Alarm.com and Comcast Close Icontrol Acquisition: What Now?
Icontrol, a pioneer in cloud-based security and home automation, has been acquired by Alarm.com and Comcast, despite antitrust concerns. Here's what could be in store for the players and the SHaaS (smart home as a service) landscape.
It’s the end of Icontrol as we know it. A pioneer in cloud-based security and home automation since 2003, Icontrol was acquired by erstwhile competitor Alarm.com (Nasdaq: ALRM) and long-time partner Comcast/Xfinity (Nasdaq: CMCSA).
Honeywell, which also competes with Icontrol and Alarm.com, had sued to block the merger, claiming a combined company would violate antitrust regulations. Alas, Honeywell failed at its 11th-hour effort. On March 8, court documents show that Honeywell "voluntarily dismissed" its complaint with prejudice, meaning the company cannot pursue antitrust claims in the future. (Is there more to this story?)
Now that the deal is done, Alarm.com picks up Icontrol’s Connect platform … along with the biggest customer for that platform, ADT.
Alarm.com also gets Icontrol’s DIY solution, Piper.
Comcast/Xfinity acquired Icontrol’s Converge platform, which powers smart-home solutions from Comcast itself, as well as several other cable companies and telcos.
Comcast to OEM SHaaS to Other Cable Companies
Comcast plans to use the acquisition to control its own smart-home destiny, and also to wholesale the service to smaller providers.
The acquisition “gives us full control over our research and development roadmap,” says Daniel Herscovici, SVP and GM of Xfinity Home, in a blog posting on March 8, the day the deal closed. “By owning the part of Icontrol that brings the core home security technology platform to life, we can invest more strategically for the future and accelerate the pace of innovation for Xfinity Home, particularly in the area of connected home security.”
Herscovici also hints at Comcast’s future initiatives to offer SHaaS (smart home as a service) to other service providers. The acquisition will:
open up a new wholesale line of business for Xfinity Home. With it, continue to provide the underlying platform that powers home security and automation services to a number of leading MSOs Icontrol was already serving around the world, including in Australia, Canada, and Japan. We will also be able to offer wholesale services to new customers, either domestic or international. We have plans to make a more formal announcement about this new line of business soon.
In other words, Comcast will take its Xfinity Home model and help other cable companies (MSOs) deploy it.
They can do this more effectively than Icontrol could because Comcast will offer a complete business platform to MSOs, not just a technology platform.
Austin, Texas a Winner
Comcast makes a big point about establishing an “IoT Center of Excellence” in Austin, Texas, where Icontrol’s Converge platform was born (with the 2010 acquisition of then-competitor uControl):
This will be a key hub where our engineers and developers will design innovations to support our various IoT businesses. There are many local, talented engineers in Austin, and we are excited to welcome them to Comcast. Those engineers will work closely with our other teams in Philadelphia, Silicon Valley, and other locations across the country, to create great customer experiences that leverage our suite of products and services. We are investing in Austin, and we hope as this news spreads that we can attract even more talent to come and work with our team.
I imagine it to be something like a franchise, where Comcast is the very successful proof of concept, and the “franchisees” benefit from the parent’s vast experience.
And one more thing: Comcast picks up a “majority of iControl's intellectual property,” as we discovered in Honeywell’s antitrust case.
The powerful patent portfolio owned by Alarm.com and Icontrol – and both firms together – has been a big issue in the SHaaS market. Now that Comcast owns a good chunk of the patents, the IP landscape could get interesting.
Alarm.com Gets DIY Platform, ADT Business, Hardware Sales
Alarm.com, which acquired Icontrol’s Connect platform for $140 million, picks up the ADT business, as well as Icontrol’s Piper DIY system.
As we reported earlier, ADT made a five-year commitment to Alarm.com, which will migrate the thriving ADT Pulse solution to the Alarm.com platform.
Besides enjoying the service revenue for that business, Alarm.com could reap huge rewards in hardware.
Currently, Honeywell provides the security and home automation system that drives ADT Pulse. Several vendors provide the peripherals for the system.
Increasingly, Alarm.com is becoming a hardware company, not just a SHaaS provider.
Hardware now comprises more than 50% of Alarm.com’s revenue, and the company has indicated in its financial reporting that products would continue to be a major focus for the company.
Currently Alarm.com offers its own surveillance cameras (and doesn’t integrate with others’), video recorder, thermostat, temperature sensor and image sensor. In addition, it resells a compatible video doorbell from SkyBell.
I am quite certain that Alarm.com will soon launch its own video doorbell, which will prove to be a huge profit center for the company, especially if it becomes standard for ADT Pulse. Other hardware products are sure to follow.
CE Pro revealed recently that Alarm.com also owns (or owned) a stake in Qolsys, a newish manufacturer of security and home-automation systems. Honeywell (rightly) fears that Alarm.com will sway ADT to move to a new hardware vendor – whether Qolsys or another partner such as 2Gig from Nortek.
DIY for Alarm.com
Alarm.com has stated on numerous occasions that DIY is the company’s next big frontier. Piper, which Icontrol acquired in 2014, could be just the impetus.
The Piper numbers are probably pretty small. Through some very, very rough math, we pegged the Piper user base at about 30,000 accounts. (A 2016 lawsuit against Icontrol and ADT by Applied Capital mentions there are 190 Piper users in New Mexico which, extrapolated, amounts to about 30,000 users nationwide.)
In addition to Piper, Alarm.com owns a stealthy company called Zendo, developer of DIY home-automation products with a focus on Apple HomeKit.
Alarm.com also owns Building36, a security and automation company focused on energy management. Building36 is the company behind Alarm.com’s thermostat, water sensor and temperature sensor.
Currently, Building36 is offered through authorized installers, but we have speculated in the past that Alarm.com might use Building36’s Z-Wave gateway as a DIY hub.
Piper would be the better platform for DIY, though. It is a self-contained solution with on-board camera, two-way audio, siren, motion detection, Wi-Fi, Z-Wave, and sensors for temperature, humidity, light and sound.
Now, imagine if ADT adopts Piper as its own DIY platform.
Recently, ADT launched a similar DIY solution with LG Electronics powered by Zonoff, an Alarm.com competitor. The LG product, called Smart Security, uses ADT’s Canopy service for professional security monitoring.
As an aside, Piper works with the location-sharing app Life360. When everyone leaves the house, Piper can arm the system automatically. ADT recently partnered with Life360 as well. In the event of a detected crash, ADT will reach out to the user and dispatch emergency services to the location if necessary.
More clues to the future of Alarm.com and ADT are spelled out in the defendants' response to Honeywell's antitrust case. Unfortunately, all the juicy bits were redacted.
Alarm.com is sitting really pretty right now.
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Julie Jacobson, recipient of the 2014 CEA TechHome Leadership Award, is co-founder of EH Publishing, producer of CE Pro, Electronic House, Commercial Integrator, Security Sales and other leading technology publications. She currently spends most of her time writing for CE Pro in the areas of home automation, security, networked A/V and the business of home systems integration. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, earned an MBA from the University of Texas at Austin, and has never taken a journalism class in her life. She's a washed-up Ultimate Frisbee player currently residing in Carlsbad, Calif. Email Julie at firstname.lastname@example.org
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