Universal Electronics Inc. (Nasdaq: UEIC), a 30-year-old giant in the remote-controls business, is acquiring RCS Technology, a pioneer and leader in smart thermostats, energy management and home automation.
RCS (formerly Residential Control Systems) may not be well-known among smart-home enthusiasts, but the company was making smart stats and energy management systems long before they were cool. Today, its products are OEMd to a wide range of providers in the security, home automation, utility and building-controls markets.
RCS is a lot like UEI, which has a thriving OEM business for remote controls, serving most of the top cable/satellite providers and TV makers.
Like UEI, RCS lets “their tech shine through other people’s brands,” says Ramzi Ammari, SVP, global product planning and strategy for UEI. “We have a lot of products in the home, but you don’t see our name on them.”
The purchase price for the acquisition of RCS assets will be approximately $9 million in cash plus incentive-based cash consideration to be paid over the next five years. UEI had revenues of more than $651 million in 2016.
UEI’s Home-Technology Roadmap
UEI makes perfect sense as a buyer. The company started life three decades ago as an OEM provider of remote controls. Chances are your TV, DVD, satellite, cable or other handheld remote came from them. The company also sells products direct to consumer via the One For All brand.
About a decade ago, UEI sold a complete home-automation solution called Nevo, featuring a touchscreen remote control and hub that integrated with third-party smart devices via a number of protocols.
It was one of the first home controllers to integrate with Sonos in 2010, at which time it released a software developer kit (SDK) for integration. Only professional integrators had access to the advanced control system, which was abandoned in 2011.
Over the past couple of years, though, UEI has attacked the smart-home market more aggressively.
In 2015, UEI acquired Ecolink, a start-up provider of Z-Wave devices and security sensors for professional alarm systems. UEI plans to package a complete smart-home solution for service providers, especially the regional telecom and cable companies it already serves.
RCS Technology founder
Michael Kuhlmann (left) with
VP Biz Dev Gene Goodell
For example, Comcast is a huge customer for UEI remote controls and now purchases some Ecolink products for its Xfinity Home automation system. Why not thermostats, too?
At CES 2017, UEI showed a kit created especially for insurance companies, which included an inexpensive fire-listening device and water detector, along with a hub for cloud communications.
Ammari says UEI does not have immediate plans to build out a complete consumer-facing home automation system – the company’s revitalized Nevo Home platform is mostly about entertainment – but he doesn’t rule out the possibility for the future.
Besides insurance firms and cable companies, UEI plans to target its existing hospitality customers. The company already provides remote controls to a whole lot of hotel rooms – rooms that also would benefit from smart thermostats.
“Today we have key accounts in hospitality for video,” says Ammari. “This will be an opportunity to maybe bring in some of our other capabilities, like Ecolink sensors and RCS thermostats.”
Acquiring RCS not only boosts UEI’s OEM portfolio for smart things, it also could ingratiate the company with utilities and other mass-market energy-management firms.
RCS has been involved with demand-side management and other technologies associated with the smart grid since forever. It has worked with virtually every popular home-control and smart-energy protocol since back in the X10 days. Today it’s ZigBee, Z-Wave, Wi-Fi, and even OpenADR for utilities’ automated demand response services.
UEI’s Latest Initiatives: QuickSet Cloud and Nevo Home
UEI has been controlling A/V devices since 1986. As such, the company has a giant database of IR codes and, more recently, codes for controlling entertainment devices via ZigBee (RF4CE), Bluetooth, IP and HDMI-CEC.
These codes – and the mechanisms to access them – are part of a UEI suite called QuickSet, which the company claims is embedded in some 400 million devices around the world.
QuickSet-enabled devices include such mass-market products as cable and satellite set-top boxes, gaming consoles, smart TVs and “many leading smartphones,” according to the company.
Recently, QuickSet moved to the cloud with a service called … QuickSet Cloud. It relieves hardware manufacturers of the burden of incorporating QuickSet technology into their products. More importantly, though, it enables richer integrators and on-the-fly updates.
With UEI’s huge database of controllable devices – from TVs to air conditioners – the company has learned to identify connected devices automatically, and control them with little or no configuration on the end-user’s part.
UEI’s auto-discovery platform is so rich, it can even delve into your TV and set-top boxes to determine which streaming services are available on the network … and then present them to the user in an on-screen display.
Ammari stops short of suggesting that QuickSet Cloud would apply to smart-home devices — UEI did show integration with Philips Hue at CES 2017 — but he does indicate UEI’s extensive cloud development could benefit RCS, delivering “a lot of control capabilities on a really smart memory footprint.”
He notes that thermostats, being “always on, always-connected devices” could serve as “some kind of gateway” in the future.
The plan today, however, is to help RCS “grow in the business they’re in today,” according to Ammari, who mentions the opportunity for RCS to exploit UEI’s manufacturing, product-design, operations and sales capabilities.
Residential Control Systems was founded in 1993 by Michael Kuhlmann and Bruce Wiens. In 1999, the company merged with the home-automation firm Integrated Home Solutions (IHS) to create the new RCS Technology, with IHS principal Mike Hoffman as co-founder. Kuhlmann continues to serve as CEO of the company, with Hoffman as CTO and Gene Goodell VP business development.
Flashback – January 1, 2005
Q&A with RCS Founder Michael Kuhlmann
Michael Kuhlmann, founder and president of Residential Control Systems (RCS), has been an innovator in the field of electrical engineering since his days as a civilian senior engineer and program manager with the U.S. Air Force Logistics Command. Kuhlmann has also worked for Data General and was the founder of ZTECH, a manufacturer of HVAC controls. Today RCS is a leader in the HVAC control industry with a long list of OEM alliances. Prior to the Fall 2004 EHX show, Kuhlmann took some time to speak with CE Pro.
CE Pro: For the reader who may not know what RCS does, can you briefly talk about the history of your company?
Kuhlmann: In 1993 RCS was created out of a company called ZTECH that specialized in HVAC zone control products for the production builder market and traditional HVAC contractors. ZTECH's products are widely used in new home construction for energy management, fresh air ventilation and cost-effective zone control. While these products are microprocessor-based, they connect to typical thermostats that do not have communications capabilities. There was a need in the market to make use of more intelligent information, including zone temperatures, setpoints and modes, heating and cooling system operation and to provide for remote communications to these devices. To do this, we had to create our own intelligent “thermostats” and build in communications capabilities. It became clear that the traditional HVAC contractors would not be our target market for these more intelligent and communicating products so we created a new company, Residential Control Systems (RCS), to focus on the emerging home automation market and the new breed of “Integrator” installers. In 1999, RCS merged with IHS, the manufacturer of the popular Time Commander and Stargate automation controller products.
CE Pro: Are devices like your communicating thermostats and zone controls amenities for the affluent homeowner?
Kuhlmann: Yes, most high-end homes will almost always use some form of HVAC control. And RCS thermostats and controls are frequently used. However, our focus is on the broader midrange market — especially the production builder market where our controls offer low cost, special energy savings features, which are a growing part of a basic home-control solution for integrated security, lighting and HVAC control.
CE Pro: With the increased emphasis on energy efficiency does RCS anticipate more consumers examining the benefits of home control?
Kuhlmann: Definitely. The energy crisis has not gone away. The coming together of integrated subsystems in the home through some form of a home controller is the logical way to merge energy management strategies such as lighting controls, security linked HVAC setbacks during times of non-occupancy, fresh air and night time ventilation cooling, demand load controls, real-time pricing and other such utility programs.
CE Pro: How can or how should a dealer present and sell HVAC control to the mainstream clientele that are just learning about the benefits of the RCS technology?
Kuhlmann: The story usually starts with the convenience of having controls where you want them, and the flexibility of having remote control integrated with such things as TV, computers, and of course, the coolest thing in the house: a color touchscreen.
The next and probably the most important, benefit is HVAC zoning. Zoning offers real payback — not only are you able to maintain a more even and comfortable temperature throughout your home — but there is also the potential for 25 percent to 35 percent or more savings in energy costs. With any discussion of home control, the big three are always, lighting, security and HVAC controls.
CE Pro: What would the typical system install for a 3,000-sq.-foot home entail both in terms of cost and equipment?
Kuhlmann: Most homes should have a minimum of two zones: living and sleeping. This can be accomplished with two heating/cooling systems or, as is becoming more common, one mechanical system with a two-zone controller and two dampers. Personally, I would recommend zones for the major living areas and each bedroom. Which on average would be four to six zones for a house of this size. Let's take a typical four-zone system for our example. It would cost under $1,000 for hardware and end up costing $1,500 to $2,000 installed in a new construction home. Zoning within a new construction home adds little to the cost because laying out the ductwork correctly to allow for zoning does not add much to the duct cost. However, retrofit installations can be much more complex due to the possibility of having to modify the home's existing ducting.
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