Deep pockets, smarter homes

What will happen to the smart home hub?

Last week’s acquisition of UK-based smart home platform provider AlertMe capped off a smart-home acquisition spree that includes Nest picking up Revolv in October and Samsung taking out SmartThings in August. If the last six months have shown the market anything, it’s that a number of leading consumer IT giants, including Google, Samsung, and Apple, plus a utility here and there, feel they need a connected-home platform to stay competitive.

The reasons for this are complex. For hardware providers like Apple, which should launch HomeKit this spring, the reasons relate to needing to keep users’ interaction with the home within the iOS ecosystem in order to maintain competitiveness in mobile. For utilities like British Gas, which picked up AlertMe, there’s an opportunity to engage customers in ways never possible before, which could be important in deregulated and competitive utility markets. And for a hardware design leader like Nest, there’s value in having some of the best home-networking engineers in-house since the company intends to use the Nest thermostat as a springboard on which to build a full platform that plays well with third-party devices.

Just a year ago the smart home market was still a startup, venture-financed one. Now it looks like a market full of players with deep pockets, global sales channels and major brands.

When I caught up with AlertMe’s CEO Mary Turner the evening of the acquisition announcement, she commented that she felt the timing of the deal was right. “It was starting to get quite noisy and there were some very large players with deep pockets entering the fray. The vision [for AlertMe] was to not service one or two million homes but tens of millions of homes globally. To effectively deliver that vision, we felt we needed the firepower to get us into the next stage of development. This is no longer a market for tiny small startups.”

The question going forward is, What happens to the physical hardware hubs in the home? The answer to that question indicates how users will control the smart home. When Nest bought Revolv, it immediately discontinued the attached hardware hub Revolv had built with its seven radios. And AlertMe has always argued that the value of its service is in its software platform, which also powers the Lowe’s Iris hub.

Turner and I looked to a future in which the hardware hub disappears and the “hub stack” is absorbed by another piece of hardware in the home, like a wireless router or a set-top box. Currently the smart home market isn’t big enough to warrant putting additional radios into a router or set top box, but that picture may well be different in two years. There is no shortage of Apple fans, for example, that believe the Apple TV is ripe to absorb the hub stack, and along with HomeKit, act as a control center for the home.

If consolidation of communications protocols follows the absorbing of the hub stack into a more mass-market device that’s in most homes, building out the connected home will get easier and will push the connected home toward the mass market.

Whether it’s Apple, Samsung, or even a utility like British Gas, there’s value in being in control of the software that will control that home. Which may well explain how almost every major hub maker with a solid software platform atop which big IT players could build services got acquired in just six months.

8 Responses to “What will happen to the smart home hub?”

  1. Home automation is at about the level of “Online Services” in 1993 – it feels exactly like the AOL/Prodigy/Compuserve walled gardens and not at all like the open web. While the need for various technologies for data interconnect (z-Wave, Zigbee, whatever whatever) are sensible, the need for another damn lock-in ecosystem is only there for the owners of the ecosystems, not consumers. Once you get down to the level of inter-communications between devices, ecosystems are bad, standards are good. the last thing I want is $2,500 worth of useless hardware that can’t talk to a proprietary hub if I decide I don’t like the way the old one looks or works. Smart home will remain a nerdy mess until they get to communications standards for interconnect & control that let me pick the best hardware for my needs, not the only products that “work with X” (I’m talkin to you Nest).

  2. I guess the Almond+ has been forgotten about, as the company behind it already integrated the “hub” into a router. It’s been a long time coming, but it’s finally available in the US at least. Oddly enough, no other router maker seems to be doing this, but instead companies like D-Link and Netgear are doing hubs for various partners instead. Consumers want less boxes, not more.

    • Less Boxes, indeed. I think that we’re moving to something like a “home domain” controller – a box that is your access control manager for devices, and acts on your behalf for home automation and so on. The concept of the “role” or “administrator” account in consumer electronics & services is sorely lacking – there definitely needs to be more thought given to the one box in the house that sits there and does stuff for everyone in the house – like the dishwasher or the heater. It’s used and controlled by everyone, not individual users.

  3. While your story has some valid points, you do have one incorrect fact. “Just a year ago the smart home market was still a startup” is false. Smart homes have been around for decades, and the popular Z-Wave protocol that these newer hubs use has been around since 2003.

    • Derek Kerton

      That’s not an incorrect fact at all.

      Yes, Smarthome has been around for a long time. I had full x-10 home automation in the 90s, and there was stuff before that.

      But that doesn’t mean that we weren’t still in startup mode just a few years back. Market penetrations were abysmal, and true mass-market solutions still weren’t available.

      Just cuz you, me, and a few geeks tweaked our homes years back doesn’t make a market.

      • I stand by my statement. The smart home market was not in start up just a year ago.

        I will admit there have been several start up companies joining the smart home market in the past year or so. This story addresses what happens if the start ups don’t make it or get acquired by larger brands. That’s why I really enjoyed this story, and find this market very exciting.

        However, the starts ups are joining the smart home market that has been around for decades.

  4. Most existing DSL gateways, DOCSIS/cable gateways, STBs or broadband home routers deployed within the last 2 or 3 years will have sufficient memory and processing power to support multiple smart home applications (validated by lab and field testing experience). The business issue with those devices is that they are usually “owned” by the Service Provider (cableco, cellco, satco, telco). The technical issue with those current devices is the lack of reasonable mix of radios to interface with the exploding variety of different potential devices/sensors in the home. Even the fact that many of those broadband devices have one or two available USB ports available that could be used to install a radio dongle or two, is probably not sufficient in the current environment. That is because the “interface standards wars” among ZigBee, Z-Wave, Thread, BT, BT LE, Wi-Fi, low power Wi-Fi, DECT and others is still to be decided (at least not in the foreseeable future because even more, new alternatives are coming). Therefore, the most likely path going forward for awhile is to have a second “gateway” in the home: i.e. the article’s termed “smart home hub”.

    Regarding the software stack aspects of the article, there are really two different aspects of that thought:

    – the software stack in the hub/gateway itself
    – the cloud/data center server software stack of the application(s) and their underlying platform

    There are critical architecture and implementation decisions for both domains.

    For the former, issues like OS, application framework, modularity framework, abstraction mechanisms, security, on-line upgradeability, etc. need to be considered. And, even more interesting and challenging are the decisions about distribution of application intelligence between the hub and the server environments and potentially how to address the need to dynamically change the distribution of intelligence.

    An interesting exercise is to compare and contrast the software stack architecture of major smart home hub/gateways deployments like AT&T Digital Life (based on Xanboo acquisition), major cableco home security services (based on iControl), Lowes Iris and AlertMe (based on AlertMe), Staples Connect (based on Zonoff), the original Verizon Connected Home (based on 4Home/Motorola) and the predicted upcoming Verizon relaunch (based on Greenwave?) plus consumer plays like Apple and Google (hard to imagine that their smart home hubs wouldn’t be based on anything other than IOS and Android respectively).

    Regarding the latter, architecture decisions about scalability, reliability, modularity, security, openness (APIs?), interoperability with other back-office/data center systems, etc. are critical.

  5. Google/Nest lost me as a customer after killing Revolv. I’m currently using Staples Connect, though it is pretty wonky. At this point, I’m not pouring any more money into solutions until HomeKit compatible hubs show up. Frankly, the ONLY people doing it right are Philips Hue — everything else is unreliable at best, and infuriating at worst.