What’s up with the sudden interest in controlling home heating and cooling? Honeywell (NYSE:HON) had the market largely to itself for years. Thermostats just were’t that interesting. But as energy prices have crept up and “green” cred has become a status symbol, there has been a push toward increased energy efficiency. Furnaces and air conditioners became more efficient, but as time-of-use rates began to kick in and connectivity became all the rage, the thermostat emerged as a new frontier in tech.
Nest Labs, a company started up by ex-Apple (NASDAQ:AAPL) engineers, fired the first salvo by introducing a high-tech thermostat that combined the futuristic design aesthetics of an iPhone with advanced technology including a motion sensor, Wi-Fi, and artificial intelligence. The $249 Nest Learning Thermostat, which was given further mass market appeal by being sold through electronics retailers like Best Buy (NYSE:BBY) instead of through hardware stores, gained considerable media attention as a revolutionary device. Then Honeywell filed suit, claiming Nest infringed on numerous patents.
Going deeper into the home
Why would a cable company be interested in home energy efficiency? It’s actually a pretty good fit. Some of the big advances in thermostat technology have been around the concepts of artificial intelligence, with usage reporting and the ability for homeowners to make adjustments remotely via their smartphone. Being able to tie into a home’s existing cable hookup for Web connectivity is a real advantage.
Comcast and other cable companies have been seeking additional sources of revenue that leverage their home connectivity such as Voice Over Internet Protocol (VoIP) telephone service and monitored security systems—so a move into home energy management seems like a logical extension of this strategy. These value-added services not only represent additional revenue potential, they can add “stickiness,” making the prospect of ditching a home cable service provider less appealing—something Comcast is concerned about after losing a chunk of its cable customers last year to competitors and alternatives like streaming video providers such as Netflix (NASDAQ:NFLX).
Micromanaging home comfort
GigaOm says that by offering EcoFactor service to its Xfinity Home customers (who receive a “triple play” of broadband, cable, and phone service), Comcast will be able to help them save money by lowering their monthly energy bill, offering a system similar to the Nest Learning Thermostat, minus the fancy hardware. EcoFactor claims average energy savings of roughly 25% to 30% per month on a home heating and cooling bill, compared to saving achievable through a traditional thermostat, by making frequent adjustments to a home’s temperature settings throughout the day and analyzing local weather forecasts. Under a previous partnership with Texas utility Oncor, customers were charged $8.99 monthly for the service. Comcast hasn’t released pricing yet, but expect it to be comparable to the Oncor plan.
The Comcast deal promises to be a big boost to the bottom line of EcoFactor, providing the potential for much wider distribution of its service. Comcast stands to add a money-saving, green service to help retain cable customers and attract new ones. Nest and Honeywell will likely be less than enthused by the news of competition as they gear up for their pending court battle.