aims to reduce the country's dependence on oil and diversify its economy. This program has created a need for smart thermostats that can integrate with smart grids and provide real-time energy usage data.

Key Smart Thermostat Company Insights

Some of the key players operating in the market include Honeywell International Inc., Ecobee Inc., and Emerson Electric Corporation.

• Honeywell International Inc. operates in various sectors, including aerospace, building technologies, performance materials, and safety solutions. The company is a leading provider of smart building solutions, leveraging its expertise in technology and automation to create intelligent HVAC systems. It offers a range of smart thermostats designed to enhance energy efficiency, comfort, and convenience for residential and commercial users. The company’s focus on user-friendly interfaces and seamless integration with other smart home devices has contributed to its success in the smart thermostat industry.

• Ecobee Inc. is known for its innovative and sustainable solutions aimed at improving everyday life while contributing to a more environmentally friendly world. The company focuses on creating smart home products that not only enhance comfort and security but also promote energy conservation. The company’s flagship product is the ecobee SmartThermostat, which uses Wi-Fi connectivity and occupancy sensors to learn homeowners’ schedules and preferences, adjusting temperature settings accordingly for optimal comfort and energy savings. Ecobee’s thermostats are known for their advanced features, such as remote access, voice control through Amazon Alexa or Apple Siri, and integration with other smart home devices like Amazon Echo or Google Home.

Tado GmbH and Netatmo SA are some of the emerging market participants in the smart thermostat industry.

• Tado GmbH offers a range of smart thermostat products that are designed to optimize energy usage and improve comfort in homes and businesses. Their products include smart thermostats, smart radiator valves, and air conditioning control solutions. Tado’s devices are compatible with various heating systems and can be controlled remotely through a mobile app.

• Netatmo’s smart thermostat offerings aim to provide users with greater control over their heating systems while promoting energy efficiency. The company’s thermostats feature sleek designs and intuitive interfaces that allow users to set personalized schedules and monitor energy consumption. Netatmo also offers additional accessories like radiator valves for zoned heating control.

   

Recent Developments

• In February 2024, Carrier Corporation launched a new smart thermostat. This thermostat is designed to enhance comfort and energy efficiency for residential and light commercial applications. It offers features such as remote access, geofencing capabilities, and intelligent scheduling to optimize energy usage while ensuring personalized comfort levels for users.

• For instance, in December 2023, Sinope launched the 'TH1123WF' smart Wi-Fi thermostat for electric baseboard and convector heating systems. It can be controlled remotely via the Neviweb web platform or app and is compatible with Apple HomeKit, Alexa, and Google Home.

• In May 2022, Ecobee introduced the Ecobee SmartThermostat Premium and Ecobee SmartCamera with Voice Control. The Ecobee SmartThermostat Premium includes a built-in Alexa voice service, a glass touchscreen display, and a speaker engineered for whole-home sound. The new products aim to redefine excellence in the smart home industry by offering advanced features such as voice control, smarter sensing and enhanced audio quality.

Smart Thermostat Market Report Scope 

Global Smart Thermostat Market Report Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global smart thermostat market report based on technology, product, end-use, and region:

• Technology Outlook (Revenue, USD Million, 2018 - 2030)

  • Wi-Fi

  • Zigbee

  • Others

• Product Outlook (Revenue, USD Million, 2018 - 2030)

  • Connected

  • Standalone

  • Learning

• End Use Outlook (Revenue, USD Million, 2018 - 2030)

  • Residential

  • Commercial

  • Industrial

• Regional Outlook (Revenue, USD Million, 2018 - 2030)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • UK

    • Germany

    • France

  • Asia Pacific

    • China

    • Japan

    • India

  • Latin America

    • Brazil

  • Middle East & Africa

    • South Africa

    • Saudi Arabia

    • UAE