U.S. Smart Network Device Expenditures to Grow to $2.53 Billion by 2009

By Consulting Specifying Engineer Staff May 9, 2005

Despite perennial predictions heralding the era of the fully automated “smart building” as the next big thing, for practical purposes, the prospect of intelligently networked devices, until very recently, has remained a fantasy. Intriguing as the notion remains, for decades reality has lagged behind promise, as manufacturers and vendors struggle (often at cross-purposes) to put enabling, foundational technologies into place.

According to a soon-to-be-released report RGB-299 Intelligent Building Networks from Business Communications Company, Inc. ( www.bccresearch.com ), the total U.S. smart network device expenditure is expected to grow from $1.62 billion in 2004 to a projected $2.53 billion by 2009, at an AAGR (average annual growth rate) of 9.3% through the forecast period.

Several developments have made intelligent device networking a true ready-for-primetime technology. Among them, the industry has moved into an age of post-proprietary standards including a home automation standard (CeBus) and the two primary protocols for building controls and automation—BacNet and LonTalk. These and other developments are making open integrating architectures—and the ability to apply them on a mass scale across many system suppliers—a realistic possibility for the first time.

Within product categories, hardware is expected to remain the largest single expenditure category, reflecting continued growth in the total number of networked appliances in the U.S. The fastest growing product category, however, is expected to be enabling chips with an AAGR of 10% reflecting the drive to design and deploy microprocessors in a wider variety of ways and settings, whether they are residential, industrial or business environments.

In terms of technology protocols, LonWorks is expected to edge out competing standards both in total size and speed of growth because of its superior flexibility and the its wide applicability in industrial, residential and business contexts. However, these rival standards, including BacNet, CeBus and Zigbee, are also expected to register positive usage and revenue growth.

The fastest-growing area of applications spending is expected to be energy usage, metering and monitoring. Growth rates in this area will be driven by a continued increase in the number of homes and buildings installing smart meters. Volatility in energy costs is anticipated to drive adoption of newer smart meters and self-metering devices, not only in the industrial market, but also in home, transportation and other markets.

The report explores and compares smart device networking adoption and expenditures in a variety of end-user markets ranging from transportation and industrial construction to the home market. Utilities are expected to be the fastest growing end-user sector of near-future spending for smart devices, reflecting the ongoing decisive shift from manual and “drive-by” automated meter-reading systems to network-based, Internet-enabled meters and other emergency-measuring and monitoring devices. Though industrial automation (IA) has been considered a relatively mature market for many years, it is expected to remain the single largest end-user segment. Reignited growth in IA will first reflect the major move being undertaken by manufacturing plants to take advantage of new, open standards for integrating formerly isolated networks, as well as new investment in next-generation technologies like RFID tags to enhance supply-chain management.