After eight years of torturing my family with smart bulbs, sensors, connected kitchen appliances, and an assortment of software and devices that tended to mostly work, but would fail only at 2 a.m. in a show of sparks or lights or noise, I have decided to focus on making the actual house smart. My goal is to install connected devices in the home infrastructure.
That means installing devices like Phyn or Flo to track leaks and water consumption, and products that I can install in my breaker box to measure and control power consumption. Maybe I’ll get a smart septic monitor from SepticSitter. I already have a smart thermostat, but I also want to make my water heater more intelligent so I can reduce energy costs.
These devices may not be sexy, but the gadget-stuffed smart home has mostly failed. So I’m trying to find where the real value will lie. I think the smart home will be about services, so I’m trying to discover which services people will pay for. Obviously the first of these is home security, which is why everyone has jumped into the sector. My belief is that mainstream buyers will next purchase services that will help lower their bills and protect the biggest investment most of them will make in their lives: their big, dumb house.
When viewed this way, the real fight for the smart home is just beginning. And the companies vying for success are varied. In the high-tech world, we have startups that hope to come in with gadgets designed to help protect the home. Think Flo by Moen, which recently offered a $5-a-month plan to protect your home from leaks, or Span, which raised $20 million this week (check out the podcast I did with the CEO) to turn your electrical box into a controller for every device that’s plugged into your wall.
Amazon also has a dog in this hunt, such as with its launch of proactive Hunches this week. It has also created an energy dashboard that can monitor specific devices in the home and turn them on or off to save energy. The energy dashboard is a great place to start for Amazon because after home safety and security, saving money and conserving energy are the main reasons people buy connected products. (To that end, Amazon has also invested in Span.)
I predict that Amazon will use the knowledge it gets from services such as the energy dashboard combined with its proactive hunches to create new services. Proactive hunches are something a user enables in their Alexa app, and lets Alexa take action when it has a “hunch” that the user would want something done. For example, if I lock my door every night, Alexa might have a hunch I’d like that done and then lock it for me.
The real question is how Amazon would monetize a service that combines proactive hunches with services. Will it create an energy related plan that promises to lower your electrical bill? Will it buy Span and use its technology as an uber-controller for the smart home with Alexa as the brain, and offer a comprehensive service? Will it resell its understanding of what’s in peoples’ homes to insurance companies or home builders that want to build products around that knowledge?
Speaking of home builders, they also have an opportunity around house maintenance services. They can install devices during the build and then offer longer and more comprehensive warranties on the homes with much less risk, since theoretically they will be able to see problems before they happen. Could they create a business outfitting older homes with smart tech to build out what would become something of a mix between insurance and a home warranty (your home insurance covers more than leaks, so it won’t go away entirely)?
If these ideas sound familiar it’s because they comprise the strategy that Resideo CEO Mike Nefkins outlined in August 2019 as a guest on my podcast. (Nefkins left the company in December, but his successor Jay Geldmacher appears to be staying the course he laid out.) Resideo had spent 2018 and 2019 spinning out from Honeywell and buying companies capable of leak detection as well as electricity and gas line monitoring. The goal was to create a service that helped homeowners track the health of the pipes, wires, and ducts that are built into the walls of their homes, and connect them with service professionals when problems arose.
At the time, it seemed far-fetched, but as I view the chaos of life in a smart home, I’m realizing that turning on the lights and setting up good-night routines with my voice isn’t the big business I thought it would be. Neither connected lightbulbs nor digital assistants are proving to be economic drivers the way smartphones have been.
Instead, the shift that’s coming for the smart home is more mundane, but also more valuable for homeowners and vendors. Companies will invest in technology that protects consumers’ homes and ensures those homes stay healthy and cozy as the years go by. And consumers will buy into that because, for most of them, their home is their largest investment.
The biggest challenge to this vision is the high up-front cost of retrofitting existing homes. So as I add some of these devices to my own home and try to live a different type of smart home lifestyle, I’m also keeping my eyes open for ways to lower those upfront costs. Ditto for builders that are putting smarts into new construction, in case I end up moving again.
I am not saying that smart light bulbs and smart cameras are going away. But I no longer think that the hundreds of companies building those products are creating the next platform for growth in the smart home. What’s become clear to me is that those products will simply become accessories to larger home protection services.