The recent Insteon shutdown has been disastrous for thousands of its smart home customers, but it isn’t likely to slow the popularity of IoT devices such as thermostats, security cameras and lighting.
IDC reported Monday that the global market for smart home devices grew nearly 12% in 2021 over the prior year, reaching 895 million devices shipped. More important, IDC projected 10% annual growth each year through 2026. Smart home lighting will see the biggest percentage increase in demand, growing by more than 23% a year.
IDC did take into account the Insteon shutdown in its forecast, noting that smart home device demand is still there and will be distributed over many other vendors in the market. “The notion of the ‘smart home’ is well and truly mainstream in many parts of the world now,” said IDC analyst Adam Wright in a statement.
IDC and other analysts and reporters have noted that a standardized approach called Matter is emerging that will help futureproof smart home systems. “Devices that are Matter compatible are able to be fold into other ecosystems in the event that one shuts down,” Wright noted in an email to Fierce Electronics.
Of course, Matter isn’t yet available and might not be until the end of 2022. “While the upcoming Matter standard will help negate some of these concerns [over lack of interoperability], OEMs will still need to offer a robust services component in addition to hardware in order to stay relevant,” said Jitesh Ubrani, also an analyst at IDC.
Insteon customers, trade press and analysts have all been unanimously appalled at Insteon’s shutdown, which occurred without any notice but affected customers as early as April 14. Ars Technical called the shutdown of the Insteon app and servers “shameful.”
Reporter Stacey Higgenbotham in “Stacey on IoT” was among the first to track the shutdown and in follow-up story on April 22 cast doubt on the entire smart home trend in a negative punch at the entire industry. “If a smart home is what you’re after, there are still no guarantees that anything you buy will stand the test of time,” Higgenbotham wrote. “Maybe Matter will change that. Then again, maybe it won’t.”
Higgenbotham found an email Insteon sent to customers April 21, a week after servers shut down, explaining it plans to sell remaining assets to help pay off creditors as part of a dissolution process. She also noted the death of early smart home hubs and gear built by Lowe’s and Staples. Also, on April 2, iHome, a trademark of SDI Technologies, shut down its iHome app and iHome cloud service.
The more shameful part of the Insteon shutdown is how the company kept quiet its dissolution plans started before March 22 when it parent SmartLabs transferred assets to SmartLabs (ABC) LLC. The case regarding the assignment for the benefit of creditors reportedly sparked confusion in the legal community.
The former Smartlabs CEO Rob Lilleness did admit via a LinkedIn message April 19 to Fierce Electronics and others, “Unfortunately, I am no longer involved with the company.” A Harvard educated executive, Lilleness made the comment after truncating his name on LinkedIn to R. Li and had removed SmartLabs from his bio.
One tech ethicist is concerned that companies like Insteon prey on unknowing customers while in the plodding process of developing the reliability of their products. “Consumers are like guinea pigs with an addiction,” said Johannes Himmelreigh, a professor at Syracuse University.
Insteon’s apparent shutdown shows ‘consumers are like guinea pigs’
IDC’s Wright said Insteon’s shutdown was a “surprise given its abruptness.” When Lowe’s shut down its Iris smart home platform, customers scrambled to find workarounds to keep their devices, similar to how Insteon customers have reacted.
“At least Lowe’s had the courtesy to warn customers ahead of time and they provided Visa gift cards to some customers to help ease the financial burden of migrating to new devices,” Wright told Fierce Electronics via email. “But in Insteon’s case, I think it shows very poor taste for them to just go dark without warning.”
Some analysts warned consumers to beware when working with smaller companies on any sort of technology while also acknowledging that some tech gurus don’t seem to mind trying to make unproven systems work, tinkering with alternatives and workarounds. In the industrial IoT segment, IT managers work to build redundancies so that they aren’t caught short if single a vendor’s approach falls through, analysts noted.
Wright put the responsibility more on the backs of smart home companies than on consumers:
“Smart home companies have the responsibility to be open, honest, and transparent with their customers. After all, smart home solutions have become more than just a fad or trivial application.
“Once a consumer embarks on a smart home journey, their home is dependent on the companies that provide the connected devices to continue functioning. This is the tradeoff with choosing new or emerging companies over more established ones.
“But no company lasts forever, so I think it’s incumbent upon smart home vendors to standardize around common technologies to help future-proof solutions as many are doing with the Matter protocol and alliance. And at the very least they need to make their customers square in the event of a complete shutdown. “