Comcast and Alarm.com are buying up smart-home platform provider Icontrol to beef up their ability to develop connected home technologies in-house.
The smart home concept has been slowly gaining steam in the past few years; it's no longer just a Jetsons fantasy. Even still, most people are investing in a few smart devices related to security, and to a lesser extent, smart thermostats. The acquisition highlights that big players want to take a stake in this space, but that having a platform with the perfect set of capabilities to entice customers has been somewhat elusive thus far.
“The consolidation of interactive service providers in the security industry is huge news,” said Tom Kerber, director of research with Parks Associates. “Alarm.com has considerably strengthened its position in the security channel, and given that the security industry is the leading channel for smart home services, it is now a clear leader in...a market that includes many new entrants competing for a slice of a rapidly growing pie.”
Source: GTM Research, Energy in the Connected Home 2015
Comcast will purchase Icontrol’s Austin-based Converge part of the business, which powers Comcast’s Xfinity Home platform. It is also the underlying platform for other leading cable providers, such as Time Warner Cable and Cox.
Alarm.com is purchasing Silicon Valley-based Connect, which provides a platform for the security industry and the underlying technology for competitors such as ADT Pulse. It is also buying Icontrol subsidiary Piper, which offers a consumer-facing security system.
For Comcast, the purchase of Converge offers a new wholesale revenue stream, as well as the opportunity to bring technology development in-house. Comcast was an investor in Icontrol.
“It brings the core technology platform of our Xfinity Home product in-house, which will allow us to invest more strategically and accelerate the pace of innovation, particularly in the area of connected home security,” Xfinity told GTM.
Alarm.com also pointed to the ability to scale research and development by purchasing Icontrol. But what it means for current Icontrol customers is unclear, especially since some are major competitors, such as ADT Pulse. For the short term, at least, Alarm.com has said it is interested in keeping those relationships that Icontrol has built.
"We look forward to welcoming the Icontrol team and to building upon the solid relationships within their customer base,” Steve Trundle, president and CEO of Alarm.com, said in a statement.
But for both Comcast and Alarm.com, the real competitors are not just Verizon or ADT, but also Google, Amazon and Apple. Google’s acquisition of Nest has also been slow to evolve, with a lack of new product releases since the acquisition, although there is a laundry list of devices integrated through the Works With Nest program.
Apple seemed to finally make a play with its HomeKit, but that too has failed to gain notable acceptance and compel consumers to fill their home with connected devices. Amazon’s Alexa offers an interesting smart home hub, and many home devices, including smart thermostats, have started to announce integration with Alexa.
Achieving tight integration with such an approach has proved difficult, and in some cases, such as Alarm.com building its own smart thermostat, companies have decided it’s easier to develop the perfect product for integration in-house.
It will likely continue to be a mixed bag and messy market for years, as consumers decide how much automation and convenience is worth the hassle in their homes. Since security is the biggest driver, the service providers that want to compete for the smart home continue to put their focus there. But connectivity is king, and some version of the connected home beyond security will eventually be a reality. For utilities, it will be important to keep an eye on the developments to forge partnerships as platforms and allegiances shift.
Alarm.com is paying $140 million for its portion of the deal, and Comcast would not disclose what it paid. Icontrol had raised nearly $100 million from ADT Security Services, Cisco, Comcast Ventures, GE Security, Charles River Ventures, Intel Capital, iFund, and Kleiner Perkins Caufield & Byers, Rogers Communications and Tyco International. The acquisition is expected to close at the end of the year.