Control4 Looking to Be in Five of Every 1,000 U.S. Homes, Maintain Premium Focus

DENVER -- Nest and Control4’s announcement last week codified what the latter’s dealers had already been doing on their own, Control4 CEO Martin Plaehn told us at CEDIA last week. “Our dealers know how to write drivers” to make products work with the Control4 system, and many had already been writing drivers to make popular Nest thermostats work in customers’ homes, he said. Nest didn’t sanction the integration because the company was still making changes to the product and was concerned the foundation wasn’t yet entirely solid, Plaehn said. Control4 reached out “informally” to Nest a year ago and suggested the two companies work together “because the world’s better when things work together,” he said.

The Nest thermostat is one of some 6,400 third-party devices controllable by the Control4 platform. As we sat with Plaehn atop the Control4 booth in the Colorado Convention Center last week, we looked to the neighboring Z-Wave booth, where that alliance touted 900 compatible devices.

Regarding the next Nest on the horizon, Plaehn said, “I don’t know of a company I wouldn’t work with,” though only “legitimate businesses” with a product that meets a demonstrated need should apply. Control4 works with products ranging from $99 to $100,000 or more, he said. While some custom dealers have expressed concern over the industry embracing a mainstream product like the Nest, Control4 won’t validate their feelings. “It’s not our business to determine the business model of the partners we work with,” Plaehn said. Control4 isn’t selling third-party products but “interoperating with them on behalf of end customers,” he said. The 6,400 drivers weren’t written by Control4 but by the ecosystem, he said. Control4’s certification program is about ensuring that the drivers work and give dealers and customers the confidence that “a second set of eyes has looked at a driver."

Going public hasn’t changed Control4, it has just made the company “more transparent,” Plaehn said. Control4 is a “small company, yet big in this industry,” he said. The company has a lot of competition entering its turf, including much larger service providers such as Verizon, AT&T, Comcast, Time Warner Cable and ADT, but Plaehn said he’s not worried. “We're good at what we do and intend to stay ahead of the curve,” he said. Control4 is “very different” from a service provider “that’s been great at delivering different types of pipe to a home and is trying to figure out how to continue to add value to that,” he said.

But Plaehn is happy to ride the coattails of the home automation marketing done by the big companies. “We enjoy the fact that those service providers do a lot of envisioneering ads,” he said. Home automation isn’t an impulse buy, and customers whose interest is piqued by advertising “do the research,” he said. “And they run up against Control4, who becomes a trusted adviser,” he said. Where a service provider is the sole provider of its service for a given market, Control4 likely has multiple dealers in a given market, he said. Phoenix alone has two to three dozen dealers, he said.

Control4 systems are in one in every thousand U.S. homes today, and Plaehn’s goal is for that stat to jump to five in every thousand. Its customers are well-educated homeowners with a family. Some 13 percent of customers have incomes under $100,000, 45 percent have incomes from $100,000-250,000 and the remaining 42 percent come in above $250,000, he said. The goal is to grow across the board, he said. “We're the largest independent home automation company you can examine,” he said. If Control4 gets to five homes out of every thousand to reach 0.5 percent household penetration, “we'll be an enormous company,” Plaehn said. If that happens, it won’t be by stooping to a lower level, he said. “I'm not in any kind of race to the bottom,” he said. “We're about building a premium company with premium products that families have a relationship with every day.”