The Risk of Relying on Smart Home Companies to Keep the Lights On

Late last week, the smart-lighting company Insteon abruptly shut down without issuing any warning to its users. Overnight, its array of connected light switches, dimmer outlets, wall keypads, and smart home sensors lost the ability to connect with Insteon servers. The company also shuttered its user forums and wiped the leadership page from its website. Insteon did not respond to a request for comment, but when reached via a LinkedIn message, former Insteon CEO Rob Lilleness said he had no information to share and was no longer involved with the company.

The sudden move angered Insteon’s users, who found themselves unable to control their home’s lights with the Insteon mobile app. Some of the company’s smart switches currently still work as regular on-off light switches, but many models are bricked. Customers who attempted to reset their glitchy devices to the default settings found that after doing so, those devices no longer worked at all.

“This shows the perils of handing over the control of your house to a solution which requires a cloud platform,” says Ben Wood, chief analyst at CCS Insight. “It’s a decision that should not be taken lightly.”

Online services shutting down is a frustrating inevitability of smart-home tech—especially among smaller companies that don’t have a massive footprint in the internet-of-things market. They can struggle to support products that require years of continued service.

Insteon was one of those smaller IoT players. Blake Kozak, principal smart-home analyst at the technology consultancy Omdia, estimates that Insteon had around 1.3 million customers. That’s a small fraction of the smart-home market; over 50 million homes in the US rely on connected lights, thermostats, and other tech, according to the Swedish research firm Berg Insight. Insteon also hasn’t been too active lately. The company last put out a press release in 2018.

Regardless of the company's size or footprint, the sudden shuttering raises questions about what sorts of responsibilities Insteon had to signal the coming changes to the people who had invested in its tech.
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“Other brands have done a much better job of explaining to customers ahead of time to give them some sort of a bridge,” Kozak says. “It has happened before, but this was next level.”

For users who rely on connected door locks, security cameras, and light bulbs around the house, the Insteon debacle is a reminder that full control of one’s devices may be an illusion in the era of the cloud. But Kozak says that while Insteon’s mess is certainly a black eye for the smart-home industry, it’s an avoidable one.

“I don’t think people should take this as ‘the market is doomed,’” Kozak says. “There’s so much positivity and momentum behind the smart home in terms of what these brands are producing.”

Positivity and momentum indeed. Revenue in the US smart-home market is growing and is expected to reach $33.7 billion this year, according to the consumer research company Statista. New interoperability standards are also emerging, bringing with them the potential to fuel increased adoption of smart-home tech. Chief among these is Matter, an open source initiative with buy-in from Google, Amazon, and Apple that will help different manufacturers’ devices work together more seamlessly.

Still, as long as the marketplace remains vibrant, some smart-home companies will stumble, fail, and disappear. When they do, their gadgets, platforms, and apps will likely cease working, leaving customers in the dark.

“Dropping consumers like this is not the way to do business,” Kozak says, “but it’s inevitable that brands are going to drop out.”