Impact of COVID-19 on Home Automation in the Information, Communication and Technology Industry
The pandemic begins with its epicenter in China in 2019 and has been continuously spreading by then to all over the globe, so far 216 countries and territories have been affected with COVID-19. The COVID-19 cases reaching to various countries which have strong dominance in the worldwide market and have adversely affected the economic growth globally. The spread of coronavirus has led to severe disruption such as global recession, many organizations are being forced to take stringent actions as lying of their employees and staffs, small and medium business is being shut down, and manufacturing & production facilities are being put on hold for a longer period. However, apart from this, the demand for food and beverages witnessed huge growth but this has increased the shortage of supply chain owing to the panic buying from the populations. Similarly, the demand for the pharmaceuticals, chemical, and healthcare industry also increased as new solutions and medicines are getting introduced for taking preventive measures. There has been a disruption in the supply chain of many industries due to restrictions in logistics and the closing of manufacturing facilities. In addition, the slowdowns in the economy have lowered the spending capability of individuals and people are saving money for emergencies.
The supply of home automation products is also affected as the manufacturing facilities and logistics gain restrictions, and the workers are being advised to stay home in lockdown leading to a shortage in the workforce.
However, the increased pace of digitalization during the pandemic period has proven to be a support for the sustenance and growth of the home automation market. Increasing penetration of the internet among the population of the world, an increasing number of smartphones and IoT devices have increased the attraction of smart homes among the young and working population.
For an instance, in 2019, there was approximately 26.66 billion Internet of Things (IoT) connected devices installed worldwide, which is estimated to grow to 75.44 billion by 2025 globally. Home automation has been drawing attention recently due to the growth in IoT since the internet provides the central controlling and monitoring unit to make the home connected and all the electrical and/ or electronic appliances are connected with a wireless internet network.
Home automation refers to the intelligent devices and terminals used for automatic and electronic control of household activities and appliances. In other words, home automation is used to increase the standard of living of the households by increasing convenience in certain household tasks and increasing the efficiency in energy consumptions by smart monitoring. In recent years home automation market has increased at a rapid rate owing to the technological developments and increase in the standard of living in the urban areas of a region. But the recent COVID-19 pandemic has disrupted the global economy by slowing it down. There is an evident slowing down of residential construction and infrastructure activities all around the globe; the home automation market has taken a hit due to this. The working class is refraining from investing in home interiors as the businesses are taking losses in the current recession.
IMPACT ON DEMAND, SUPPLY CHAIN, AND LONG-TERM STRATEGY ADOPTED BY MANUFACTURERS OR STEPS TAKEN.
The home automation market has developed at a surging rate in recent years. The COVID-19 pandemic has accelerated this trend partially; the people have spent more time in their houses during the pandemic owing to the lockdown measures. This has led and encouraged more suppliers to enter the sector. The increasing use of the internet and developing online platforms have increased accessibility to home automation devices.
• In January 2021, a study released by Xiaomi, a global leader in smart devices, states that the stay-at-home norms changed the way people interact and live in their homes. People tend to reconfigure their living space to match their functional requirements. Since March 2020, 70% of consumers have reported making changes to their living environment owing to the more time spent in their homes. And 51% reported purchasing a smart device during the period
The considerable amount of demand for smart lightings, fire detector systems, security systems among others is being noticed during the pandemic period. Consumers are appearing to have found a greater need to protect their families from disasters such as fires, smokes, and burglary. While the demand for smart lighting is driven by the desire to improve the aesthetics of the home space while people spend most of their time indoors.
• In 2020, according to Christian Cerda, the CEO of the home security system SimpliSafe, the sales of home security systems went up to 86% week over a week during the pandemic period.
The manufacturers are continuously engaged in developing new products, partnerships, collaborations to develop new products for home automation in the market. With the increasing use of smartphones and the consumers are seen leaning towards AI and IoT integrated products for automating their houses. Smart speakers, interactive displays, voice-controlled utilities among others seem to be appealing to the consumers.
Leading brands have taken up the strategy of creating a portfolio of connected products, each of which is designed to work together and attract consumers to invest in vendor-specific ecosystems. This has enabled the manufacturers to gain a strategic edge in the market to grow.
The supply chain of home automation products has been minimally disturbed due to the temporary shutdown of manufacturing facilities for components in China or some other regions, the disturbance has also been due to the restrictions imposed on logistics by the various government due to which raw material supply is affected. The trade war between the U.S. and China has put a strain on the supply chain of electronics in the market which is an important raw material for home automation product manufacturers.
The rising infrastructure projects to build smart cities and make urban infrastructure development around the world will keep driving the market, the government will not shut these projects down due to the pandemic to boost the economy and provide employment to the people. No such government infrastructure development has been shut down because of pandemic; however temporary shutdown in construction projects and lack of workforces has led to a temporary downfall in the demand for home automation products for these projects.
• In 2020, according to a survey by IPC, a trade organization dedicated to advocacy, education, and support for the electronics industry, around 69% of survey respondents had received warnings from their suppliers about shipment delays. The average delay between February to March 2020 was about three weeks.
The COVID-19 has not only attacked the health of human lives but has adversely affected the economy globally. There is a recession all over the world and various industries have been affected due to it, many manufacturing industries are being temporarily closed and workers are being advised to work from home. The work from home culture paved way for home space customization by individuals to increase convenience and lifestyle. For instance, according to a 2020 survey by ZDNet, 56% of U.S. adults feel comfortable with smart home technology.
The demand is majorly being compensated by the infrastructural investments being made by the governments to promote smart cities. However, the disruption in logistics has led to the increase in the rise of prices in some parts of the world. The effects are temporary and will be dealt with by the end of this pandemic.
The increasing digitalization accelerated the developments of smart cities during the pandemic. Integration of IoT devices for home automation increased for security, entertainment, lighting, and other purposes. For instance, 1.9 billion smart home devices were expected to be sold by the end of 2019.