The current darling in this market is Nest, the $249 circular screen that can provide a stylish and efficient replacement for boring old thermostats. Despite its legal troubles with Honeywell, Nest has been successful enough to enter a second generation, which it did last month. Trouble is, Nest is only really practical for those in the U.S. and Canada, due to its wiring requirements.

Enter Tado, a new rival out of Germany that’s shifting today from private to public beta. First off, you can use it across Europe, which is a good start. But there’s more to it than that.

Control of Tado takes place almost entirely in its smartphone apps for iOS and Android. The minimalistic white box on the wall doesn’t even have a screen, nor does it have sensors. So, for example, while Nest knows its owners have left the apartment because it can’t sense movement, Tado knows because each occupant has the app on their phone, and it can track their location.

There are at least two advantages to this approach – it should be quicker to tell that they’re gone (by default, Nest waits two hours before turning down the heating), and it also lets Tado’s systems automatically turn the heating back up when the occupant is heading home.

“Our idea is to bring a brain to heating and cooling systems, to make them more adaptive and to make it possible to control energy in a smarter way,” co-founder Christian Deilmann told me. “Tado is your assistant who takes care and knows when you’re leaving and turns it down for you… It learns how your specific home reacts to solar radiation, but also how fast it can heat up and how much energy it uses. All this information is taken into account.”

(I also asked what happens if you have your smartphoneless grandmother over to stay and you head off to work. The button on the side of the wall box overrides to manual, apparently, which is also handy if you forget your smartphone at work.)

Nest uses Wi-Fi to have the thermostat talk to the home router, but Tado opts instead for the mesh-network-friendly 6LoWPAN protocol, which requires a dongle to be stuck into one of the router’s USB ports.

Tado’s also going with a somewhat different business model to that employed by Nest and others such as Ecobee. While those rivals charge an upfront amount for the hardware, Tado opts for a €99 ($126) annual subscription fee for the associated services – during the beta phase, the first 1,000 customers will get the hardware for free, and Deilmann says that strategy might continue in the future if it proves successful.

There’s a psychological factor at play here. Even though a consumer may know in their heart that smarter thermostats can help save money, they may be turned off by a significant cost at the start. It’s true that Tado’s route would probably turn out more costly in the longer run, but Tado’s hoping that those services – which handily include a monthly report telling the user how much the system is saving them – will keep them hooked.

The company quietly raised $2m in venture capital earlier this year from Target Partners and Shortcut Ventures. The launch will first take in Germany, Austria and Switzerland, but Tado also plans to move into other European countries sooner rather than later.

“We are very interested in the Scandinavian market and also the UK and France,” Deilmann said. “It’ll probably be in September next year that we will be delivering in these countries.”

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How might this new lawsuit impact the growth of the overall smart thermostat market? We want you, GigaOM readers, to weigh in below, and we’ll release all the details of the survey in a research note.

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So what’s in the new name? In an interview on Friday, CEO R. Blake Young laid out some hints for how this rebranding might change the way Comverge approaches its different markets, its competition with leading demand response provider EnerNOC and other competitors,  and how it’s adapting to a future where demand response and smart grid look more and more alike. The move is also part of the overall trend that I outlined in my report: demand response as the backdoor to the smart grid (subscription required).

1). Two-way communications will rule the future: Comverge got its start as a demand response aggregator, using one-way paging networks to turn down power-using equipment in commercial and industrial sites to help utilities manage peak load events. That’s a cheap and direct way to manage peak load, and will continue to be part of the company’s business — as Young put it, “We’ll never be completely finished with the smart grid,” meaning lower-tech solutions will be necessary for decades to come.

But Comverge and its competitors will also need to be able to use the smart meters and other two-way links between utilities and their customers to expand on the ways it helps shave peak loads and save energy. Comverge already has a number of utilities — most recently Texas’s TXU Energy — using the old one-way pager system that plan to switch over to Comverge’s “Apollo” platform for two-way control through smart meters once they’re installed. (Part of Monday’s rebranding includes renaming Apollo as “Intellisource,” by the way.)

2). Integrated solutions may de-emphasize equipment: While Young didn’t identify any existing endeavors that Comverge would be leaving behind with Monday’s rebranding, he did emphasize that the company has “not sold solutions as aggressively as I think we should.” One might see that as a hint that business lines that don’t link back into a broad solutions set are going to be de-emphasized — and that may include Comverge’s line of branded smart thermostats, now installed in some 5 million homes around the country. What that might mean for more future-forward efforts — such as Comverge’s plug-in vehicle charging efforts — remains to be seen.

3). A move toward energy services models: While Comverge, like its competitor EnerNOC and others in the traditional demand response business, works under service contract models, it has also created a turnkey load control platform that it sells to utilities to do their own demand response directly. That turnkey business has grown increasingly popular of late with stimulus cash-rich utility customers. Still, “we know the stimulus is finite,” Young said, and that could push utilities toward Comverge’s “Virtual Peaking Capacity” contracts — those in which Comverge invests the up-front capital, assures customer enrollment, and then contracts over a period of years to return that peak reduction capacity.

4). The path to Intelligent Energy Management lies through internal development: Unlike competitor EnerNOC, which has acquired a host of companies to expand its business, Comverge hasn’t done an acquisition since it bought Enerwise Global Technologies in 2007. Still, Young said, the Intellisource platform has “millions of dollars invested in it, and we’ll invest millions of dollars more in the next year.”

5). Comverge, Not On the Block: Citigroup analysts in September speculated that Comverge could be an acquisition target, noting that the company has seen shares slide amidst operating losses in recent quarters. But Young declared that Comverge wasn’t for sale, and that any acquisition talk was being spurred by the purchase of demand response provider CPower by competitor Constallation Energy last month — a purchase that more than anything “gives validation to what we do.”

For more research on demand response and the smart grid check out GigaOM Pro (subscription required):

Demand Response as the Back Door Smart Grid?

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Image courtesy of tim12k8.