Smart home experts debate profit models in a shifting market

PLANO, Texas — During a recent webcast, Elizabeth Parks, president and chief marketing officer at Parks Associates, asked a panel of smart home experts about the important questions facing industry professionals right now: Who’s making money, what are consumers buying, and how do we compete and change? 

With up to 48% of households having a smart device in their home, according to the latest Parks Associates research, you might assume that recurring monthly revenue from subscription services would be a leading business model. But George Yianni, CTO and founder of Phillips Hue at Signify, set the record straight, noting that his company had tried to give away hardware for years to generate subscription revenue. 

“It really did not resonate; people like to own the hardware they put and build into their homes,” he said during the webcast, Smart Home Future Outlook 2030 during CONNECTIONS 2025. “While I do see that slowly changing, I still think that is very much true today. People, if they’re given the choice, tend to prefer to actually own the products they put inside their home, which of course leads to a problem if you want to be able to (have) high quality, ever improving, ever up-to-date smart home products.” 

Hue, instead, found that improved user experience drove engagement and encouraged users to expand to new areas of the home. While the company is still interested in generating more recurring revenue, it has found the best path is replacing hardware with software solutions when possible. 

PG Gall, senior product strategist, living, for Crestron, provided an answer not just as a hardware manufacturer but as a professional installer. Relating some of the difficulties faced by installers to available DIY solutions, he believes that the key to profits is loyalty. 

“If our pros-as-dealers (as we call them), are loyal to Crestron (then) they’re going to recommend Crestron to their customer time and time again,” he said. “So, if we can get a loyal base of these dealers, which we have on the Crestron side, they’re going to keep recommending and specifying Crestron.” 

As a result, Gall said end users do then upgrade as new technologies are released, or they move and want to keep their existing system in a new home. He believes there’s a huge role that software and recurring revenue is going to play as time goes on. 

The full webinar can be found here online.