Connected Home Platform Provider Targeting ‘Affordable’ Subscription Model

Prodea Systems, a connected home platform provider, launched in the U.S. Tuesday with the goal of enabling a range of consumer-facing companies -- including content providers, home builders, developers and retailers -- to offer Internet of Things (IoT) services to mass-market consumers for nominal recurring fees. The company calls its Residential Operating System (ROS) “the first managed service delivery platform to enable ubiquitous and simple access and interactions between people, data, services, and devices.”

Richardson, Texas-based Prodea launched in the Middle East, Asia and Africa with seven providers that are in varying stages of development, Andrew Tauhert, executive vice president-marketing and business development, told Consumer Electronics Daily. The B2B2C (business-to- business-to-consumer) company announced its first customers for the U.S. market: Fort Capital, a Miami-based real estate investment management company that will install Prodea’s ROS in luxury condos there, and Canal SUR, an OTT service provider that delivers Latin American content to customers in North and South America.

Prodea, with technology roots in the telco world, has $100 million in financial backing. Its 16 granted and eight pending patents cover areas including billing in a large-scale service delivery platform; ordering products via a multimedia service system; managing and distributing media, receiving media from more than one source and displaying them on a TV; and methods of providing secure activation, initialization authentication and authorization of devices within a user premise. Chief Technology Officer and co-founder Amir Ansari called the patents “fairly valuable” because “there aren’t too many ways that you can deliver these services, maintain the management and maintain the quality,” he told us.

In what Prodea calls a horizontal approach to the connected home -- versus the vertical approach taken by many companies focused on security or home automation -- the company takes its cloud service to customers and “plugs into their infrastructure,” Tauhert said. Target customers could be telcos, cable companies, satellite providers or wireless companies -- or one of the “alternative emerging service providers” including home builders, developers, retailers, or OTT content companies, he said.

Under the Prodea model, the platform is white-labeled under the customer’s brand, while Prodea has architected the end-to-end platform, Tauhert said. The offering is a combination of the ROS cloud service, technology in the home and “the orchestration of both,” he said. Customer support is handled by the service provider’s support staff first because consumers “don’t know Prodea,” but Prodea provides the tools to its business customers to remotely support their customers, he said. Costs of that deployment are picked up by Prodea.

Prodea hopes to deliver a unified platform that lets service providers “rapidly and cost-effectively” deliver services to their customers regardless of operating system or communication standard, the company said. Consumers should be able to access services from the home or outside the home using smart devices “in a managed, controlled manner” without complex operation “and little do-it-yourself experience necessary,” while operators can sell those services into homes “without having to be an expert in any one domain or having to invest in a significant amount of back-end infrastructure,” Ansari, said. Prodea manages billing as well, he said.

With the ROS platform in place, service providers can “add any new vertical” as the connected home market evolves, Ansari said. A VoIP provider that knows nothing about home automation, for instance, can adopt the ROS platform and then offer consumers through the Prodea platform services such as home automation, home control, video on demand, social interaction, and healthcare management, he said. An OTT provider offering content could extend into healthcare, home automation, e-learning security and control, for instance, he said. “We will plug into what you have in terms of content and communications, and on the back end, plug into billing systems and call centers, he said. “We plug into your infrastructure and then extend it to a new breed of services that you're not doing today,” Tauhert said.

Prodea’s software-based home manager solution is designed to be overlaid onto a service provider’s platform and delivered through a set-top box or router, Tauhert said. For customers without their own hardware gateway in consumers’ homes, Prodea offers a gateway box that “talks to all the connected home devices” and provides the TV interface that enables consumers to manage services on TV, tablets and other display devices. Prodea software talks to any off-the-shelf connected devices in the home whether their network interface is IP, Wi-Fi, Ethernet, ZigBee, Z-Wave, USB or a proprietary protocol, he said. “There has to be some way to talk to the device but there’s nothing that’s Prodea-specific required,” he said.

Prodea positions itself separately from the traditional home automation world occupied by Custom Electronic Design & Installation Association (CEDIA)-level integrators and programmers. Unlike Savant or Control4, Prodea built its “end-to-end” platform “from a cost and performance standpoint as well as mass market,” Tauhert said. The platform is not distributed through CEDIA installers or high-end home AV dealers internationally and there are no plans to target that distribution segment in the U.S. “It’s all DIY” (do it yourself), Tauhert said.

The Prodea business model is based on recurring revenue from subscriptions along with transactional revenue from purchases made via the platform. It’s not a hardware company, Tauhert said, and if providers without a gateway need to buy the Prodea gateway to enable service, the company will deliver it “basically at cost.” Similarly, those providers just integrating Prodea’s cloud service do so at “little or no cost,” he said. The company’s revenue model is to share proceeds from services sold inside the connected home, which could be “an incremental subscription fee” or from transactions -- such as a pizza delivery -- enabled through the platform, he said. “We don’t charge for the customization or integration with a provider’s network,” he said. “We want to get into homes."

Consumers’ service fees are “not totally in our control,” Tauhert said, since the consumer is “paying our customer, not us.” But the goal is to generate many recurring subscriptions and other revenue opportunities to broaden the market, rather than “high upfront fees,” he said. “We didn’t build a $10,000 or a $1,000 box,” he said, saying the technology was designed to come to the consumer for “say, $10 a month” for a starter package. Prodea wants to deliver a range of connected home services “that you can do with very high-end equipment with a custom AV installer but to make it more widely available through a services play,” he said.

Consumers can create their own use cases and adjust scenes in the Prodea environment through third-party apps, Tauhert said. At the basic level, when a new connected device is plugged into the network, users are prompted to integrate the device on the network, he said. The platform offers core sets of use cases that consumers can opt to implement. The company has an open application-programming interface allowing third parties to create apps, but the platform “is not built around the premise that you need to have a programmer come in” to program scenes in a home, he said, calling the platform “all DIY and wireless plug and play.” When a user plugs in a connected camera, the network sees the camera, asks the consumer if he wants to integrate it and then “starts configuring,” Tauhert said.

Appealing to the mass market would give Prodea the kind of numbers necessary to drive a substantial recurrent revenue base, but its first real estate venture for ROS with Fort Capital -- The Surf Club Four Seasons Private Residence in Surfside, Fla. -- is decidedly not a mass-market project. One website called the 150-home development “the latest Miami example of branding architects to sell expensive condos,” referring to architect Richard Meier. In a prepared statement, Nadim Ashi, CEO of Fort Capital, said the ROS managed-service delivery platform fits with the company’s goal to offer “a lifestyle of unmatched luxury, convenience and ease.” The Four Seasons didn’t immediately respond to questions for additional information.