In the late 2000s, while he was building himself a “green” home in Lake Tahoe, Calif., Tony Fadell, one of the creators of the iPod, went looking for a thermostat, and was unimpressed by the limited features and dated technology he found.
Fadell teamed up with former Apple colleague Matt Rogers in 2010 and set to work crafting a “smart” thermostat. A year later their company, Nest Labs, introduced a brushed stainless steel “Learning Thermostat” incorporating an iPod-like wheel user interface, WiFi connectivity, and software that could learn to adjust the settings based on usage patterns. The price: $249.
“We took tech from a smart phone and … put it in a package on your wall,” says Rogers.
Today the Nest Learning Thermostat is sold at about 5,000 stores, from remodelers like Home Depot and Lowe’s to the Nest co-founders’ former place of employment, Apple. The device cuts energy usage by about 20%, amounting to roughly $170 in annual savings for the average U.S. homeowner, says Rogers, and some utility companies have begun offering rebates as well.
Now, the company is rolling out a combination smoke and carbon monoxide alarm that connects to WiFi and interacts with the homeowner through its smartphone app. Dubbed Nest Protect, it monitors when and where an early threat may be manifesting, and if it’s a false alarm, turns off with the wave of a hand.
“The iPhone started this revolution. Now people are used to a product in their hand that they can use to control the rest of their life,” explains Rogers. “But the home hasn’t caught up yet and Nest sees that as an opportunity.”
Nest isn’t the only one. Home automation technology has been around for several decades in luxury dwellings. But the industry as a whole has been slow to take off. Blame it on clunky, hard-to-use systems with sky-high prices that required professional installation and a lot of upkeep. But as smartphones and tablets become increasingly prevalent, smart home tech is becoming easier to use and dramatically more affordable. The home automation industry is projected to grow to $14.1 billion in worldwide revenues by 2018, according to ABI Research, predominantly in the United States. That would be an 11.5% increase over 2012.
ABI Research projects double-digit growth through 2018 in all of the industry’s submarkets, led by the managed subscription market (automation subscriptions provided by security and telecom companies), with expected growth from 1.9 million devices shipped per year to 19 million. ABI also expects the mainstream market, comprised of less expensive products and lower-cost vendor installations, to grow 60% to more than 6.4 million devices.
“Home automation is not a very new market,” says Adarsh Krishnan, an ABI Research senior analyst. “But the mass awareness of home automation is relatively new, primarily driven by initiatives from security companies and more recently telecom and cable companies.”
Companies including Comcast Corp., Time Warner, DirecTV, Verizon, AT&T, Best Buy and Staples have all rolled out automation offerings. Manufacturers and security companies in the game include General Electric, ADT Corp., Honeywell International, Ingersoll Rand, United Technologies Corp. and Tyco International. And brick and mortar retailers like Walmart are carrying more and more items on store shelves.
“Before the end of this year you will be able to go into a mass market retailer, buy hardware from big name companies, and access the software that makes all those devices work together,” says Mike Harris, chief executive of Zonoff, a Malvern, Pa.-based company that provides connectivity software for automation products to work together in a home. He says homeowners can get started with as little as $150.
A growing number of companies, among them August and Kwikset, sell smartphone-operated locks that range in price from $150 to $300. These “smart lock” systems work with or replace traditional locks and deadbolts, granting keyless access to homeowners through bluetooth phone recognition technology and allowing those owners to customize and monitor other entrants’ access (like a housekeeper, for example).
Through software platforms like Zonoff’s all of the different automated devices in a household can be used together. For example, a text message notifying parents that their kids got home from school can be sent. Between the doors opening, and the lights or TV being turned on, the system can gauge if someone is home to stay rather than running in because they forgot something. Living room products can be integrated to automatically decipher whether to dim the lights and drop the window shades when a television is turned on during the day.
There may be more mass-market products, but the luxury market continues to power new innovations, dominated by companies like Vivint, Creston, Control4, Savant and AMX Home Automation.
In August the six largest U.S. luxury home technology providers merged to create the first national-level, full-service integrator, VIA International. “The luxury homeowner now is automating everything,” says Eric Thies, a co-founder and director of marketing for VIA international. “So what you’d expect like audio, lighting, climate, video, motorized shading — but also some stuff you wouldn’t expect.”
Like home theater rooms built around actual IMAX screens. Thanks to packages like the $35,000 Prima Cinema, homeowners can even watch new films the same day they hit theaters, with the movies downloading automatically and accessible via fingerprint scan.
Even regular televisions have gotten more high tech treatment, with companies like VIA International motorizing them to drop down from the ceiling or come out from under the bed to be viewed at the foot of the mattress. Another option: camouflaging them behind mirrors and walls, invisible until the touch screen is activated.
Another growing trend is a digital backsplash, typically installed just above kitchen countertops and below cabinets where tiling would traditionally go. These smart walls can pull up security camera feeds, display pictures or the kids’ artwork, or be used to search the Internet for recipes, all with fingertips.
Thanks to Apple’s Siri, the next major trend that will invade homes is interactive voice control. Once companies work out the kinks — and several are clamoring to do so — voice controlled-home automation will become more than a silver screen scene in the Back to the Future franchise. “Voice command and gesture control are definitely on the horizon,” affirms Thies.
Still, for every WiFi-connected automation system in the home, there comes greater exposure to privacy and security risks. As my FORBES colleague Kashmir Hill recently discovered, it can be surprisingly easy to hack into a stranger’s home through their automation systems. “As we bring the things in our homes onto the Internet, we run into the same kind of security concerns we have for any connected device: they could get hacked,” Hill notes. And companies are scrambling to remedy that, incorporating stronger password protection and in some cases, recalling older products. VIA International says cloud-based software is also being developed that will enable providers to monitor the tech inside their clients’ homes to, in part, watch for digital intruders.