Control4 Looks to Dealer-Created Apps, Partnerships for Growth

ATLANTA -- While audio and video companies talked at CEDIA last week about adjusting to a changing market and next-gen consumers, home automation company Control4 had its sights firmly on the future. Lower revenue, slim margins and the continued malaise in home construction continue to weigh down dealers and manufacturers, but Control4 has remained in “a bubble” separated from the struggles of the overall custom electronics market, CEO Will West told Consumer Electronics Daily. “We've been growing and adding market share,” he said.

At the same time, technological advances are creating challenges that the industry hasn’t dealt with before, West said. With more CE devices being networked and upgradeable via the Internet, the industry is experiencing more interoperability snafus when product upgrades affect the chain of command, West said. “Version control is a really big deal,” he said, noting that in the IP world, TVs, thermostats and HVAC equipment -- devices that never used to go through software upgrades -- will increasingly require upgrades to remain current. If a TV is part of an automation system and a consumer needs to download an upgrade for the set to get the latest features, “you need to know if that’s compatible with everything else in the house,” he said. Otherwise, he said, users could “orphan” their TVs and no longer be able to turn on the TV, cable box and other products using a one-button macro command. That would be a bad situation for home-automation companies whose reason for being is simplified operation, he said.

"The major manufacturers are working with us to solve this problem,” West said. He said that “a lot more manufacturers with big names” will be making announcements at CES about embedding software in home control products. The partnerships will allow “effective home automation management, or future proofing, or at least a consumer-friendly future,” so an upgrade to one piece of equipment doesn’t disable another product or process. “Big companies who you would normally think are fierce competitors are putting real skin in the game behind a common platform for automation,” West said. Most of Control4’s revenue comes from its core platform, he said, so if Control4 starts appearing in broad-market products, “that creates a fantastic opportunity for our dealers to help consumers connect their lives.”

Control4’s strategy centers on its home automation platform, rather than specific products, West told us. The position is to deliver automation “for a broad market” and to allow customers to choose the products they want to use, Control4’s or others’. “If you want to use our thermostat, fine,” West said. “If you want to use someone else’s with an open protocol we can talk to, that’s fine, too.” The software is “the magic” for the company, he said, and a growing number of manufacturers are adopting the Control4 platform and writing applications that ride on top of it.

When Control4 launched an app store last summer, it opened a new world of control possibilities for its dealers, West said, citing an application that one dealer developed for households with autistic children that uses visual cues on a touchscreen or TV, rather than text-based or auditory communication, to convey a message. “Whether it’s for getting out of bed, getting dressed, brushing teeth, or going to dinner, having visual commands like the dinner table show up on screens around the house totally changes the living environment for a family with an autistic child,” he said. Providing the platform and store takes the programming out of Control4’s hands and puts it with the thousands of company dealers that are also programmers, he said. Home automation apps that cost $9.99-$29.99 offer value to everyone, he said, compared with the cost of a program customized to a proprietary platform. “Go around to other places and try to buy those functions,” he said. “You're talking at least thousands and maybe tens of thousands of dollars in programming."

At CEDIA, Control4 introduced new in-wall touch-screen controllers with integrated intercom capability. While priced low “relative to automation” at $599 and $899 each, West said, touch screens have to drop much further, to $299-$399, before mainstream consumers can afford to put a user interface in every room and make home automation a realistic home electronics option. The Control4 system can be operated on an iPad or iPhone, West said, although dedicated touch screens offer more flexibility with hard buttons that allow users to turn on lights when entering a room versus punching through menus. Still, he’s sanguine about the expanding control options not only from Apple but also from devices including Samsung’s Galaxy and Sony’s Dash. “It’s all good if it provides the consumer a better integrated experience,” he said.

Control4 sees energy management as a huge opportunity and is already selling some utilities a $200 combination touchscreen-controller-thermostat for customers. The company plans to provide the product to its dealers in a couple of years when the smart grid is more entrenched. The smart grid is meaningless to consumers, West said, until smart meters and real-time pricing hit home. Unless utilities are detailing usage and pricing information and allowing consumers to react to it, West said, “I can’t change your rate from 7 cents per kilowatt hour to $1.70.” He described a backlash that could occur if a homeowner is at work, the electricity rates go up during peak-usage times of day, and “they've spent a fortune on energy when they're not even home.” When the infrastructure starts gelling, he said, energy monitoring and management devices have to be in place to read and react to data coming over the smart grid from the utility company in a way that the homeowner has prescribed. “Whether that’s the backlight on the TV going to 70 percent or the Xbox shutting off because you don’t want your kid playing Xbox when it costs $2 an hour,” he said, will be up to individual homeowners. West sees a timetable of three to five years for such a scenario, with a rollout of services by region. Texas will be one of the first markets, he said, because of high electrical demand and insufficient resources. The Midwest, “with a ton of energy from current plants” will ride a later wave, he said.

The cost for consumers to interact with utilities could be more than they're willing to spend, depending on whether utilities give away controllers to consumers and roll the cost into rates plans covering a number of years. West maintained that it will cost consumers a lot less than not interacting with utility data. “If you can better manage your home, the chances are you'll save money and probably be more comfortable,” he said. “If you don’t take advantage of it, then you'll spend more money.” In the short run, he said, Control4 will be outfitting “tens of thousands of homes” with the low-end touchscreen control thermostats, and in the medium term, “millions.” Control4’s hope is that the touchscreen controller that the company sells to utility companies will whet the appetite of consumers for the ability “to control stuff.” The company will offer the boxes to dealers, too, possibly as soon as next year, he said. Dealers then would have an open door to offer additional products and services. The utility boxes, he said, would be “cool little devices with limited functionality,” he said. “Then you buy a TV with Control4 inside, and the TV becomes the controller and controls the audio and everything else.”