The smart home appliance market, defined by products with built-in connectivity, will witness substantial growth over the next five years, reaching nearly $25 billion by 2018. Currently limited to the top-end luxury models, wireless connectivity will slowly permeate to lower tier brands and models.

Senior analyst Adarsh Krishnan comments, “Smart home appliances have yet to incorporate features that add significant value for their premium price. Smart home appliance features are at present limited to remote access through mobile devices. The true value of these smart grid ready devices, such as use in demand-response energy management programs, is several years away and initially will be primarily US-based.”

North America remains the most lucrative market which has seen the fastest growth in the uptake of the smart appliances and is expected to see revenues in excess of $500 million in 2013. China’s booming luxury market along with more mature markets such as Japan, South Korea, and Australia will drive growth in the APAC region for smart home appliances at a five year CAGR of 92%.

Wi-Fi is preferred by appliance manufacturers for wireless connectivity which will see over 21 million Wi-Fi enabled appliances shipped worldwide in 2018. High penetration of Wi-Fi networks in residential households and its ability to easily add devices to the home area network without additional bridges or controllers are seen as a key advantage. However, partly due to Wi-Fi’s higher energy consumption, other connectivity technologies such as ZigBee, Z-Wave, and Bluetooth will slowly gain share of the smart appliance market.

These findings are part of ABI Research’s Smart Home Research Service, which examines the market for home automation monitoring and control technologies used for applications including home energy, environment, security, and entertainment control. In the latest analysis, the smart appliance market is sized across washing machines, clothes dryers, refrigerators, freezers, and dish washers.