Thermostat technology has evolved significantly in just the past few years, and smart thermostats have become one of the fastest-growing HVAC market segments. But, just as the technology has evolved, so has the definition of the smart thermostat.
While it’s generally recognized that programmability, the ability to connect to the Internet and other equipment, and the capability to react to external data are all features of the smart thermostat, manufacturers often differ slightly in their definitions of the product. But, as thermostat technology continues to evolve and more and more products enter the market, manufacturers are beginning to recognize the need for a standardized definition of the smart thermostat.
A FLUID DEFINITION
According to a recent study from IHS Building Technologies, thermostats generally fall into four distinct categories: nonprogrammable, programmable, connected, and smart.
“The first two are non-connectible, and the latter two are connectible,” said Omar Talpur, a market analyst at IHS Building Technologies. “There’s confusion in the marketplace with connected versus smart thermostats. There are a lot of people who think connected is smart, but that just means it can get on the Internet. It doesn’t make decisions.”
Thermostats that qualify as smart, Talpur said, respond to input such as occupancy and customer preferences. These “smart” thermostats include, but are not limited to, the Nest, ecobee3, and Honeywell Lyric thermostats.
In performing his research, however, Talpur ran into many instances where manufacturers differed on the criteria they used to designate a product as a smart thermostat.
“I was surprised that, within the industry, there were a lot of manufacturers that didn’t make the distinction between connected and smart,” he said. “The Nest is a learning thermostat; it makes a decision. But, there are a lot of manufacturers that market Wi-Fi thermostats as smart.”
Liz Haggerty, vice president and general manager, unitary products group, Johnson Controls Inc., pointed out how the industry’s idea of a smart thermostat has changed vastly over the years.
“Originally, a smart thermostat was any programmable thermostat that allowed the homeowner to enter set points for different times of the day. The intelligence of the thermostat was defined by its ability to respond to pre-set set points without homeowners having to manually change the set points multiple times throughout a 24-hour period.
“More recently, smart thermostats have come to mean thermostats that also feature a Wi-Fi connection,” Haggerty continued. “This means the thermostat has a Web application or remote connectivity associated with it that provides homeowners with remote access to their thermostats. But, what really separates smart thermostats from connected thermostats is their ability to make decisions based on the data they receive from other system components. Unlike connected thermostats, they can make adjustments in system operation, going beyond a simple response to set points without user input.”
Ed Blittschau, vice president of marketing at Emerson Climate Technologies Inc., gave a more generalized definition of smart thermostats, saying they are “those that help homeowners save energy and support their busy lifestyles.” He added, “This is a quickly evolving category, and we think these labels are evolving, too.”
Steve Dushane, president and CEO, Venstar Inc., suggested the definition of a smart thermostat is broader and much more subjective than the IHS report indicates.
“I’m not sure we have to define what precisely constitutes a smart thermostat,” he said. “For some people, a smart thermostat has time-period scheduling; for others, it may automatically control the humidity and the temperature. And, for me, if my thermostat efficiently controls my comfort, is remotely controllable, and is compatible with my home automation system, I will call it a smart thermostat.”
THE CALL FOR A CONSISTENT DEFINITION
As more thermostats enter the market, some industry leaders believe the different kinds of thermostats should be clearly defined and marketed so customers know exactly what they’re getting for their investment.
“There are more than 180 million smartphone users in the U.S., and mainstream consumers are beginning to understand the value and ask for smart products, but there’s still confusion over the actual functionality,” explained Stuart Lombard, president and CEO of ecobee Inc. “There’s still a long way to go, and we continue to educate consumers on the advantages of smart thermostats over connected thermostats.”
Various industries and manufacturers have borrowed and used the phrase “smart technology” as they see fit, which can cause confusion, said Mike Smith, senior marketing manager, residential products, Mitsubishi Electric US Cooling & Heating Division. “For example, we’ve heard about homeowners purchasing what they think is smart technology — with all those great decision-making capabilities — when, in reality, their purchase offers just connected technology. A complicating factor is that some manufacturers mislabel their own technology. … The public is confusing the two terms, so clearer definitions are needed, and manufacturers should be careful how they use the word ‘smart’ with their products.”
Not only is the general public largely unaware of the technological differences between smart and connected thermostats, Haggerty said, but so is a large part of the HVACR industry. “I think smart and connected are still being defined and often used interchangeably,” she added.
To find the best product for their needs, homeowners rely on the expertise of their heating and cooling contractors as well as their own research, said Bob Swilik, product manager, Carrier Corp. “We expect demand for these products to continue to grow as consumer awareness about thermostat capabilities increases.”
Better definitions would help create value for residential and commercial consumers, Lombard said. “Clearer definitions would further clarify the value proposition of smart thermostats to customers who may not know the difference and wonder about the price difference between the two types of thermostats. However, when someone begins to research and consider buying a smart thermostat, most will evaluate the net benefits they receive based on how the device supports and improves their lifestyles.”
THE FUTURE OF THE SMART THERMOSTAT
Whether clearly defined or not, smart and connected thermostats are expected to continue to rise in popularity, and more options are expected to come to market.
“The smart thermostat market is growing quickly,” Lombard said. “There’s tremendous amount of value consumers can get out of smart thermostats, both in terms of comfort and savings. With the ecobee Web portal, we can validate savings for our customers. Furthermore, utilities appreciate the value smart thermostats can deliver to their customers and customers’ communities by using smart thermostats to minimize strain on the power grid.”
As the smart thermostat offerings available to consumers increase, contractors will have an opportunity to boost their bottom lines. “There will be more recognizable brands at retail,” Dushane said. “And, in the professionally installed two-step distribution, the choices available to the dealer/contractor will increase, and the value proposition will get better, as well.”
“Revenue-wise, the Wi-Fi segment is growing at a much faster rate than non-connected thermostats,” Blittschau added. “However, there is a long runway in terms of units, as the non-connected mid-tier market still dominates the everyday installation. Traditionally, the thermostat has been changed only with a new system installation, but the demand for connected solutions is increasing the market in both professional replacements and do-it-yourself upgrades.
“There are a lot of new entrants to this market and a wave of interest by consumers in thermostat technology,” Blittschau continued. “We’ve been conscious of ensuring that contractors and our wholesale channel stay top-of-mind in our plans for new innovations.”
While smart thermostat sales continue to grow, some industry leaders predict the thermostat will soon become much more than just a box on the wall; in the not-too-distant future, they could transcend indoor climate control to become the interface through which the homeowner controls his or her entire smart home, including door locks, lights, garage doors, security systems, the HVAC system, and more.
“Thermostats will integrate into whole-home controllers and continue to offer more options, features, functions, accessories, and integration,” Smith said. “While Nest pioneered the smart home system control, others have innovated more advanced products. The trend toward smarter technology will continue.”
“While we might call these devices a wall module or a zone sensor in a commercial space, people will always continue to call them thermostats, no matter what term we drive them to,” he said. “In the long term, they really aren’t going to be what we had in the past. They’ll be much more.”
Publication date: 10/19/2015