Connected Home Won’t Be Only a 1- Or 2-Company Market, Says Control4

Recent moves by Apple and Google toward developing connected home portfolios “don’t frighten” Control4, CEO Martin Plaehn said on its Q2 earnings call Thursday. A year after the Control4 IPO, Plaehn referred to the company’s “evangelizing” role in the growing awareness of the connected home and how it has been educating investors about the “home automation opportunity” before the arrival of new market entrants.

Citing Apple’s Home Kit, Google’s purchase of Nest, Nest’s buy of Dropcam, the Works with Nest program and Nest’s wireless meshed networking technology initiative based on Thread, Plaehn said Control4 is “following these activities along with others.” All of these announcements have put the Internet of Things, smart devices, the connected home and home automation “top of mind for many technology investors,” Plaehn said. Rather than giving Control4 “deep pause,” the various initiatives “encourage” Control4 and “emphasize the scale and scope of the opportunities ahead,” he said.

Plaehn said products from Apple and Nest “are not directly competitive with our products or solutions, and they are not at the exclusion of Control4.” He said Control4 announced last year that it was the first authorized home automation provider to begin integrating with Nest products, and that testing is continuing and integration is “forthcoming” with a future release of Control4’s operating system.

Control4 is also a “significant application developer on Google’s Android platform, as well as on Apple iOS,” Plaehn said, saying his company has access to Apple’s Home Kit, which as it develops, “could provide us rapid interoperability” among future consumer-oriented connected devices, the iOS platform and the “built-in home products and systems homeowners have in their homes today."

So far, Control4 dealers are “reporting and envisioning minimal near- and mid-term impact” from the announcements surrounding Apple, Nest and Google, but Plaehn acknowledged “it’s early” and difficult to say now how the market will change and play out long term. Plaehn said the company doesn’t view the connected home “as a one or two winners-take-it-all market.” Instead, he said, “The opportunities are too large, too diverse, too early and with too many moving parts for just one approach to dominate.” The opportunities can continue to support Control4’s growth in those segments where the company focuses, Plaehn said.

One of those segments is the builder market. Control4 has products and marketing materials in model homes or design studios within seven Toll Brothers developments, Plaehn said. Control4 has 28 authorized dealers for Toll Brothers and plans to support new dealers with marketing and sales of Control4 packages for Toll Brothers customers in “targeted markets,” he said. At the same time, the company is working with standard dealers and local builders to enable “hundreds of new housing projects and multi-dwelling communities” with Control4 systems, he said.

While touting the relationship with Toll Brothers, Plaehn was also cautious, calling it a “step-by-step” process. “We are being conservative with regard to sell-through,” Plaehn said, saying developing such a program “takes time.” Still, the company highlights the builder initiative because “it is an example of how home automation is becoming mainstream to new 21st century homes,” he said.

Among Control4’s initiatives with CE manufacturers, the company is continuing to integrate and test Sony Bravia TVs for certification with the Control4 Simple Device Discovery Protocol (SDDP) and expects the Sony line to be enabled by the factory with SDDP by year end, Plaehn said. Other brands supporting SDDP include Bose, Denon, DISH Network, Integra, Onkyo, Pioneer, Panasonic, TiVo and Yamaha. Most recently, Control4 inked SDDP license agreements with Bang & Olufsen, Channel Vision, Fusion Research and Meridian, Plaehn said. The goal with SDDP is to improve device efficiency and minimize the complexity of connected device integration so “eventually most devices can be connected to a smart home as simply as consumers add a new smartphone or tablet to their home Wi-Fi network today,” Plaehn said. SDDP licensees are shipping in more than 500 product models with embedded SDDP, up from 300 models in April, he said.

Responding to a question on how Control4 positions itself within the current home control landscape, Plaehn broke out competition into two camps: service providers offering telecom, broadband or security under a subscription model that have tacked on home control service, and traditional home automation companies such as AMX, Crestron and Savant.

In its positioning against service providers, Control4’s sole purpose is to deliver the “best in breed, most flexible, long-term durable home automation experience” through dealers as compared with service providers looking at home control offerings as ancillary services that offer additional monthly revenue opportunities along with a way to ensure “stickiness” with customers, Plaehn said. Service providers are offering “utilitarian” product lines that aren’t designed for personalization or broad interoperability with products consumers have in their homes, he said.

Against traditional home control companies, Control4 positions itself as a premium, but “value-based,” open solution for intelligent lighting, multiroom AV, safety, security and interoperability, Plaehn said. “We think we have a much stronger offering at a much better price point,” he said.