Consumer IoT Has A Serious Demographic Problem
Take a moment to ponder the IoT systems in your home. Which one do you value the most? Is it your set of mobile-connected, color-changing lightbulbs that help you zen out after work? Do you appreciate the security your sturdy smart lock affords you? Or are the energy-saving properties of your smart thermostat most important of all?
Now, if any part of that last paragraph actually applied to you, you’re probably 35 or older. And, no offense, that’s a problem.
Well, not a problem per se, but it certainly isn’t helping. Young people are disproportionately high early adopters of new technology and services, with many recent unicorns in the consumer sector, including Snap(chat), Spotify, and Facebook growing to prominence on the desktops and phones of Millennials. And while Gen X’ers only slightly trail Millennials in new product adoption overall, young people are indeed more likely to adopt less affordable new tech.
For the Home IoT sector, which has yet to achieve substantial economies of scale, and still demands an investment of several thousand dollars for a full system, that’s huge. Millennials should be the primary age segment to be adopting, exploring, and spreading the word about smart home tech.
Unfortunately, this technology demands a certain complementary good most Millennials do not own: a home. And apartments or mom’s basement won’t cut it either. Among consumers aware of smart home technology, the vast majority would only be prompted to adopt such products when faced with a major home renovation or new home purchase. So, while Millennials do show substantial interest in adopting smart home tech, it simply isn’t feasible for many. Home IoT’s biggest cheerleaders have no access to it.
L.A. housing economist G.U. Krueger has noted, “this is the first time in the supply history of housing where, for whatever reason, a giant new generation is not being served.” Hardly a surprise, given that less than 20% of new housing construction in recent years has been for the sorts of entry-level homes best suited to young, up-and-coming professionals.
As it stands, Accenture notes that the most likely demographic to be purchasing smart home tech is parents, who typically do own a home and can benefit substantially from the conveniences offered by Home IoT products. Again, Millennials are left out; the number of adults aged 18–34 that are married with children has declined from 50% in 1970 to 20% in 2016. Reaching adulthood in the wake of the Great Recession hasn’t done this generation any favors.
So, what can smart home entrepreneurs do to change things? Unless the industry can eliminate economic uncertainty, get more starter homes on the market, and get Millennials to stop valuing access over ownership, not much.
What it can do is adapt. Optimize for ease-of-use. Make retrofitting easier. Stop requiring the help of electricians to install integrated systems. And get more of these products into home improvement retailers, where they can get more exposure amongst the blessed few Millennials who are DIY-savvy homeowners. Or better yet, make a push toward getting these products into rental homes or apartments. Smart tech has the potential to add real value to the properties young adults are occupying, whether they own them or not.
And once they do move into something more permanent, they’ll be ready for whatever comes next.
