Smart Home Gateway

Smart home products were a key theme at the 2017 Consumer Electronics Show, said Ed Blittschau, vice president of marketing, White-Rodgers, Emerson Commercial and Residential Solutions.

“Mainstream customers are increasingly looking for opportunities to make their first smart home purchase,” he said. “Due to its attractive features and benefits, as well as successful history, the Wi-Fi thermostat is the gateway to a smart home for many consumers.”

According to Blittschau, increased consumer awareness and interest in Wi-Fi thermostats are driving adoption.

“As Wi-Fi ownership moves from early tech adopters to more of a mainstream audience, consumers are going to be less familiar with technology, and ease of use is going to be of greater importance. Wi-Fi thermostats offer an attractive value proposition for homeowners.”

Blittschau cites a recent research study conducted by Emerson in which 25 percent of homeowners expressed an interest in purchasing a Wi-Fi thermostat within the next 12 months. “Nearly 85 percent of current Sensi owners replaced an existing and functional thermostat with a Sensi,” he said. “Wholesalers can capitalize on the Wi-Fi thermostat’s growing popularity, as the majority of Wi-Fi thermostat purchases are an optional upgrade.”

Rapid Market Growth

Blake Edwards, senior product marketing manager, Lennox Intl. Inc., said the biggest trend in the thermostat market right now is the fast-paced growth of smart thermostats.

“It is growing extremely fast, and consumer awareness of Wi-Fi-enabled smart thermostats and the Internet of Things [IoT] with connected devices is increasing as well,” he said. “Many HVAC contractors are no longer only offering one thermostat but typically a variety that offer the homeowner options to support Wi-Fi functionality, convenience, energy savings, usability and the aesthetics they are seeking. In addition, consumers are becoming more aware of the benefits of smart and ultra-smart thermostats that offer convenience, energy savings, peace of mind and remote access capabilities. Lennox is focused around targeting these needs and exceeding them with options such as our iComfort Wi-Fi thermostat line.”

Edwards adds that the market has been moving away from basic programmable or nonprogrammable thermostats whose only options were to raise, lower or hold the temperature and set a temperature schedule for the week.

“There are a whole new level of energy savings options, looks, features, and further peace of mind for homeowners,” he said. “Lennox’s iComfort S30 and new iComfort E30 smart thermostats allow the homeowner to use our feature called Smart Away Mode™. which uses geo-fencing technology to pair with the homeowners’ smartphones, using a set radius around the home to know when the homeowners are away, putting the system into an energy-savings-away mode, and also will recognize when the homeowner is returning home to put the system back into a normal desired temperature operation mode. This allows for a much more convenient option for the user for energy savings and convenience to work with the individual or family’s schedule.

“Wholesalers should be enthusiastic about these current trends as they indicate a continued interest in home automation, and the opportunity for robust future sales of products that showcase smart home technology,” Edwards continues. “A focus on smarter and easier-to-use products is the way the consumer thermostat interest is going, and consumer understanding, interest and excitement around smart thermostats continues to increase rapidly, which is equally exciting for manufacturers and wholesalers.”

Expanding Connectivity

Nate Kraft, senior director, Global Home Products, Honeywell Intl. Inc., believes the two major driving forces for thermostats are centered around connectivity and new applications.

“Connectivity means Wi-Fi enabled, app-controlled thermostats and also the connected home partners that link to them,” Kraft said. “Wi-Fi stats continue to grow at a sizzling pace, with upward of 40 percent month-over-month growth for the last several years. This product category is driven by the desire for convenience and for energy savings but is also linked to the world of the connected home. As more product categories like cameras, water leak detectors, doorbells and security systems become controllable via an app, the integration of those products becomes another driving force to the sales of thermostats.”

Kraft also agrees that connected devices are rapidly replacing nonconnected ones.

“While we still see a strong business within nonconnected in the near term, it will continue to hold steady or shrink as consumers migrate toward a connected world,” he explained. “This has also led to the replacement cycle shrinking as it moves from being driven by replacements. This is a great opportunity to increase ASPs and drive revenue per shelf space. Connected thermostats, even entry-level products, come at a price premium versus the nonconnected devices. Consumers are hungry for the new products, and those who can sell them increase their average sales per job. There is a need to keep educating wholesalers and contractors so they can make the connected sale more easily through training and by providing them with the tools they need to be comfortable with Wi-Fi thermostats.”

Rob Munin, president and CEO of LUX Products Corp., said that thermostat marketing is continuing to evolve with more choices in the connected segment of the business.

“There are plenty of bells and whistles being offered, and many companies entering the category have little background with HVAC,” said Munin. “Research finds that purchasers are most interested in simple, intuitive user interfaces and product designs. This opens the door for HVAC professionals who are well-versed and carry products that deliver features and functionality without being too complicated for the average user. The most successful professionals have sought out options from manufacturers who know their business. For the pro, it’s important to have products that meet the need on different projects and price points on their truck. Smart products make for an upsell opportunity.

“It’s all about connectedness right now,” he continued. “Consumers are inundated with connected home messages — from asking Amazon Alexa about the weather to controlling their home comfort from their smartphone. Putting control into the consumer’s hand is at the forefront for many of today’s manufacturers. Those manufacturers that can do that in a simple, easy-to-use way will win the race. The thermostat market is taking a leadership role in delivering feature-full functionality in product solutions that are easy to install for the contractor and easy to use and monitor by the homeowner.”

This push for a connected home provides a great opportunity for wholesalers, Munin noted.

“The opportunity is training their customers. When the contractor is comfortable with connected products, the selling to end users becomes easy,” he said. “Contractors need to be up to speed on products in the market, how they work, how to install them and, most importantly, how to sell them. Manufacturers who partner with wholesalers to ensure that their staff and customers are trained in their products are the key to success. At Lux, we have NATE-certified trainers on our team and a course for further education. LUX also offers a deep team of support from technicians through product experts and engineers who are all accessible to support customers.”

Planning For The Future

Though Wi-Fi thermostats are growing at a rapid pace, Blittschau said it’s important to note that awareness is only around 30 percent.

“The good news is that the majority of households that are aware of Wi-Fi thermostats have also expressed purchase intent in the near term,” he said. “We anticipate continued accelerated growth for Wi-Fi thermostats as mainstream consumers become aware of the product and the compelling features and benefits.”

The number of consumers and industry professionals who understand and realize the importance of a home’s thermostat and HVAC system having more awareness of Wi-Fi-enabled smart thermostats will increase significantly, according to Edwards.

“The thermostat is the brains of the full heating, cooling and indoor air quality system,” he said. “Consumers will absolutely want and need the important features we currently bring to the market. Consumers want smart thermostats that are Wi-Fi-enabled and allow remote monitoring, daily reports, energy savings, enhanced comfort control options, including voice commands, and control and monitoring of their comfort system when both home and away.”

Munin agreed, saying smart home connectivity will continue to explode.

“What we may see are fewer new entrants into the category of comfort controls and more of a refinement and evolution in the technology from the brands that have become widely known in the space,” he said. “The ability to deliver more holistic information to users on savings and service along with more seamless integrations with evolving automation hubs and the continuation of making life easier and more comfortable are the things we’ll be seeing.”

In five years, connected thermostats will be the dominant category in both dollars and units, Kraft noted. “This is a major shift within the industry and one that connected contractors and those who supply them with product will be able to leverage into profit growth.”