Last week’s acquisition of UK-based smart home platform provider AlertMe capped off a smart-home acquisition spree that includes Nest picking up Revolv in October and Samsung taking out SmartThings in August. If the last six months have shown the market anything, it’s that a number of leading consumer IT giants, including Google, Samsung, and Apple, plus a utility here and there, feel they need a connected-home platform to stay competitive.
The reasons for this are complex. For hardware providers like Apple, which should launch HomeKit this spring, the reasons relate to needing to keep users’ interaction with the home within the iOS ecosystem in order to maintain competitiveness in mobile. For utilities like British Gas, which picked up AlertMe, there’s an opportunity to engage customers in ways never possible before, which could be important in deregulated and competitive utility markets. And for a hardware design leader like Nest, there’s value in having some of the best home-networking engineers in-house since the company intends to use the Nest thermostat as a springboard on which to build a full platform that plays well with third-party devices.
Just a year ago the smart home market was still a startup, venture-financed one. Now it looks like a market full of players with deep pockets, global sales channels and major brands.
When I caught up with AlertMe’s CEO Mary Turner the evening of the acquisition announcement, she commented that she felt the timing of the deal was right. “It was starting to get quite noisy and there were some very large players with deep pockets entering the fray. The vision [for AlertMe] was to not service one or two million homes but tens of millions of homes globally. To effectively deliver that vision, we felt we needed the firepower to get us into the next stage of development. This is no longer a market for tiny small startups.”
The question going forward is, What happens to the physical hardware hubs in the home? The answer to that question indicates how users will control the smart home. When Nest bought Revolv, it immediately discontinued the attached hardware hub Revolv had built with its seven radios. And AlertMe has always argued that the value of its service is in its software platform, which also powers the Lowe’s Iris hub.
Turner and I looked to a future in which the hardware hub disappears and the “hub stack” is absorbed by another piece of hardware in the home, like a wireless router or a set-top box. Currently the smart home market isn’t big enough to warrant putting additional radios into a router or set top box, but that picture may well be different in two years. There is no shortage of Apple fans, for example, that believe the Apple TV is ripe to absorb the hub stack, and along with HomeKit, act as a control center for the home.
If consolidation of communications protocols follows the absorbing of the hub stack into a more mass-market device that’s in most homes, building out the connected home will get easier and will push the connected home toward the mass market.
Whether it’s Apple, Samsung, or even a utility like British Gas, there’s value in being in control of the software that will control that home. Which may well explain how almost every major hub maker with a solid software platform atop which big IT players could build services got acquired in just six months.