After 20 years of business reporting, I feel like I’ve seen…not everything, but an awful lot. Then on Wednesday afternoon, Wink, the smart home hub owned by Will.i.am’s investment firm, posted a blog and sent a notification to app users that next week it would shift to a subscription model, charging $4.99 a month for continued access.
I was stunned by the short notice, surprised by the reasonable subscription fee, completely shocked by the inclusion of literally every Wink service as part of that paid subscription, and bemused by the fact that someone at Wink was apparently still on the job given its history of radio silence and not paying employees.
But after some consideration, I’m glad that Wink is making this Hail Mary pass for continued viability. I’m also OK with Automatic shutting down and PetNet’s dismaying slide into a defunct company with little-to-no communication. I’m even glad that Sonos pissed off a good chunk of its users by killing off some of its older gear with such relative insouciance.
There’s nothing like time and a pending economic downturn to expose what truly matters, and for most businesses, that’s going to be making money. It may be making money by gathering data and delivering insights, or it may be making money by selling hardware, but so far there’s no solid business model that lets a company sell a piece of hardware and support it in the cloud indefinitely with software updates.
So in the coming months, I expect we’ll see more panic sales and a bunch of panic shutdowns for companies and their investors that are just now figuring out the economics of IoT. I have been predicting this for a while, but COVID-19 is like an oncoming train that will force this day of reckoning.
I’m surprisingly OK with all of it. After years of trying to get companies to build distributed platforms, use open standards, set expectation dates for their devices, put money into escrow, and other practices that would lead to consumers who purchased their products having an orderly shutdown (or even no shutdown), I’m ready for that train to clear out the initial crop of connected device makers that failed to provide much value or build sustainable business models.
On the vendor side, I encouraged companies to think about use cases and the benefits of putting a chip into a device, and begged them to look at the real costs. Which is why a crockpot controlled by my phone didn’t seem like a huge value-add, but an oven that had pre-programmed recipes to cook my food sure did. And while the next few months of shutdowns will leave a sour taste in the mouths of many consumers, I think it will clear the way for a better designed and more valuable crop of companies.
The first crop of smart home devices simply wasn’t designed for today’s world of increasing threats, modern architectures, and consumer demands. Kent Dickson, the co-founder and CEO of IoT cloud provider Yonomi, calls this the “first-mover disadvantage.” Companies that released products in the early days often built on AWS or Azure and didn’t have the advantage of serverless computing. On the chip side, they may not have had access to security features that matter today. And even integration strategies have changed.
The result has been the end of many smaller companies. But it has also forced many bigger companies to change direction. For example, last year, citing security reasons, Google had to transition its Nest devices off the Nest platform and onto the Google Home platform. Google’s challenge was that it needed to change the way partners accessed data for a world with more integrations.
But for many businesses, the challenge is in the cloud — or more specifically, in the cost of supporting a device’s connection to the cloud. Connected devices need a place to connect to in order to initiate software updates and data transfers, and to communicate with other devices that it can’t reach on the local network. That requires a connection to a computer somewhere, which costs money.
In the earliest days of the smart home, companies built their own data centers or threw data into Amazon Web Services. Those decisions could cost a company $1 a year per device on the low end and $10 a year per device on the high end. So if you purchased a Nest thermostat when it launched in 2011 and kept it on your wall, that device would have cost Google between $9 and $90 to run for the last nine years. Sure, the Nest thermostat was $250 and the cloud costs may be on the low end, but there are also cheaper devices like the $50 WeMo outlet. Mine, also from 2011, still works.
Moreover, none of that covered what was needed to pay software developers to implement and update integrations, or to do security updates, or to cover any of the other costs associated with running a smart home device company. Devices built today aren’t as expensive to operate, says Dickson; cloud costs range from just 20 cents to $1. At Yonomi, Dickson’s team encourages companies to think about how long their products might operate and how much that will mean in cloud charges. He recommends most companies build that into the price of the product rather than charge a subscription.
“There has to be a sustainable business model in here somewhere,” he says.
As a consumer advocate, I would like to see companies make those calculations a bit more public, so users don’t get emails on a Wednesday afternoon telling them they have a week to start paying for a subscription on a device they thought they already paid for. In Wink’s case, I paid around $100 in October 2016 for the second-generation hub that I used until the end of 2018 when Wink started getting unreliable.
Wink used to be both mine and Kevin’s hub of choice for people dipping their toe into the smart home because it worked with almost everything out there and was really intuitive to use. It also offered a lot of value for the smart home super user who bought a bunch of devices from different platforms.
And I’ll probably pay the $4.99 subscription fee to see if it gets me the original Wink service, though I’m not sure how many others will. But rather than resent the switch in business models, I’m going to embrace what I believe is just another step in the maturation of the overall smart home industry.
Joel V says
Very good point! I hesitantly bought SmartThings hub years ago then when they got bought out by Samsung went all-in. While many thought of that as “selling out” and worried it would close the ecosystem, those of us in the industry I think realized that the Samsung model (heck, the Korean model) is to subsidize promising businesses with their larger, more profitable businesses. It wasn’t hard to figure out that these business models were fine at high tide but troubled when the water recedes.
The reality is because of the decade of boom years, most startups dive in with little business discipline and say “mass adoption then monetize” with the assumption that money will flow forever. That is a massive risk. And with businesses that have a hardware element, debts to the supply chain are far more serious than a subscription to AWS that can be turned off. Baking the lifetime cost into the product MSRP is certainly one way but in the hardware business there are “magic price points” where volume spikes and value is realized.
The IoT business is NOT the cloud business and this Wink move not only is evidence but as you mention it’s a “Hail Mary”. Trying times will always expose “sick” companies and “healthy” companies can differentiate and create advantage by investing INTO a recession like this if they can. I totally agree that this crisis will flush out some truly unhealthy businesses and while that is unfortunate from a human standpoint, it’s important for the future viability of these solutions.
I think you’re a little bit punch drunk from all the failed cloud services you’ve signed up for.
To suggest Wink moving to a subscription service, which isn’t really working for anyone else, is a sign of industry maturity, might come back and bite you. To me, it smacks of desperation.
The point Dickinson’s group suggested about hardware companies charging for their hardware and droping this nonsensical “we must milk this for all it’s worth” approach by forcing unwanted, expensive cloud services on users is a good one. If the hardware companies provided robust APIs for the aggregating hubs or software systems to utilitise, it would allow those “software” companies to deliver on the creativity we’re all looking for.
Too many hardware companies doing software and vice-versa.
Anyway, sorry for your latest loss.
This is a black hole for all the companies trying to bring unity to the smart home industry. Wink’s going to go out of business and their product has had stability issues for 2 years now. What are you talking about Stacey? As a user, nobody can see this as a positive sign and it brings more skepticism to people who are not in
I’m sorry, I paid for a product that advertised specific features with no subscription model included. To suddenly require a subscription or else I’ll lose access to the features I already paid for, well that’s basically robbery, and I question the legality as well. There is no way I’ll pay this fee. I’ll go buy a competitor’s device and start all over rather than allow this extortion. Shame on Wink, and shame on anyone who supports it.
Exactly. I feel the same way. Worse yet is that they want to store your CC number and hit you each month. I find that annoying and yet another security hole for hackers to steal it. I may not mind a “yearly” fee to keep the automation, but yet another drip recurring monthly, I don’t need.
Just switch to Smart things Hub and don’t look back. I did and it was definitely the right choice.
Jason McCaughey says
I feel the same way. Bait and switch situation. I just emailed Wink. Im embarrassed to have recommended them to so many.
James Voight says
I can’t disagree more with you concerning your support of Wink’s unforeseen subscription service. It would have been expected and even acceptable had the fee based system been implemented shortly after Will.I.am took over his new purchase.
Yes, I understand the need to pay employees to attempt to keep the doors open, however, the services offered to a large degree have been supplanted by Wink’s competitors of which the Amazon Echo currently has the edge.
Already, most Smart Home users have multiple hubs already in place and most likely the Wink is simply part of the infrastructure feeding into those arrays mainly because users don’t want to take the time to move the devices over to the other controlling hub.
Unless Wink has some unannounced service(s) and super product(s) in the wings, this particular move is poorly thought-out and nothing but an act of desperation. If they have something else, they should have announced it prior to implementing a pricing change.
How you will pay for something that doesn’t provide support for years? I have the hub, some Relay, and is continuously losing featuring. In my opinion, you pay if you receive good service and features. Wink vs the World is not too much different and free.
Nathan Snyder says
I have to say, I’m certainly disappointed with Wink’s new subscription model, and the short notice, frankly, adds insult to injury. I truly hope they make it, and can become a sort of comeback story, but unfortunately, for me, it’s time to move on. I might have tried to consider it, but they’ve proven to be unreliable as of late.
I have several products (all from iHome) that suddenly stopped working with Wink a few weeks back. When I tried to disconnect them and reconnect them, I found that I could no longer reconnect to Wink. Despite contacting their customer support on Twitter, and being told, “We apologize for this. Our team has been made aware so we can work to get everything resolved,” they haven’t worked since March 19th. I’d certainly be more understanding and willing to give them a chance if they’d demonstrated that existing things could be reliable, but as is, that’s not the case.
I’ve got a couple lights that rely on Wink, though nothing critical, so I’ll be investigating whether to replace those, or find another cheap Zigbee hub. Unfortunately, that won’t be with Wink.
Jim Brown says
I read your newsletter each week and often the content goes way over my head, so kudos to you for being so damn smart! 😉 With that said, I’m no industry expert. I have dipped my toes into the world of smart home products, but have kept it at a rudimentary level. I own a couple of Wink hubs that run a few lights and my experience has been good. Lights come on, lights go off. No rocket science here.
While I am certainly in favor of businesses making a profit, keeping people employed and furthering R&D for future offerings, Wink has performed a customer service blunder that is inexcusable. Whoever came up with the bright idea to give their entire customer base one week to buy into their new subscription model or lose all service should be fired, rehired and fired again for good measure.
While I would very likely have paid the $4.99 per hub for the subscription, the feeling of being held hostage negated my desire to keep the system at any cost. The whole thing reeks of desperation, and even if that is the case, exposing that level of distress to your customer base is a really bad idea.
Wink did send an e-mail extending the deadline after receiving what I can only imagine was a backlash of “New Coke” proportions. But too little, too late. By the time that e-mail arrived I, like many others, had already done the research for the replacement service and pulled the plug on Wink.
But I realized today that there is another unintended consequence of Winks terrible judgment. Today MyQ notified me that my smart garage door opener would no longer work with my Wink hub as of June 1st. So not only are customers jumping ship, but so are the manufacturers who partner with Wink. They have lost the trust of the customer and industry partners. That is the nail in the coffin for Wink.
Wink will one day be a case study in an MBA course on how to greatly accelerate the shuttering of a business in trouble. I didn’t have any bad feelings about Wink. I frankly never had to do anything with the hub – it just worked. But their poor judgement and bad messaging has set them on a path of imminent demise.
Michael D. Majeski says
I am a current WINK user and have been happy and had NEXIA Home before this. Nexia charged a monthly fee and service was steady but the hub could integrate very little. I pay RING for my Cameras, so not new. WINK does integrate well but service and reliability is falling the last few months. Have no issue paying $5 a month to keep it because I want to maintain 30 plus lights, locks, MYQ, RING, Rachio, NEST, and integration with Alexa. My only issue, is they should have done it after WILLIAM bought it and it would have come off better and the company would have been in better shape. Not everyone one is a fit for WINK or Smartthings hubs because those users have as many devices. If you use ADT or Vivint, you will pay more for less.
Because I'm Batman says
Why would anyone in there right mind pay for a subscription to Wink. There service sucks. Plus there are dozens of smart devices out there that don’t even need a single Hub to work. I’ve got a bunch of different brands of smart devices that are all linked to Google Home and controlled by it. Don’t pay for something you shouldn’t have to unless they are offering something worth it and Wink isn’t offering anything.
H. Smith says
IMHO, there is no need in this day and age for centralized servers and the necessary infrastructure to support them (and all of those employees). Once you sign up you are captive to the whims of bad decision makers. This also includes the largest companies like Amazon, Google, etc dabbling in the smart home / IoT market. Once you put your feet in that wet cement, your investment is on borrowed time, especially where every major company offering software of any kind wants to tap in to your circulatory system forever with subscription based services. Like a leech infested pond, the leeches are not going anywhere.
If you want to create a real automation system it should be local autonomous (“hubs” if you want to call them that) with distrubuted capabilities. These “hubs” should not be based on proprietary hardware designs (like the Wink, SmartThings, etc) that inherenetly have static central web presence, support costs, and end of life costs. If you want something to carry on for decades, that is not the way you do it.
While there are many that turn to PC based systems, they are inherently energy hungry and really not practical for the home centeral or nerve system. Why would you dedicate a PC that costs hundreds of dollars to do basic I/O/timer/networking operations anyway? It smacks of wastefulness. Do not forget that Microsoft has everyone on the endless upgrade tredmill that has no end in sight (subscription coming soon?). Embedded systems based on Linux would seem to offer the best pathway forward.
With embedded Linux based systems such as the Raspberry Pi (Zero -> 4), there are only a few obstacles to overcome (Dynamic DNS, security certificates) in order to make a decentralized open-source automation for everyone. Any lesser embedded system is probably not a practical solution in the long run. So far I have not seen any limitations with the Pi. Today there is a Pi 4 B (4GB, 4 core), tomorrow there will be a Pi 5, and so on. The Raspberry seems to have a great business model and they are ramping up production across the board, even for the lowly Zero. The costs are obvious and upfront and there is no possibility of subscription models going forward.
Anyway, I look forward to the developments. I will be shutting down my 15+ Wink based devices and will hold back on any future investments until I see something reasonable.
So for now: Alexa: “Shut it down”
Bye Wink! I’ve been a Wink user for the last 3.5 years and I’ve watched reliability go into the toilet during the last year or so. That said, there’s no way I’m paying any kind of subscription when your service is so very unreliable. I might have considered it if you had simply fixed the issues first, but I believe Wink is a company that will cease to exist in the near future, so I moved on to a SmartThings Hub and now I enjoy excellent reliability and don’t have to pay a monthly subscription fee.
Ian Fitzgerald says
Hey Stacey – just received my Wink subscript notice and am more than livid, but reading your blog made a lot of sense that the existing SmartHome business model is not sustainable. The problem with many IOT devices being disconnected – and a newer better model emerging – is the loss of trust consumers will feel – and will revert back to dumb devices. There may not be enough of a demand to support the next business model and as a result innovation will suffer. Or it will mean Google and Amazon get bigger and competition becomes extinct. Either scenario is bad all around.