PALO ALTO, Calif. - The perception that programmable thermostats are complex and hard to use is hampering their adoption by consumers, according to a study by consulting company Frost & Sullivan. Meeting the need for a more user-friendly interface would give market participants the opportunity to gain a competitive edge, says the company.

The new study, "North American Thermostats Market," shows that this market had total revenues of $520.1 million in 2002 and has the potential to expand to $754.4 million by 2009.

"The basis of this challenge lies in both the design and lack of clear instructions for programming. Very few companies have seriously considered this an issue or are working to develop solutions," said Frost & Sullivan research analyst Sathyanarayanan.V.

According to the company, the demand for electronic thermostats is expected to increase as the perception of programming changes, eventually replacing the traditional electromechanical thermostats completely. Environmental concerns and legislation against mercury-based thermostats are driving end users toward the adoption of electronic thermostats. Energy concerns are another factor adding impetus to demand for programmable units.

One factor that has somewhat limited the growth of thermostats is the decline in commercial construction, which is attributed to the sluggish economy. "However, the deceleration of new construction is proving to be a boon for retrofitting applications and is also boosting demand for advanced electronic thermostats," said Sathyanarayanan.

The majority of revenues come from the booming retrofitting segment and participants are looking to maximize this opportunity, the company says.

"With the anticipated recovery of the building industry, more opportunities will be created, ushering in a greater number of hopeful entrants while crowding the marketplace, thus increasing competition," stated Satyanarayanan.

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Publication date: 10/27/2003