Installation: a core smart home advantage

on June 25, 2015
Reading Time: 3 minutes

The smart home concept is one that’s been around for quite a while but has never really taken off. There are a variety of reasons for that, some of which I wrote about in an earlier piece about why we hardly made use of any smart home features when we built a new house a year ago. However, one thing that’s becoming increasingly apparent to me is professional installation and on-site support (when needed) is going to be a vital component for mainstreaming this technology and, therefore, the companies that have that capability will have an edge. In this piece, I’m going to give three examples of companies doing this and talk about the implications for others.

AT&T Digital Life – and DirecTV

One company doing this for the past year or so is AT&T, with its Digital Life solutions. The numbers are still modest around this service, partly because it’s such a departure from the services the wireless part of AT&T (which is the business unit that manages the service) has offered in the past. That means training sales reps, educating consumers, and building a set of capabilities AT&T’s mobility arm has never had. As such, it’s been making use of third party installers until now, which creates both costs for AT&T and complexity and a lack of control in how the installation happens on a detailed level. This is where DirecTV makes things really interesting, because DirecTV obviously has a network of installers for its satellite services and these can be used by AT&T to install Digital Life services too. There’s also some economy of scale and scope AT&T can take advantage of here, which it doesn’t enjoy as long as it’s only installing a few hundred thousand home security systems a year. AT&T’s own U-verse service offers another opportunity for bundling products and the associated installations which could provide some of the same benefits.

Google Fiber and Nest

When Nest announced its new products last week, one of the more interesting elements in this context was the fact Google would be running a promotion offering a $50 discount off devices along with free installation for Google Fiber customers. Along with AT&T Digital Life, the Nest is the only home automation product we have in our home and, although the product itself is very easy to use, installation can be tricky, especially if you’re replacing an older thermostat. If you don’t know what you’re doing, you can easily electrocute yourself or damage wiring or, less seriously, simply end up with a thermostat that doesn’t work properly. Google also has an army of technicians out in the field installing Google Fiber, so it can benefit much as AT&T will from an existing base of installers who can help put products in consumers’ homes and get them working. Given that many of Google’s Fiber installers seem to be ex-cable company employees (based on my experience with them) it’ll be something of a transition for them to start installing thermostats, smoke detectors, and security cameras — but it’s not a huge stretch.

Vivint and home automation

Vivint is perhaps a less well-known brand nationally than it is in Utah, where I live. But Vivint has built up a very successful business through door-to-door sales of alarm systems and an increasing range of other products over the last few years and it’s also spun off a very successful solar panel installation business. Vivint’s home automation solutions also leverage the company’s technicians, who install and offer support for their security products as a base service but can now also install and support a wider range of home automation solutions. Vivint is also moving into other home services over time and the installers are a critical part of the capabilities that allow it to do so.

An expensive proposition

Sending installers and technicians to people’s homes is an expensive proposition – in the cable and telecoms world, minimizing so-called “truck rolls” is always a key goal and there’s been a big move away from technician installations and towards self-installation for some services. However, that’s much easier to do when it’s a question of swapping out set-top-boxes or modems or plugging a new device into an existing socket than it is when you’re replacing thermostats or light switches. If home automation is going to go mainstream, installation capability will be increasingly critical, albeit expensive. That’s where having an existing workforce of installers who manage other products makes a huge difference and that’s what each of these three companies (and others) are doing. The question then becomes how companies such as Google (outside the very small Fiber footprint), Apple, and others will manage this challenge. Almost all the standalone home automation products on the market today operate on a self-installation model, which necessarily limits their appeal to serious hobbyists and those comfortable with wiring, except for the simplest products. For this market to move to the next level, we need to see a deeper investment in professional installation, and that’s going to be a hard shift for many of the companies currently in the market.