The smart home is stuck in stasis (and I’m stuck in Dallas)

This week I traveled to Dallas for the Parks Associates Connections conference. The event focuses on the movers and shakers in the smart home, with a big focus on Parks’ ISP and security provider client base. For me, the big news of the event is that I got COVID, so I am stuck quarantined in Dallas and missed the last day of the event.

But from what I saw the first two days, it’s safe to say that the smart home is stuck. The big topics were focused on security, business models, interoperability and bringing context awareness (or what Amazon calls ambient intelligence) to the smart home. And everyone is waiting for Matter.

The smart home became a hot topic around 2012 after the Nest thermostat launched. At that time, WeMo was making smart plugs, Philips Hue was about to launch, and dozens of startups were putting radios on hardware and calling it “smart.” A year or so later, we saw the launch of hubs from retailers such as Staples and Lowes and startups like SmartThings and Revolv.

It was clear back then that interoperability was going to be an issue. Making smart hardware necessitated new thinking about business models due to the cost of continued software updates and cloud computing. We were even talking about security and the lack of compelling use cases back then.

These topics came up again and again this week, a decade later. Half a dozen panels mentioned the challenge of figuring out a business model that offsets the ongoing cost of smart devices.

I am encouraged about adoption of these models in enterprise settings. Vutility, a company that makes an electricity monitoring sensor, has done well building a data-as-a-service business that includes the sensor as part of the service.

But when it comes to consumers, getting them to pay for much beyond monitored security and cloud storage for video is still tough. That said, there is real optimism around aging in place as another service option.

Another way to drive adoption of devices into the smart home is through insurers. This feels like a match made in heaven because many common claims such as water or fire damage can be prevented with the use of smart technology in the home. Installing a water pressure sensor and water shut-off valve can prevent a big leak claim, and a device that monitors the quality of electricity can prevent an electrical fire.

I remember having a conversation with a venture capitalist in 2014, arguing that the high cost of connected consumer devices and the lack of clear benefit for the consumer meant that to get to mainstream adoption, someone like an insurance company would have to subsidize devices. At a panel this week, I found out that a mere 6% of smart home devices purchases come through the insurance channel. So clearly, we still have a ways to go when it comes to getting insurers to subsidize the smart home.

On the security front, the panel felt like going back to 2018 or so, before there was real legislation and the biggest challenge with IoT security was that consumers kept reusing their passwords. The panelists all agreed that monitoring the network for badly behaving devices was the best way to secure the smart home and that ISPs were poised to do that well. I disagree.

I think consumers do need some kind of networking monitoring service, either through physical hardware at their router or via a service from Eero or an ISP, but that only covers part of the problem. Monitoring network traffic should prevent your home’s devices from becoming part of a giant botnet, but it doesn’t do much to prevent ransomware infections that consumers are far more worried about. I’m trying to imagine calling my ISP after clicking on ransomware and having them offer any help.

Now, what about interoperability? The Matter smart home interoperability standard was expected to be out about now, which would have been awesome, but it has been delayed until fall. So many of the panels brought up the challenges associated with getting smart home devices to work together and then said something along the lines of, “We’ll see if Matter solves this.”

In conversations outside of the panels, talking about Matter was like talking about the weather. People brought it up, said they hoped it would be good, and then shrugged and said we’ll wait and see.

Ultimately, it was good to get out and see people again, if only for two days before getting struck down by COVID (I wore a mask, so I hope I didn’t infect anyone else). But it’s a bit depressing that after a decade of being excited about the smart home, there’s a feeling of little progress. Yet it’s clear we’re moving in the right direction.

Compared with mobile phones or even broadband, shifting to smarter homes will take longer. The home is built infrastructure that represents the largest investment most people make. And many of the shifts associated with the smart home feel weighted toward generating data and revenue for large companies, not providing huge benefits to the end user. The group at Connections touched on that problem, but we’re not close to solving it.