Despite the world’s uncertain economy clearly slowing the electronics market in general, I see exciting opportunities for growth in the appliance and white goods market for OEMs and components manufacturers. Increasing pressure from the environmental movement and a growing consumer awareness of the need to reduce energy consumption is driving the demand for smarter, more efficient appliances. In addition, regional influences are motivating consumers to buy smart appliances.
The decision for European consumers to buy appliances remains strongly based on environmental protection considerations and government regulations. In North America, where appliance sales are traditionally tied to new home construction, the slowing economy has made consumers more financially conservative, and the recent expiration of tax credits for energy-efficient upgrades and purchases has diminished the financial incentive to buy “green” in the U.S. However, many consumers are buying new, innovative products such as robotic vacuum cleaners as well as feature-rich appliances, such as refrigerators with temperature sensors to regulate compressor power and super-quiet dishwashers with one-touch capabilities.
In the Asia Pacific region, macroeconomic factors and policy initiatives over the past few years have provided a real impetus to manufacturing, and durable goods sales have benefited from stimulus programs like the “home appliances going to the countryside” program in China. Although some energy-saving programs are set to expire, the Chinese government offered 26.5 billion Yuan (3.3 billion Euros) last May in order to subsidise the purchase of household electrical appliances for a year. Additionally, urbanisation and rising wages have helped raise price levels, while an increasingly brand-conscious consumer base has provided opportunities for western OEMs, with Miele and Bosch steadily gaining market share.
These market trends indicate that the principal reasons consumers are adopting smart appliances are to gain an economic benefit by reducing energy usage (lowering their electric bills), to obtain direct incentives, or to benefit from the convenience or “wow factor” that the appliance’s features can provide.
So what does this mean for the components manufacturers who are servicing the appliance OEMs? Today’s appliances have to be not only more energy conservative, they have to prove it – with communication connections to the smart grid and Home Energy Management Systems (HEMS). This is driving a higher electronic component count for the entire value chain of appliance manufacturing – from the smart grid communication equipment to the HEMS to the appliance itself.
These challenges of an advanced, interconnected landscape of home appliances are more far-reaching than the 1957 Monsanto House of the Future, where push button technology promised effortless housework. Now OEMS and electronics manufacturers who provide the smarts that allow efficiency to become a reality are tasked with navigating building infrastructure, standards protocols, government regulation, utility services and green compliance – not to mention meeting consumers’ insatiable demands for performance and aesthetics.
The smart grid is driving technology at an increasingly rapid pace and as technology standards develop appliance manufacturers will launch smart products in greater numbers. However, there are several key issues related to enabling technologies and regulatory factors that must be addressed in order to ensure widespread adoption. Such issues include:
1) Smart grid communication standards must define how appliances, the grid and parties involved will manage energy share and exchange information.
2) HEMS that provide actionable information, in an easy-to-use device, at a reasonable installed cost will add to the value and convenience required to create momentum in the market.
3) Because consumers expect their data to be managed in confidence, all parties will need to demonstrate the security of their communication and sensing technologies.
4) Consumer awareness of smart appliance benefits and ROI will have a strong influence on adoption and so appliance manufacturers will need to engage in educating potential buyers.
5) As white goods move increasingly to digital controls, component vendors will need to collaborate with appliance designers and manufacturers to develop innovative, cost-effective systems and solutions that appeal to consumers and meet energy efficiency standards.
It is inevitable that the homes of tomorrow will be more efficient since it will cost more and more to waste energy. Likewise, appliances will become simpler because consumers will demand products that allow them to conveniently and easily manage their energy usage.
By working together, OEMs and components manufacturers have many new opportunities to introduce innovative designs that spur consumer adoption of smart appliances. And while the challenges are many, I believe that the appliance and white goods market presents one of the most interesting technological and environmental areas for innovation. And since the rate of change is accelerating, my advice is, don’t get left behind.
Eric Braddom is Director of Global Strategic Marketing, TE Circuit Protection
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