Connectivity has disrupted the thermostat market, which like many mature markets had become commoditized. The average price paid for a traditional programmable thermostat in retail was approximately $50 and households replaced existing thermostats only when they broke or when they purchased a new furnace or air conditioning system. Approximately 70% of sales were through the HVAC dealer channel and only 30% through retail.

Additional Parks Associates smart thermostat research shows:

• More than 10% of U.S. broadband households plan to buy a smart thermostat over the next 12 months.
• Over 40% of thermostats sold in 2015 will be smart thermostats.
• Nearly 75% of current smart thermostat owners report their device has reduced their electricity bill.

Today, highly differentiated thermostats that create value through integration of weather, electric utility, and user data have expanded the market in two ways. First, differentiation has allowed new entrants to capture a significant price premium, as much as six time historic retail prices. Second, the bundle of value added services and innovative industrial design is compelling proactive replacement of existing thermostats, expanding the size of the market. As a result, the online and retail channel has expanded its share.

For more information on consumer interest in and adoption of smart thermostats, see the Parks Associates 360 View Update The Market for Smart Thermostats.

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