Control & Automation

Icontrol, Respond to Antitrust Suit: Honeywell Defines Smart-Home Market All Wrong

In its lawsuit to stop Icontrol from being sold to and Comcast/Xfinity, Honeywell defines the relevant security and home-automation market way too narrowly, defendants claim.

Icontrol, Respond to Antitrust Suit: Honeywell Defines Smart-Home Market All Wrong
In their answer to an antitrust lawsuit, Icontrol and note that Honeywell dwarfs their comparatively small SHaaS (smart home as a service) businesses.

Julie Jacobson · March 2, 2017

Icontrol, a leader in security and home-automation services, was supposed to be sold by now. Erstwhile competitor (Nasdaq: ALRM) was to buy part of the company and Comcast/Xfinity would buy the rest of it.

Last month, however, Honeywell – yet another competitor in the SHaaS (smart home as a service) business – sued Icontrol and to halt the deal, claiming the merger would violate antitrust laws.

Honeywell seeks, at the very least, a preliminary injunction to postpone the deal.

Icontrol and just responded to the Honeywell suit in the New Jersey District Court, claiming that a merger would not give the two companies a 70% market share, as Honeywell suggests, because the SHaaS market is far bigger than Honeywell defines it.

The Players, The Products

Icontrol and provide cloud-based solutions that integrate professionally monitored security systems with home-automation systems for remote access and control.

One version of Icontrol’s SHaaS platform (Connect) powers systems from ADT and a handful of smaller providers. That is the business that would be sold to

The other version (Converge) powers systems from cable companies and telcos, with Comcast/Xfinity being the biggest customer. That is the business that would be acquired by Comcast.

READ: Honeywell Sues to Block Icontrol, Merger on Antitrust Grounds

Both platforms do pretty much the same things. And those two things are pretty much what does – cloud integration and remote management of security and home automation. Honeywell, too, offers pretty much the same thing with its Honeywell Total Connect platform.

While Icontrol sells through enterprise customers like ADT and Comcast, both and Honeywell sell through thousands of independent security dealers.

None of the providers offers its products and services directly to consumers, with the exception of Icontrol’s newish Piper business (which also would be acquired by They all sell services almost exclusively as part of professionally installed and professionally monitored security systems.

The Alleged Smart Home Market

In the scheme of things, that market – professionally installed and monitored security systems – is about 20% of U.S. households. The extra “interactive” element provided by, Icontrol, Honeywell and others, is a fraction of that market – maybe as small as 25%* of the 20% of households with monitored security systems, claim the defendants.

So when Honeywell claims that a combined and Icontrol would command 70% of “the market,” they are referring to a market that is about 5% of U.S. households. A merged company, then would own about 3.5% of U.S. households, according to Honeywell’s math.

In essence, Icontrol argues: 1) That’s a very small and narrowly-defined market to begin with and 2) Even that small market size is overstated.

Honeywell forgets, for example, that Comcast would be getting a decent chunk of the Icontrol business, according to the defendants.

Comcast, then, would emerge as a major competitor to, especially as Comcast seeks to recruit other cable companies, utilities and big players into the market using the Icontrol Converge platform.

The defendants reference a Comcast press release that states the acquisition will help Comcast “deliver new features, products and services to both individual Xfinity Home customers and enterprise-level Converge customers, faster than ever before.”

The defendants go on: “Because the proposed merger actually promotes competition rather than harming it, the public interest plainly lies in allowing the merger to close.”

The overarching argument against Honeywell's antitrust claims is this: The “market” is so much bigger than 3.5% or even 20% of U.S. households.

It is true that (with Icontrol) would continue to dominate that portion of the market in which it currently plays. But the defendants point out that there is so much more, including (again!) offerings from cable companies and other “utilities.”

Most notably, the DIY market for remote home-control services is surging, thus threatening the likes of Icontrol, and Honeywell if they continue with business as usual.

Icontrol and have no intention of proceeding with business as usual. They’re both pursuing the DIY market, for example.

Meanwhile, if you believe Icontrol and, Honeywell is stuck in a business-as-usual mindset, judging by its very perception of the market size (professionally installed, professionally monitored security systems with interactive home services).

Honeywell, furthermore, has not followed industry trends by moving to a more open platform for its services. Currently, Total Connect only works with Honeywell’s own security panels.

Honeywell argues at length in its antitrust case that it has intended to go to a more open platform, and that a combined would make it harder for Honeywell to do so.

Too bad, so sad, argues Icontrol and … and the majority of those who commented on social media to our original story on the Honeywell suit.

On, one reader comments, “ had the foresight to see that it was crucial to integrate with third party vendors, while Honeywell stubbornly adhered to proprietary equipment.  Now that they see the error in their ways and that they made poor business decisions, they seek to punish the competitor who saw and capitalized on future trends.”

In any case, as Icontrol notes:

As for the alleged move to open architecture, Honeywell employs language so vague that it is far from clear that Honeywell has actually adopted such a plan. But even if and when it adopts such a plan, Honeywell acknowledges that it will take two years to come to market. A theoretical problem that Honeywell may face in two years’ time is not imminent harm.

Proof of imminent harm is required for a successful antitrust claim.

The Actual Market

We won’t go over all of the competitors and potential competitors facing Icontrol,, Honeywell, their competitors, their dealers, and the traditional security business in general.

“Honeywell’s market definition improperly focuses on a single distribution level, excludes downstream competition, and outright ignores fundamental market definition principles.”
— Icontrol, response to Honeywell antitrust suit

But it’s not just industry-specific players like UTC Interlogix (ZeroWire platform), Napco (iBridge), Securenet, ipDatatel, Telular (Telguard) and so many others.

Instead, the wild growth in the smart-home market, “has attracted a large, diverse set of emerging competitors into the provision of remote services, which Honeywell completely ignores,” defendants argues. “Indeed, consumers are increasingly adopting remote services through their smart devices (e.g., Samsung Smart Things, Amazon’s Alexa, Apple HomeKit, and Google’s Nest Thermostat) instead of obtaining these services through traditional security systems.”

Icontrol and detail the competitive landscape in its filing, as CE Pro has done many times over. (See, for example: Who Will be the Next Icontrol? and If Acquires Icontrol.)

At the end of the day, the defendants say, “Honeywell’s market definition improperly focuses on a single distribution level, excludes downstream competition, and outright ignores fundamental market definition principles.”

And, well, Honeywell’s “critically flawed” market-share calculation “inexplicably accounts for only half the proposed transaction. Through the transaction, proposes to acquire certain assets from iControl, while Comcast proposes to acquire the rest.”

[Update] What about those Patents?!

Shortly after posting this article, a friend and industry consultant Avi Rosenthal wrote to me: "They have completely missed the point. Honeywell should be arguing the IP point that the new company will control too many of the critical IP patents in the industry. This is not about current market share or size it's about the ability for others to enter and innovate in the space without the fear of a lawsuit."

Indeed, the extensive patent portfolio of a merged Icontrol and is -- or should be -- the scariest thing to (would-be) innovators in the smart-home business. The companies have shown a propensity to sue for infringement.

That threat was not lost on Honeywell, which claimed in its antitrust suit that a combined IP arsenal could cripple innovation. 

Curiously (or not), the defendants barely mention the patent situation in their reply, other than as footnotes involving agreements with ADT.

Even though the document was heavily redacted, there seems to be few clues suggesting the very real patent issue was addressed by Icontrol and

We do know that is acquiring some Icontrol patents as part of the deal, but many of the key patents owned by both companies are shared already through cross-licensing agreements from a few years ago. It's unclear how much the un-shared Icontrol patents would boost's IP position in the IoT marketplace.

We also don't know the patent arrangements with Comcast post-acquisition. 

 Here's all we get from the Icontrol and filing:

Through the acquisition, would acquire iControl’s Connect and Piper business units as well as several iControl patents for $140 million, and Comcast would acquire the remaining iControl entity, which includes the Converge business unit and the majority of iControl's intellectual property.

Bottom line: The shared IP portfolio between and Icontrol is already scary. Will it blow up to antitrust-worthy proportions? If so, what would be the remedies?

A Few Other Things

The market definition is at the crux of the defendants' answer to Honeywell, but Honeywell had other claims as well.

One of them is that, when ADT moves to the SHaaS platform, will practically force it to use different hardware that is already supported by Today, Honeywell supplies hardware for ADT’s Pulse system, but currently does not support Honeywell hardware.

The defendants claim ADT will make any hardware decisions on its own, noting:

“Honeywell claims that the proposed merger will provide with ‘both ability and incentive to drive out Honeywell hardware by denying interoperability with the Remote Services platform. [redacted] this harm has nothing to do with Honeywell’s ability to compete in the relevant market that it defines – Remote Services.”

There’s another thing: Honeywell “dwarfs and iControl in size,” the defendants point out. "Honeywell produces as much profit in a single day as produces in an entire year."

Or, as someone posted on Twitter, “95 billion dollar company suing a 1 bilion dollar company [market cap] on antitrust grounds, cry me a freaking river $HON

Honeywell, “a household name,” had revenues of over $39.3 billion in 2016. Its Home and Building Technologies segment, which includes home security and automation, generated revenues of $10.6 billion in 2016. was projected to generate about $255 million in revenue for 2016. Icontrol does not report its financials, but it has fewer SHaaS subscribers than, presumably earns a lot less money per subscriber, and definitely sells a lot less hardware. is paying $140 million for Icontrol Connect and Piper. Comcast has not disclosed the acquisition price of Icontrol Converge.

Incidentally, “Both of the transactions are contingent on the closing of the other.”

If the deal collapses, so does the Comcast acquisition.


Honeywell Sues to Block Icontrol, Merger on Antitrust Grounds

*As the defendants write: “Honeywell admits that approximately 75% of the home security services systems sold through the dealer channel do not employ remote services.”

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  About the Author

Julie Jacobson is founding editor of CE Pro, the leading media brand for the home-technology channel. She has covered the smart-home industry since 1994, long before there was much of an Internet, let alone an Internet of things. Currently she studies, speaks, writes and rabble-rouses in the areas of home automation, security, networked A/V, wellness-related technology, biophilic design, and the business of home technology. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, and earned an MBA from the University of Texas at Austin. She is a recipient of the annual CTA TechHome Leadership Award, and a CEDIA Fellows honoree. A washed-up Ultimate Frisbee player, Julie currently resides in San Antonio, Texas and sometimes St. Paul, Minn. Follow on Twitter: @juliejacobson Email Julie at

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  Article Topics

Control & Automation · Automation · Whole House Control · News · ADT · · Honeywell · iControl · Lawsuit · Legal · All Topics
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