Smart Home

What is a 'Smart Home'

A smart home is a convenient home setup where appliances and devices can be automatically controlled remotely from anywhere in the world using a mobile or other networked device. A smart home has its devices interconnected through the Internet, which control functions such as security access to the home, temperature, lighting, and home theater. Related terms include "home automation" and "smart building."

BREAKING DOWN 'Smart Home'

A smart home’s devices are all connected with each other and accessible through one central point – a smartphone, tablet, laptop, or even game console. Door locks, televisions, thermostats, home monitors, cameras, lights and even appliances such as the refrigerator can be controlled through one home automation system. The system is installed on a mobile or other networked device, and the user can create time schedules for certain changes to take effect and can also monitor the devices from any internet-connected place in the world.

The global home automation market in 2016 had an estimated value of about $36 billion, and with the growing adoption of internet-enabled devices, it's been forecasted that the market could reach revenues of as much as $80 billion by 2020. Growth in the broader home automation market, however, has faced challenges due its convenience-driven, as opposed to necessity-driven, nature.

Characteristics of Smart Homes

Smart home appliances come with self-learning skills whereby they can learn the home owner’s schedules and adjust as needed. Smart homes enabled with lighting control allow homeowners to reduce electricity use and thus benefit from energy-related cost savings. Some home automation systems alert the home owner if any motion is detected in the home while away, and some can call the fire department in case of any imminent situations. Once these smart appliances have been connected, we have an example of what we call Internet of Things (IoT) technology. 

Smart homes can feature systems that are wireless or hardwired. Wireless systems are cost-friendly and easier to install while hardwired systems are seen as more reliable and are typically harder to hack. While hardwired systems are also more expensive than wireless options, installing a hardwired system can increase the resale value of a home. Installing wireless home automation with features such as smart lighting, climate control and security can cost a household a couple thousand dollars. Meanwhile, luxury and hardwired options can cost homeowners tens of thousands of dollars.

Risks of Smart Homes

While the smart home brings with it convenience and cost savings, security risks and bugs have been challenges faced by the technology. Adept hackers, for example, can get access to a smart home's internet-enabled appliances. In October 2016, a botnet called Mirai infiltrated interconnected devices of DVRs, cameras and routers to bring down a host of major websites through a denial of service attack, also known as a DDoS attack. Measures to mitigate the risks of such attacks include protecting smart appliances and devices with a strong password, using encryption when available and only connecting trusted devices to one's network.