Insteon’s Surprise Failure Highlights the Problems with Smart Home Tech

This week, Insteon joined a growing number of failed Smart Home companies that died ignoble deaths. In this latest case there was little or no warning, they just shut down and the apps stopped working.

Smart home products were pioneered by X-10 back in the 1970s and the company is apparently still around. These companies didn’t understand they were effectively telephony or networking companies, which means that interoperability, ease of installation and replacement (to enable product churn and successive sales), and ease of use were critical to the home

The products didn’t interoperate well, were often extremely difficult and somewhat dangerous to install, and were even more painful to replace, all of which damaged both initial and subsequent sales. User interfaces were all over the map. If you’ve been in a smart home that isn’t working right, it quickly becomes a nightmare. My next-door neighbor had his home automation ripped out after a week of use because his light kept coming on and waking him up at night (he wasn’t great with technology but shouldn’t have needed to be).

Let’s talk about why home automation isn’t working now and what needs to happen for it to have a chance.

Home Automation Requirements

There are three requirements for any networked product to be able to get to critical mass.

First, the product must interoperate so that you can have one control structure for all of them. In my own smart home, I have one app for some locks, another app for one or two others, two apps for my security cameras – and my lighting system, thanks to the Insteon failure, is on two apps.

I installed much of this so I can get it to work, but my wife isn’t a fan. Frankly, the whole thing is a management mess. Home users don’t want to be one-person IT departments in order to manage various apps, interfaces, and deal with wireless networking conflicts and interference. The point of a smart home is that it is supposed to be easier, not require an advanced degree in systems management to make it work.

The second point is that they must be relatively easy to install and to upgrade. One thing the tech industry seems to forget regularly is that it lives on churn. If you create barriers to installing upgraded products, you’ll kill potential future revenue and sales. I’m only aware of one company, Noon Smart Lighting (a subsidiary of Racepoint Energy), that addressed this problem with a Smart Switch socket that, once installed, could allow you to swap out the related switch without an electrician or the risk of getting shocked. For an Insteon switch, you first must delete it from the app and all other switches. This can take five minutes or more if it works (often it doesn’t), and then you have to pull the existing switch out, unwire it, then wire the new switch in. If you do this with the power on, be ready for several shocking moments when you accidently touch a live lead. So, you’re basically getting shock aversion therapy during the replacement, which tends to mean you won’t ever attempt another replacement.

Finally, the resulting installation must be easy to use from one interface, including voice. Amazon, Google, and even Apple have been working on that part with varied levels of success, but they don’t own the overall user experience because none of those companies make a complete solution themselves. As a result, software issues between the platforms become problematic and will fail, usually when you try to show off the system, making it hard to develop critical advocacy for the segment or any group of related products.

Companies like ADT have attempted to roll out more complete offerings connected to their security-based user interfaces, but they often don’t work well with third-party products and their own peripherals aren’t competitive with third-party offerings, making the result less than stellar.

Also read: Ossia’s Wireless Power: The Most Revolutionary Technology You’ve Never Heard Of

Why Smart Home Tech is Failing

The reason smart home products are successively failing is because companies treat requirements as if they are optional. The result is product sets that don’t get to critical mass. These products need Amazon, Apple, Google, or someone else large enough to drive through a set of requirements that would make this class of offering more viable. No company has done this to date, which suggests we’ll see more companies abandoning this market or going under.

In short, if the smart home industry doesn’t get it together soon, it will fail one company at a time.

Read next: Does Meta Have a Death Wish?

Rob Enderle
Rob Enderle
As President and Principal Analyst of the Enderle Group, Rob provides regional and global companies with guidance in how to create credible dialogue with the market, target customer needs, create new business opportunities, anticipate technology changes, select vendors and products, and practice zero dollar marketing. For over 20 years Rob has worked for and with companies like Microsoft, HP, IBM, Dell, Toshiba, Gateway, Sony, USAA, Texas Instruments, AMD, Intel, Credit Suisse First Boston, ROLM, and Siemens.

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