Staples abandons home automation (SPLS)

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Staples announced that it is transitioning its Staples Connect smart home platform to Z-Wave Products, an authorized dealer of Z-Wave-compatible products, according to Twice.

While terms of the deal were not disclosed, Z-Wave Products will take over sales and support for Connect. Zonoff, a software company that had helped Staples develop Connect, will step in to maintain the platform and provide updates to the software.

Connect is a DIY platform that facilitates control to around 150 devices produced by more than three dozen brands, notes Twice. Staples said in an email that the move to sell was due to "changing market dynamics and a focus on more business-oriented solutions." This aligns with Staples interim CEO Shira Goodman's statement in June that the company would be ramping up its focus on mid-market businesses.

In a statement on its website, Staples noted that this does not indicate the end of Connect.The company elaborated that Staples Connect will continue to operate on its app, and that Zonoff will continue to update the platform to avoid user disruption. Zonoff's Chief Marketing Officer Kevin Garton said that the company is very interested in continuing to grow and evolve the platform.

This move raises questions over the future of growth in the home automation market. Overall, smart home market growth remains relatively stagnant, but new players continue to enter the market looking to cash in on what's supposed to be a hot market. Staples and Lowe's were the two major retailers that entered early by offering a DIY platform. Their competitive advantage was leveraging their brick-and-mortar locations to sell compatible products.

But new players in the market have realized that they too control crucial components of the DIY smart home buying process and are ramping up their DIY platforms. For example, tech giant Apple recently announced it was building out its Apple Home ecosystem, which will be a major competitor to these DIY platforms.

At its current state, we believe the smart home market is stuck in the 'chasm' of the technology adoption curve, in which it is struggling to surpass the early-adopter phase and move to the mass-market phase of adoption.

There are many barriers preventing mass-market smart home adoption: high device prices, limited consumer demand and long device replacement cycles. However, the largest barrier is the technological fragmentation of the smart home ecosystem, in which consumers need multiple networking devices, apps and more to build and run their smart home.

John Greenough, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on the U.S. smart home market that analyzes current consumer demand for the smart home and barriers to widespread adoption. It also analyzes and determines areas of growth and ways to overcome barriers.

Here are some key takeaways from the report:

• Smart home devices are becoming more prevalent throughout the US. We define a smart home device as any stand-alone object found in the home that is connected to the internet, can be either monitored or controlled from a remote location, and has a noncomputing primary function. Multiple smart home devices within a single home form the basis of a smart home ecosystem.
• Currently, the US smart home market as a whole is in the "chasm" of the tech adoption curve. The chasm is the crucial stage between the early-adopter phase and the mass-market phase, in which manufacturers need to prove a need for their devices.
• High prices, coupled with limited consumer demand and long device replacement cycles, are three of the four top barriers preventing the smart home market from moving from the early-adopter stage to the mass-market stage. For example, mass-market consumers will likely wait until their device is broken to replace it. Then they will compare a nonconnected and connected product to see if the benefits make up for the price differential.
• The largest barrier is technological fragmentation within the connected home ecosystem. Currently, there are many networks, standards, and devices being used to connect the smart home, creating interoperability problems and making it confusing for the consumer to set up and control multiple devices. Until interoperability is solved, consumers will have difficulty choosing smart home devices and systems.
• "Closed ecosystems" are the short-term solution to technological fragmentation. Closed ecosystems are composed of devices that are compatible with each other and which can be controlled through a single point.

In full, the report:

• Analyzes the demand of US consumers, based off of survey results
• Forecasts out smart home device growth until 2020
• Determines the current leaders in the market
• Explains how the connected home ecosystem works
• Examines how Apple and Google will play a major role in the development of the smart home
• Some of the companies mentioned in this report include Apple, Google, Nest, August, ADT, Comcast, AT&T, Time Warner Cable, Lowe's, and Honeywell.

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The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the smart home market.