Narrative: The Smart Home is Stuck
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Narrative: The Smart Home is Stuck (Jan 28, 2017)
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Nest Unveils Cheaper, Slightly Less Capable Thermostat E (Aug 31, 2017)
Nest unveiled its first new thermostat product in two years today in the form of the Thermostat E, a cheaper ($169 vs $249) and slightly less capable alternative to its core product line. The functionality is very similar, with only a slight reduction in compatibility with HVAC systems (Nest says 85% versus 95%) and one other minor missing feature relative to its core product. But the new thermostat is also redesigned, with a much lighter and arguably less distinctive look, apparently intended to blend in better to light colored walls and rooms rather than sticking out as an intentional piece of striking design like its first product in the category. Though the price of the original thermostat has certainly been a sticking point for some, especially those who need several units – the reality is that price is only one of many factors holding back the smart home. Far more important in many ways is the fact that most people find installing and managing these things intimidating and therefore managed services rather than DIY solutions are going to be the key for the vast majority of users, and Nest really isn’t doing anything in that direction. Meanwhile, Nest’s slow pace of new product introductions continues: it has three product lines, none of them newer than 2014, and its core thermostat and Protect products haven’t been updated in two years (see this image for an overview of its product launch history). The camera products have received most of the attention in the last couple of years, but there’s been no new organic product category from Nest since 2013. (See the Smart Home is Stuck narrative linked below for more context on all this)
Samsung announced its Connect Home mesh WiFi and smart home hub product alongside the new Galaxy S8 phones in March, but didn’t provide pricing or availability, something it’s now done. It will go on sale on Sunday at Best Buy and then become available more broadly in mid July, and will cost $170 for a single unit and three for $380, with a higher-throughput Pro version available for $250 per unit. The pricing is comparable with the many mesh WiFi solutions that have emerged in recent years, but the big difference is the SmartThings integration, which would normally involve a separate purchase. I’ll wait until reviews are available to judge it beyond that, but as I mentioned in the comment linked above back in March, it’s good to see Samsung finally starting to tie together its SmartThings and smartphone businesses, and I look forward to seeing whether that helps SmartThings get more traction in the market. The pure mesh WiFi space is certainly crowded enough already.
Nest Launches Smarter Security Camera for Inside Homes (May 31, 2017)
Ecobee Launches Thermostat with Alexa (May 3, 2017)
Comcast reported Q1 2017 results this morning, and in keeping with past trends, the numbers were generally good. It saw another rise in TV subscribers as the cable companies continue to take share from the telcos, despite the overall trend of cord cutting, and it also saw strong growth in broadband subscribers, which now significantly outnumber its TV subs. Interestingly, it also began placing more emphasis on its home automation and security business this quarter, and reported that it has almost a million subscribers, or around 4% of its broadband base. The big theme that’s emerging from this quarter’s earnings reports from these providers is bundling – Comcast continues to see the percentage of customers taking more than one product rise over time (it’s now reached 71%), while AT&T suffered precisely because it can’t offer broadband/TV bundles to DirecTV customers. The wireless-TV bundles it can offer aren’t the ones consumers are looking for, which makes Comcast’s push into wireless somewhat questionable too. At NBCU, we’re seeing many of the same trends we’ve seen before too – subscriber numbers and viewing are down, but contractual rate increases with MVPDs are driving revenue growth anyway (of course those rate increases are rising costs on the cable side). Ad revenue was down in the cable networks business but up slightly in the broadcast business despite lower ratings because prices have been rising, though my analysis across the TV industry suggests the rate of price increases is slowing dramatically. Comcast continues to be a powerhouse across the categories where it competes (which also includes movies through Universal) but it’s facing some significant headwinds in the form of cord cutting, ratings declines, and rising content costs, which are going to take an increasing toll over the long term.
Note: you can see all my earnings posts or all Q1 2017 earnings posts specifically by clicking on the relevant tags below.
Comcast invests in Plume, a Wi-Fi wall plug startup – Axios (Apr 11, 2017)
This is an interesting investment for Comcast, which already has a big focus on WiFi, as evidenced by its Xfinity Mobile launch last week. Its home broadband routers double as WiFi hotspots for other Comcast customers, and it’s been investing in home automation technology too. So investing in Plume, which offers a service-based approach to WiFi, is a logical next step. Smart home systems are increasingly going to require management and control over the WiFi and other networks in the home for quality and security purposes, so going deeper into WiFi technology and management is going to be important for companies like Comcast that want a role there. The other intriguing part of this is that Plume has been working on a model where it would charge a monthly fee for that WiFi management service, something I could see Comcast doing in time either separately or as part of a smart home service. Yet more evidence, though, that the future mainstream version of the smart home is likely to be service-based. (Incidentally, read this smart piece by Stacey Higginbotham for more on Plume)
I’ll cover the other accessories announcements from Samsung in a separate item, but this one feels worth calling out by itself, because it’s really the first time Samsung has created any meaningful connection between its smartphones and the rest of its portfolio of appliances and smart home devices and therefore created a proper ecosystem. As with the new phones, we’ll have to see how this hub and associated apps perform in practice, but on paper this looks like a good combination of hardware and software for setting up and managing a Samsung-owned ecosystem of devices, incorporating both Samsung-branded appliances and the SmartThings home automation gear it also owns. The separateness of these parts of Samsung’s portfolio in the past has been baffling, because its smartphone base has been a big potential lever for moving SmartThings forward and it hasn’t used it. This now puts Samsung into more direct contention with some of the other ecosystems in this space, like Apple’s HomeKit, Alphabet’s Nest and Google Home, and Amazon’s Echo. And it’s another sign that other big companies are deepening their in-home infrastructure even as Apple appears to be backing away from its WiFi routers, at least for now. I suspect we’ll see something new from Apple in this space eventually, but for now its withdrawal from this market feels risky as routers and associated devices are going to be important components in a smart home ecosystem.