Consumers Leave the Nest as Smart Home Technologies Struggle

Over the past decade, many of us were optimistic about next-generation technologies that would revolutionize the way we live while mitigating risks related to climate change. In this vision, clean energy and smart technology would join forces to reduce costs, decrease our impact on the environment and create new economic opportunities as consumers would gravitate to this new “smart cities” lifestyle, in part powered by smart grids weaning us off utilities as we inhabit much more efficient homes.

Yet despite plenty of fits and starts plus the two-year slump in oil prices, renewables are scaling rapidly and decreasing in price while smart devices, especially those designed for the home, have sputtered in popularity. So, what’s going on?

The answers can be in part explained by the struggles of Nest and the resignation of its chief executive, Tony Fadell, last week. Fadell simply claimed that “the time is right to leave ‘the nest’,” but other forces were at play.

The smart device designer, known mostly for its innovative and popular smart thermostat, had its fair share of problems that metastasized soon after Google purchased the company in 2014 for $3.2 billion. At the time of its acquisition by Google, Nest’s new “smart” smoke alarms proved to be quite dumb to buyers with their false alarms and the fact that its “hush” feature appeared to work a little too well. The Revolv, a "smart home hub," was also widely panned and then mothballed.

Nest also became notorious for its high employee turnover rate, with one former employee lashing out at Fadell for allegedly throwing his product team under the bus. Fedell gave Bloomberg a more sunny assessment of his tenure and Nest’s days as part of the Google family. But chatter on sites like Reddit suggest a toxic work environment and a company slow to roll out new devices yet quick to miss anticipated sales targets.

But Nest’s struggles aside, the truth is that many consumers are just not ready to live in, or do not want, a smart home. As an Accenture study released earlier this year suggests, consumers’ interest in technology has plateaued for the moment. According to that survey, only 9 percent of consumers expressed interest in buying a smart thermostat in the next 12 months, and even more telling, that percentage didn't budge from the previous year. Hence we have the reason for why the only smart thermostat we hear about on the market is the one made by Nest. Other companies, such as Honeywell, manufacture smart thermostats, but hardly market them aggressively. One would think there would be an opening in the market considering the buggy reputation Nest’s thermostats have, but no company has rushed in to try to seize this market. The opportunity for smart home devices, companies have realized, is just not there.

The fact is that home appliances are more energy efficient then ever, and for many consumers, those investments make their homes smart enough. Add the fact that we are at a time when residential solar installations are proving to be more cost effective, and more opportunities to participate in community renewable power projects are hitting the market, consumers have more options to make their daily living guilt-free and more sustainable. A two-story, 3,000-square-foot home could benefit from a Nest thermostat; my 900-square-foot, single-level condo shaded by trees with no passive heat does not. And as urbanization increases, and more millennials and empty-nesters move to cities, they realize the smartest decision they can make is to live in a smaller space in the first place.

Image credit: Nest