What’s the best way into the smarthome?

While the interest in the smarthome from enterprise players like Apple, Samsung and Google has been notable, evidenced by a string of acquisitions and product launches, the trend isn’t limited to consumer IT leaders. It seems recently that anyone with a relationship with a customer in a home, from utilities to cable providers, want a crack at the smart home.

What are they all thinking? In a best case scenario smart home services can provide a new revenue stream for industries, be they telco providers or utilities, that are struggling to upsell in a time when internet habituated consumers want more and more value at lower and lower prices.

For this week’s column I want to survey and break down all of the divergent strategies that companies are using to try and crack the smart home as well as handicapping their chances of success.

1) The Utility Play: Most recently British Gas snapped up smart home platform maker AlertMe, which is based in Britain. Utilities, particularly utilities that are investor owned and in deregulated markets, are wondering if there’s a chance to expand their offerings beyond the staid power, gas and water. This is tough. Yes, utilities are in the home and you might trust them for home energy management. But to manage your lights, security, and even media system? It’s not impossible and a few forward looking utilities are going to take a stab at it.

2) It’s The Hardware, Stupid: When Google owned Nest bought Revolv, it immediately shut down its hardware hub. Rather, it wanted the team of home networking engineers that came with Revolv—a so called acqui-hire—to help cement a smooth user experience for customers wanting to hook connect products into it Nest’s ecosystem.

Nest’s entry into the home is via its beautifully designed thermostat and the popular Dropcam. Its “Works with Nest” program is an attempt to pull third party devices into that ecosystem. But first it wants to hook customers with an initial piece of great hardware. Nest has strong management and Google has the developer chops to help it build a great platform with solid communications engineering. Getting people to buy an expensive piece of hardware is a slower track because new relationships have to be built through every new purchase. But Nest remains very much in control of that relationship because it all starts with a piece of hardware it controls. Nonetheless, selling customers a point application product that solves a specific problem is one initial strategy for building a larger networked smart home ecosystem around that product.

3) The Telco Strategy: Similar to the utility hypothesis, most telco providers have begun to wonder if they can add a service to their bundle, which is itself under fire from cord cutters and cord nevers. Time Warner has IntelligentHome and AT&T has rolled out Digital Life. The telco’s major advantage is the presence these companies have in millions of homes. Additionally, if hardware hubs go away, as many including myself expect, one big candidate to absorb them is the set top box.

4) Let’s start with your smart phone. When home security leader ADT led a $50 million investment round in location sharing app Life360, the company was very aware of the smart home. The idea was and is that ADT can leverage the millions of families using Life360’s app to begin rolling out smart home features beyond security, like thermostat control. It’s a novel strategy and ADT is right to worry about the proliferation of security alternatives like those available from Dropcam that could begin to eat the legacy security leader’s lunch. It’s very early to know how this experiment will work out for ADT but I like the advantages of being able to immediately access millions of families via Life360’s app. They are prime customers for security, and I like that mobile is the route in because a good app experience is critical to any successful smart home (or security) experience.


These represent four main strategies I’m currently watching. It’s not exhaustive (even the cellular providers like U.S. Cellular are rolling out smart home services). But it represents a diversity of strategies and is striking in just how varied the companies are that think they’ve got a shot in the smart home.

Who will win? It’s much too early in the market, which is vulnerable to a quick roll up from big smartphone makers which seek to absorb all control into the smartphone, leaving it difficult for others to create value. But the companies that create trusted and reliable services that actually engage and hook consumers will be in the best position to still be around in 3-5 years.