Tado aims to be a smarter thermostat than Nest

The last couple of years have seen pretty rapid development in the smart thermostat space. That’s not surprising – the technology offers a clear way to go greener, while saving some cash in the long run too. It’s kind of a poster child use case for the internet of things.

The current darling in this market is Nest, the $249 circular screen that can provide a stylish and efficient replacement for boring old thermostats. Despite its legal troubles with Honeywell, Nest has been successful enough to enter a second generation, which it did last month. Trouble is, Nest is only really practical for those in the U.S. and Canada, due to its wiring requirements.

Enter Tado, a new rival out of Germany that’s shifting today from private to public beta. First off, you can use it across Europe, which is a good start. But there’s more to it than that.

Control of Tado takes place almost entirely in its smartphone apps for iOS and Android. The minimalistic white box on the wall doesn’t even have a screen, nor does it have sensors. So, for example, while Nest knows its owners have left the apartment because it can’t sense movement, Tado knows because each occupant has the app on their phone, and it can track their location.

There are at least two advantages to this approach – it should be quicker to tell that they’re gone (by default, Nest waits two hours before turning down the heating), and it also lets Tado’s systems automatically turn the heating back up when the occupant is heading home.

“Our idea is to bring a brain to heating and cooling systems, to make them more adaptive and to make it possible to control energy in a smarter way,” co-founder Christian Deilmann told me. “Tado is your assistant who takes care and knows when you’re leaving and turns it down for you… It learns how your specific home reacts to solar radiation, but also how fast it can heat up and how much energy it uses. All this information is taken into account.”

(I also asked what happens if you have your smartphoneless grandmother over to stay and you head off to work. The button on the side of the wall box overrides to manual, apparently, which is also handy if you forget your smartphone at work.)

Nest uses Wi-Fi to have the thermostat talk to the home router, but Tado opts instead for the mesh-network-friendly 6LoWPAN protocol, which requires a dongle to be stuck into one of the router’s USB ports.

Tado’s also going with a somewhat different business model to that employed by Nest and others such as Ecobee. While those rivals charge an upfront amount for the hardware, Tado opts for a €99 ($126) annual subscription fee for the associated services – during the beta phase, the first 1,000 customers will get the hardware for free, and Deilmann says that strategy might continue in the future if it proves successful.

There’s a psychological factor at play here. Even though a consumer may know in their heart that smarter thermostats can help save money, they may be turned off by a significant cost at the start. It’s true that Tado’s route would probably turn out more costly in the longer run, but Tado’s hoping that those services – which handily include a monthly report telling the user how much the system is saving them – will keep them hooked.

The company quietly raised $2m in venture capital earlier this year from Target Partners and Shortcut Ventures. The launch will first take in Germany, Austria and Switzerland, but Tado also plans to move into other European countries sooner rather than later.

“We are very interested in the Scandinavian market and also the UK and France,” Deilmann said. “It’ll probably be in September next year that we will be delivering in these countries.”