According to a Fuji Research Laboratory report, the Japanese smart home market is expected to top JP¥4.2 trillion (US$38 billion) in 2025, up 36.3 percent from 2017. The market is being driven by smart devices including smartphones, which already account for more than half the market and are continuing to grow due their ability to conveniently connect IoT devices.

Japan’s smart speaker market size is expected to quadruple by 2025, along with increased use of other multimedia devices equipped with intelligent voice assistants. Deployment of devices such as smart lights, smart curtains, smart electric controllers and smart appliances such as TVs, washers and air conditioners is also on the rise, while specialized smart services account for the remainder of this rapidly expanding market.

Rising market size of smart homes in Japan, data from Fuji Comprehensive Research Office

A couple of Japanese Smart home sectors with strong short-term development potential are security systems and lighting control systems.

Intelligent security products include smart door locks, smart doorbells, smart cameras, smart sensors, human sensors, door and window sensors, gas leak sensors, water immersion sensors, etc. A big difference between smart security and traditional security lies in reducing dependence on people.

Panasonic residential intrusion prevention system with intelligent rolling doors, smart locks, cameras and other smart sensors.

Intelligent lighting control systems include smart light bulbs, light strips and smart curtains, and can achieve dynamic and desirable lighting effects through intelligent curtains and outdoor light linkage. Also, by using advanced electromagnetic voltage regulation and electronic induction technology to monitor and track power supply in real time, such systems can reduce power consumption.

Global tech giants such as Google and Amazon have launched a series of smart home products tailored to the Japanese market. The increasing use of remote control services and automated services also allows for the widespread collection of huge amounts of consumer data, which interests these tech giants and is another market that will continue to grow.

Companies active in Japan’s smart homes can be roughly divided into two camps: appliance manufacturers such as Panasonic and Sony; and network communication providers like KDDI and SoftBank.

In manufacturing, the main smart home appliances include smart washing machines, smart TVs, smart air conditioners and smart water heaters, etc. Kitchens are another home niche where AI-empowered products and services are being integrated. Network communication providers meanwhile are focusing on the construction of improved cloud networks, and launching smart home solutions to efficiently connect home appliances.

The image below shows room readings from Sharp’s AI air conditioner, which analyzes indoor air quality on a range of metrics such as temperature, humidity, airflow and infrared ray data. The collected data is analyzed on the cloud. If for example the room temperature is inconsistent between the center and sides of a room the smart air conditioner can make adjustments to correct this. Sharp says its AI air conditioning can also reduce electricity consumption, for example in a 23 sqm room power usage can be reduced from 228Wh to 186Wh.

Although the penetration rate of traditional home appliances is expected to decrease year by year as the smart home industry develops its seemingly unlimited potential, original products presently available are still relatively expensive. Further, most manufacturers remain unable to recover the money they are investing in smart home R&D, and startups in particular will face tremendous pressure to survive in the highly competitive market. Intelligent products, solutions, and business models all need to be continuously combined with actual market demands and trends in order to succeed.

To successfully “cross the river,” it may be necessary for smart home enterprises to join forces. It will be more efficient if companies agree on standards and cooperation, particularly so that data collected by different sensors and devices in home networks can be shared to make smart home development a win-win situation for all parties.