Navigant Research Blog

With Developer Program, Nest Raises Questions

— June 30, 2014

This week Nest Labs introduced its Nest Developer Program, which integrates smart devices for both home and lifestyle uses.  The results suggest that energy efficiency is going mainstream without most people even knowing it.  This program, which has already enrolled partners such as Mercedes-Benz, Whirlpool, Jawbone (UP24 maker), LIFX, and Logitech, allows communications between smart devices in order to influence and optimize their overall functionality.  For example, the Nest thermostat could receive better information on a homeowner’s sleep/wake cycle, whereabouts, and habits from data transmitted through the UP24 bracelet.  It can then incorporate this information into its intelligent algorithm for determining household heating and cooling patterns.

But that’s only a small part of it.  Nest has already taken a stab at utility-scale demand response (DR) through its Rush Hour Rewards program for climate control, but the program can now enroll other energy-heavy appliances, such as washers and dryers, in the same DR events.  Following device trends in electric vehicle charging, where smart communications are increasingly integrated and relied upon, it’s fair to speculate that this type of developer program has the potential to solve a lot of the problems utilities are currently facing as growing renewables penetration causes instability along the distribution grid.

Privacy Pushback

The potential to optimize energy usage will grow significantly as cloud-based home energy management advances technologically and adds functionality.  But the market is likely to experience setbacks as privacy issues are raised.  Nest and Apple have both created privacy guidelines for data as it is communicated between devices, but protection and control over this information will still be an issue for customers.  As public utilities incorporate software platforms for managing connected devices, it’s unlikely they will be able to avoid the type of pushback (seen here, here, and here) that has hindered the deployment of smart meters.

Another question inherent in this move to a connected life is how the interaction between devices and software will take shape.  Nest and its associated partners have built value propositions off the premium quality of their networked thermostats and the software that controls them.  But competitors like EcoFactor and EnergyHub build value off the ability be flexible in the devices they connect to – asking if premium devices are really all that necessary to realize the same gains.  When you involve multiple customer demographics (with different levels of income and values) and budget-conscious public organizations, different needs and limitations will require different solutions.  There’s no denying that people become emotionally connected to well-made, well-designed hardware – and they will pay a premium for it.  But, as the cellphone industry has shown, there are limitations in terms of hardware development.  So how long will the novelty last for thermostats?

 

Honeywell’s Lyric Intensifies Smart Thermostat Competition

— June 11, 2014

Honeywell has introduced a new Wi-Fi-connected smart thermostat called Lyric, a device squarely aimed at taking on Google’s popular Nest thermostat in the home automation arms race.

The new device looks similar to Nest’s: round, glossy, and with a modern digital interface – though Honeywell would say it hasn’t copied Nest (something the two have argued about in court) – the Lyric updates its iconic Round thermostat, first introduced in 1953.

The new Lyric thermostat is smartphone-centric and will work with iOS or Android devices.  It uses a homeowner’s smartphone location as the cue for adjusting the temperature set point.  For example, when a homeowner leaves the house with smartphone in hand, the Lyric device can automatically enter an energy-saving mode.  Similarly, as the homeowner and smartphone return, the Lyric thermostat senses the proximity and can either heat or cool the house to the preferred temperature.  This technology is called geofencing – using a device’s location to trigger events.

Under the hood, the Lyric thermostat software makes automatic adjustments using an algorithm based on indoor temperature, local outdoor weather conditions, and humidity.  This functionality, dubbed Fine Tune, endeavors to provide the most comfortable temperatures in an automated fashion.  In a dig at Nest, which emphasizes its learning capabilities, Honeywell notes the Lyric thermostat does not have to learn any patterns; it merely adjusts to homeowner activity.

Game On

Honeywell has provided energy-savings guidelines for Lyric owners in the United States.  Estimated annual savings by region are: $26 to $150 in the West; $133 to $173 in the Midwest; $31 to $143 in the South, and $130 to $221 in the Northeast.

The retail price for Lyric is $279, meaning it will compete at the high end of the market, like Nest.  The Lyric thermostat is available now through Honeywell’s network of heating and cooling contractors, and is expected to be in retail stores starting in August.  The new thermostat is the first in a family of connected home products Honeywell plans to launch under the Lyric name.

With this device, Honeywell has upped its game against Google/Nest.  Given its strong brand and equally strong distribution channel, Honeywell should be able to at least dent some of the momentum Nest has generated in the past few years since its launch.  And, more than likely, Google will counter with product upgrades of its own.  The competition should be good for consumers, giving them choices for a smart thermostat that meets their needs.  Moreover, competition won’t be limited to these two U.S. players.  Germany-based startup tado° has been active in Europe with its hardware-software temperature control system.  The company recently reached its $200,000 target through a Kickstarter campaign to launch its new air conditioning control product.  It also plans to adapt both its heating and cooling products to be compatible with Apple’s forthcoming HomeKit platform.

The smart thermostat arms race is on.

 

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