Buddy has acquired LIFX, one of the premier names in the smart lighting sector, for just $51mn – a bargain price, considering LIFX’s reported $25mn in annual revenues. It’s an indication that even the stronger brands in the smart home are running into trouble, as early investors start looking for their exits and subsequent returns. For Buddy, the LIFX lightbulbs are a way to expand its building energy monitoring platform, Ohm, which can leverage LIFX’s brand and install-base.
LIFX has struggled in recent years, swamped by new rivals and also undercut by cheap alternatives that have flooded the market. It was best known for its colored LED lights, which could be controlled by applications and integrated into most smart home ecosystems. But lighting is one of the markets that has most quickly been commodified, and so it was effectively running out of time. This seems to be why it was sold for such a low price.
Buddy has been more focused on the commercial side of things, providing the hardware and software needed to connect a building’s energy supply and then monitor its usage. This connectivity then lets Buddy provide an energy monitoring service, powered by its Buddy Cloud, using data gathered by the electricity, gas, water, and steam supplies, as well as any rooftop solar installations, and the in-building temperature and humidity readings.
Ohm is a pretty impressive platform, and an example of how a very focused offering can be developed and pitched to customers. Thanks to the Ohm Link sensor hubs, as well as the Pulse sensors that use infrared to detect the flow of the utility supplies to the buildings, Buddy can quickly connect a building to its cloud back-end, and then begin providing data services to the building owner. These include performance analytics, and the consequent operational optimization recommendations that can help cut the running costs for the building. It also encompasses alarm systems, which could warn an owner if a room’s temperature or humidity exceeded a threshold, which is useful for storage, catering, and server applications.
Now, with LIFX, Buddy can look to expand into the home space, as well as improve its data generation in commercial settings that opt for LIFX bulbs – which Buddy can recommend or cross-sell to such clients. On the consumer side of things, Buddy doesn’t have such an easy route to market. There are very few homeowners looking for a commercial-spec energy monitoring system, but there are quite a lot who are interested in smart lighting.
For the home, the cross-selling could be the reverse, where the LIFX bulbs are a channel that could see Buddy then promote a scaled down version of Ohm. Again though, this would be a small volume market, but there’s a bigger opportunity if Buddy can get the utilities on-board.
We are entering an era where utilities are going to be more sharply criticized for wastage and inefficiency. In their own distribution networks, LPWAN-powered sensors that push data to cloud analytics platforms have allowed utilities to better find and repair leaks, and smart meters in the home have enabled them to better understand their customers’ usage habits, which then lets the utilities purchase their own supply in a more optimized fashion. In time, the purchasing optimization will get closer and closer to real-time, for energy at least.
However, the utilities don’t know how their customers actually use the product that they are supplying. With smart meters, they will know time-of-use, but not the appliances and devices that are running. There are a handful of startups that can use machine-learning powered algorithms to identify devices by their power signatures, such as Verv, but a platform like Buddy could allow the utility to take things a step further – tapping into a smart home itself.
Of course, we’ve seen Google trying this from the opposite direction, using Nest and Google Assistant to move from the smart home into the utility sector. Amazon will undoubtedly be considering a similar tactic, thanks to its strong market position, which it can leverage by making itself useful to utility partners.
At scale, the data gathered from smart homes could facilitate much leaner energy purchasing from wholesalers or the emergency peaker plants, thanks to both routine efficiency optimization in the home, as well as through demand response. A truly smart home would be able to analyze its energy usage and then determine where it needs improvement, recommending to its owner that the boiler should be upgraded, or that it seems to lose a lot of heat through windows that could do with being replaced.
White goods appliances could be monitored for maintenance issues, and devices could be put into standby mode or switched off entirely depending on the routine of the occupants. There are a plethora of options for cutting usage and improving efficiency, just by monitoring usage and comparing the output to the energy input.
Demand-response is the more dynamic option though. The aforementioned efficiency improvements are akin to lowering the baseload usage of a grid, whereas demand-response is a way of reducing peak usage, and therefore avoiding having to pay through the nose for additional peak capacity.
The smart home is key to advanced demand-response deployments, and while early experiments have focused on HVAC usage, the scope of demand-response increases with the number of connected devices in a home – provided there’s a mechanism that lets the utility alter their energy consumption in order to lower its total demand for energy.
For customers that opt-in to demand-response programs, the reward is usually rebates that lower their total energy bill. Demand-response is still a long way from being common in the marketplace, but it does demonstrate how the more innovative utilities could make use of new technologies to improve their margins. For providers like Buddy, partnerships and licensing agreements could prove to be lucrative.
There are other approaches though, which don’t require such an extensive reach into the smart home. Northern Powergrid has announced that a gamified demand-response test project was a success. It used a mobile application to encourage customers to turn off appliances in the home in exchange for points, which would increase their chance of winning a cash prize. The average power reduction was 11%, at 305W, but one customer dropped some 4.9kWh.