Over the last few weeks I’ve been thinking about the smart home, mostly because I still haven’t connected very many devices in my new place and feel somewhat guilty about it. But the launch this week of a new product from water monitoring company Phyn and an interview earlier this month with the CEO of Resideo have clarified for me the two separate strategies at work in the smart home of today.
Resideo, the smart home spinoff of Honeywell, is pursuing a smart home strategy involving smart devices that primarily communicate with outside help. Think of the traditional home security model covering more elements of the home, including leak detection and HVAC controls. Meanwhile, after more than a year trying to sell a pro-quality product through plumbers, Phyn this week launched a cheaper water monitoring device with DIY aspirations.
It’s the mass market vs. the pro channel, or DIY (do it yourself) vs. what the pros like to call DIFM (do it for me). This isn’t a new divide. Roughly a year ago I spoke with Charlie Kindel, who after heading up Amazon Alexa’s smart home efforts moved to professional home automation dealer Control4 (which was subsequently bought by SnapAV), in part because he believed that without professional help the smart home wasn’t going to move forward.
I’m struck by how little has changed since then. The smart home is still difficult, and heavy with gadgets that offer nominal utility in exchange for a lot of work — which is why I’m so ambivalent about setting things up again. But I am tempted by a good use case, such as leak detection.
In a recent conversation with Ryan Kim, the CEO of Phyn, I asked where he saw the most opportunity, especially since his company’s first product was aimed at the pro market. The original Phyn water monitor sells for $699, requires a plumber to install it, and can shut off your water in case of a leak. But because of the price tag, and perhaps the sales strategy, it failed to find a market. “Plumbers are not salesmen,” Kim says. “They have to sell the homeowner on the device, and they are not always the best at that.”
Phyn still plans to sell the pro product, but it wanted something for the mass market, too, something that Kim says would sell at Best Buy. And indeed, the new Phyn Smart Water Assistant will be sold at Best Buy in late September. He said that the pro product helped teach the Phyn team about water data, and that it also provided brand credibility. But what it really sounds like is that Phyn is turning to the mass consumer market after it made a bet on pros with an expensive product that didn’t pay off.
Meanwhile, Resideo, which makes about $5 billion a year selling Honeywell Home-branded home and security products, only gets about 3% of its revenue from DIY consumers, according to CEO Mike Nefkens. His company is doubling down on the pro market by buying companies that offer intelligence around essential home systems. For example, it purchased Buoy Labs, which also makes a water monitoring product that can shut off water in case of leaks.
In a podcast conversation with me earlier this month, Nefkens compared the shift in his firm’s focus to bringing the monitored security model to other areas of the home. “With security monitoring, when you’re out of the home and an intruder comes in, you get an alert, somebody calls the police, they come,” he said in our interview. “But the rest of the home — the water network, the air network, and even indoor air quality and room temperature, the gas network, your electrical network — really the homeowner is left all to themselves to have to figure out how to…maintain and how to ensure that those things are working properly.”
The big shift for companies trying to get consumers to spend on pro services is figuring out a revenue model that makes sense. While well-heeled individuals might spend big with a pro product like Control4, that’s out of reach for many. Even monitored security isn’t huge in the mainstream — only some 20% of homes have it; the rest don’t. And while one out of every five U.S. households is a significant market, monitoring for water, air quality, home security, gas, and electric could quickly add up.
Nefkens said Resideo plans to launch the business model around home monitoring in December, but that a warranty model makes sense. For example, homeowners might buy a warranty with a new home or another with a new HVAC system. Nefkens wants to normalize that behavior. He expects combining warranties and insurance discounts will help reduce costs for homeowners.
“The house is only going to become more complex. And with that you need support,” he said. “And if you take a look at your daily life, right now for your body you have a physician. For your car, you have a mechanic. In office buildings, we have building managers. But again, for the home, we leave it to the homeowner, who is really not trained or doesn’t have the time or skills to manage a lot of these systems in the home that are behind the wall.”
This is a compelling vision, but whether or not it’s the right vision will come down to costs. Even after a few leaks in my previous house, which was under warranty, my husband was reluctant to buy a $699 Phyn Plus because the cost was incredibly high for something that was essentially invisible and hopefully unnecessary. That math is going to be at play as consumers evaluate any sort of “pro” service or DIY gadgets. And so far, no company has really convinced the mainstream consumer that either side of the divide is worth their hard-earned cash.