The end of Insteon and why the smart home continues to falter – Stacey on IoT
Smart home company Insteon shut down its servers, lost its management team and sent an email to customers on Thursday explaining how it plans to sell all remaining assets to help pay off creditors in a formal dissolution of the company. It was the most dramatic end to a consumer IoT company to date – and also represents one of the biggest opportunities left for the Matter smart home standard going forward.
On Friday, April 15, customers began reporting that their Insteon app was down and their hubs could no longer communicate with the cloud. After reading these reports, I went online and found that according to their LinkedIn biography, no one from the SmartLabs/Insteon management team was still working at the company.
Three of them had completely removed the company name from their bios, including Rob Lilleness, the former CEO. Lilleness founded Richmond Capital Partners, the company that invested $7.3 million in Insteon in 2017 with the idea of capitalizing on smart home interests. After I contacted him on Saturday and reported the original story, he truncated his name on LinkedIn to R. Li. The following Tuesday, he responded to my initial request by replying to me on LinkedIn saying: “Unfortunately, I am not involved in the business.”
By then, he had also removed his name, photo, and biography from LinkedIn, appearing only as an anonymous LinkedIn member.
What he told me was true, because as customers learned via email two days later, Insteon’s parent company, SmartLabs, had transferred its assets to a separate legal entity on March 22 called SmartLabs (ABC) LLC. SmartLabs ABC is a legal entity created to sell all assets and pay off original creditors of SmartLabs.
As part of this process, the new LLC contracted with a company to collect the debts, and on April 12 published a letter telling companies that have a complaint about SmartLabs/Insteon to file them by September 18, 2022.
SmartLabs ABC may have assets for sale, including source code that many customers would like to see made available, but the idea that Insteon will continue to be some kind of a going concern for all but the most knowledgeable users in matter of technology is out of place. A connected product is much more than its source code.
While a company could buy SmartLabs code and host it, it’s unclear why a buyer would invest in paying for Amazon servers, continuous updates, and the skills to rebuild all integrations without the promise of a kind of new income. It also assumes that some of the more valuable integrations, such as those related to Amazon Alexa or Google Assistant, would be endorsed by larger companies.
After such a public shutdown of Insteon service, many customers are likely to cut their losses instead of paying a new company to restart the service. We’ve come up with a list of potential alternatives to keep some Insteon gear limping. But many of these options require a level of comfort with smart home services like Home Assistant, HomeBridge, HOOBS, or other DIY smart home tools.
Casual users of Insteon gear will likely be looking to rip and replace what they can. The good news is that there is an option on the horizon that can help. Matter, a smart home protocol championed by Google, Apple, Amazon and Samsung (along with hundreds of other consumer IoT companies) is due later this year.
The standard will create an interoperable data model for a selection of devices such as locks, light bulbs and HVAC equipment that will allow all Matter-certified devices to talk to them. Which means that if a Matter-certified hub stops working, a consumer can easily swap it out for a new one that can work with Matter peripheral devices.
Because the Matter standard isn’t there yet, it’s all still theoretical. But the problem it could solve is very real. Insteon is just the latest example of a smart home company going bankrupt and locking up its users. We also saw the death of the first hubs and equipment built by retailers such as Lowe’s and Staples.
We’ve also seen some connected device companies try to restart with a subscription model, like Wink did. That said, because Insteon’s technology used proprietary wireless radios to communicate between light switches, garage door openers, and other products, losing its service is a bit more complicated. While companies such as Universal Devices have licensed radio technology, so we could see new options that work with blocked devices. But if a smart home is what you’re after, there’s still no guarantee that anything you buy will stand the test of time.
Maybe Matter will change that. Again, maybe that won’t be the case.