This is a very common question because the applications for both technologies are similar (not to mention the branding).

Both are technologies designed for IoT devices. Both support low power, low bandwidth mesh networking. Both have a built-in common application layer / interoperability language that allows devices from different manufacturers to work together.

That being said, there are a number of technical differences between the two standards that are worth understanding, but it's probably most important to understand the differences with regards to business and strategic factors:

While there is a Z-Wave Alliance that operates in a similar manner to a standards body, Z-Wave is in fact a proprietary standard owned by a single vendor (Sigma Designs). They own the IP, control the evolution of the standard, and are the sole supplier of Z-Wave radio chips and modules. This isn't in and of itself a bad thing, but is certainly something to keep in mind if supply chain flexibility is a concern.

The Zigbee Alliance is a non-profit organization comprised of hundreds of companies around the globe, with a diverse board and membership. Anyone is free to contribute to the standard, which is evolved through a democratic and participatory process. So if you have an innovation you want to add to Zigbee technology, you have a way to contribute and influence the standard. This also means that Zigbee silicon, modules, software and support are available from a wide and global range of companies, giving you significant development and supply chain flexibility, and ensuring that competition moves the standard forward.

For instance, today you can now purchase, from multiple suppliers, silicon that incorporates Zigbee, Thread, Bluetooth, and even WiFi (all open standards) all on one chip. This is not available with zwave.

Z-Wave's single-source nature isn't inherently a bad thing, or surprising, as they were first to market with this kind of technology. And if you're building a device that needs to connect to a Z-Wave network, that's going to be the determining factor. But like any technology evolution, the industry always moves from proprietary single vendor solutions to more open standards, and this is what we're seeing now in the IoT. We recommend, and the movement in the industry is such that new product and platform vendors adopt Zigbee over Z-Wave for it's technical and strategic advantages.