Polimi: The Smart Home Market is in Good Shape

On February 19, the IoT Observatory of the Politecnico di Milano presented its annual report on the smart home market trends. A market that appears to be performing well despite the disruptions affecting the entire building systems sector, which is closely tied to the construction industry and, consequently, to fiscal incentives.

The analysis by the Politecnico is undoubtedly one of the key references for understanding the trends of a specific market like smart homes. However, it is frankly incomprehensible that it persistently excludes wired home automation systems from its study. These systems, in contrast, bring together technologies that are fully aligned with the very concept of smart homes and are essential for energy efficiency processes.

That being said, we are pleased to see that IoT solutions for the home grew by double digits in 2024, recording a significant +11%—equivalent to approximately €900 million in revenue. This suggests that the psychological threshold of €1 billion is now within reach. Notably, the Italian market is growing much faster than the European market (+6.5%), allowing it to at least partially close the gap in per capita spending, which in Italy remains significantly lower (about half of the rest of Europe).

The main driving force behind the domestic Internet of Things market remains security, which alone accounts for more than a quarter of the total sector (approximately €250 million). This segment is also seeing the strong entry of AI as an added value. Connected small appliances are also on the rise, while large appliances remain stable.

Conversely, all energy-saving devices—such as boilers, heat pumps, smart thermostats, and HVAC solutions—have declined (-5%), as they have been impacted by the reduction of fiscal incentives tied to the bonus and superbonus schemes. In this area, it is particularly noteworthy that the B2B channels (distributors and installers) have been hit the hardest, while B2C channels have responded more resiliently. Nevertheless, it is reassuring to see that, even beyond the fiscal incentives, consumers remain highly interested in devices that provide energy savings: 71% would be willing to invest in equipping their homes with such solutions. This suggests that the current decline is only temporary.

The most encouraging factor, however, is the growing market maturity: 69% of respondents are now well aware of what a smart home is and the solutions it offers—a sharp increase of 10% year over year. This marks a significant and likely generational shift, as digital natives are gradually replacing older generations, particularly in terms of spending power.

Returning to the relationship between smart homes and energy savings, the Politecnico has estimated that, in relation to the goals of the EPBD4 (European Green Homes Directive), there is a need to reduce energy consumption by approximately 40,000 GWh/year over the next decade. The adoption of smart energy management systems could contribute 2,600–3,100 GWh/year, covering around 7% of the overall target.

While this contribution may seem modest at first glance, it is actually quite significant given the relatively low investment required. Moreover, its impact on user behavior—though difficult to quantify—could be substantial.