Spotting technologies’ “next big thing” is always exciting and problematic. Industry hype tends to be too far in front of market readiness for making great ideas in theory prime time stars in practice. Case in point is the home automation/smart home market. It has been just around the corner as the next big thing since it was a highlight of the 1939 New York World Fair. However, reading the recent tea leaves, it is possible that the announcement on June 20 that iControl got a fourth round of funding of $50 million may signal one of those infamous tipping points.
First the news. As featured on TMCnet’s Renewable Energy channel in an article by contributor Cheryl Kaften, home management start-up iControl Networks (News - Alert) raised roughly $50 million in Series D funding. This brings investment in the Palo-Alto, Calif.-based company to over $100 million. Funds will be used to accelerate deployment of iControl's OpenHome energy management solution and other broadband home management services, and for international expansion.
It follows hard on the heels of the company’s June 9 announcement that investor Comcast (News - Alert) is using the iControl OpenHome™ software platform to power Comcast's XFINITY Home Security service. It also amplifies recent announcements involving use of the platform by:
- Paris, France-based home network solutions provider Technicolor — for use on the home control and security edition of its MediaTouch tablet
- Tel Aviv, Israel company The Visonic Group, who will integrate its security peripherals
It also plays into general market atmospherics including the June 21 announcement by The HomePlug® Powerline Alliance of support for IEEE P1905 Convergent Digital Home Network Standard which it describes as “the first standard for hybrid home networks combining IEEE 1901/ HomePlug (News - Alert) AV, Wi-Fi®, MoCA® and Ethernet.
So why are we possibly at a tipping point? Here are my top 7 reasons:
1. Follow the money. I always look at who the investors are and if, when and how, they are placing their wagers. Here is the list of investors who have doubled down on their original bets: Comcast Ventures, Cisco (News - Alert) Systems Inc., Charles River Ventures, the Kleiner Perkins Caufield & Byers iFund , Intel Capital (News - Alert), Rogers Communications, and Tyco International (parent of security leader ADT).
2. Partners. Black & Decker, Consumer Electronics Association (CEA), Continental Automated Buildings Association, General Electric, INSTEON, NETGEAR, Oracle, The Security Industry Association (SIA) SiGe Semiconductor, SMC Networks, Technicolor, the Visonic Group, The Z-Wave Alliance and The ZigBee Alliance. In other words, all of the critical areas for a global ecosystem are covered.
3. Industry consolidation. Prime example is that despite (maybe because of?) the economic downturn, Tyco’s ADT unit in January 2010 bought competitor Broadview Securities for $2 billion increasing its North American market share from roughly 35 percent to an estimated 42 plus percent. This validates the view that even in hard times this looks to be a long-term growth market. Plus, such industry restructuring tends to be a leading indicator of markets poised for breakout performance.
4. Getting support around standards is a critical foundation for market growth.
5. The addressable device population in the home is growing, including smart thermostats, washers and dryers, refrigerators, etc., and in-home digital dashboards are dropping in price while increasing in versatility.
6. While the song from hit musical Avenue Q is probably correct that “The Internet is for Porn,” one cannot dismiss the attraction of the desirability in upper and upper middle class households to use the medium for more sophisticated home security and energy management. Both markets are prime targets for iControl.
7. A corollary to the above is that we live in a risky world and web cams are proliferating. So too is the promotion by service providers of the remote control of these and other "smart" home devices by smartphones. Enough said.
The last two points are key. It is hard to predict whether security or managing utility consumption will be the primary accelerant that engenders a full blown market explosion for home automation. Hence, having a platform that serves both markets is important.
As Mr. Green himself, (former U.S. Vice President and Partner with iControl investor Kleiner Perkins Caufield & Byers) Al Gore, is quoted as saying, "empowering individuals to directly manage energy consumption is one of the most important parts of the great promise of the U.S. Smart Grid initiative." Having this capability share a ride with security is not just a good technology choice but a sound business one.
Now if we can only kick-start the housing market. Peter Bernstein is a technology industry veteran, having worked in multiple capacities with several of the industry's biggest brands, including Avaya (News - Alert), Alcatel-Lucent, Telcordia, HP, Siemens, Nortel, France Telecom, and others, and having served on the Advisory Boards of 15 technology startups. To read more of Peter's work, please visit his columnist page.
Edited by Rich Steeves