The connected home may still be a distant mirage for most average consumers, but in the meantime the technology is becoming big business. Today, British Gas announced it will buy AlertMe, a developer of platforms for running various domestic “smart” devices, in a deal worth £65 million ($100 million), lining up the energy company to provide smart services covering heating, lighting and more. The net cost to British Gas and its owner Centrica will be £44 million ($68 million), after accounting for an existing 21% investment in the company.
In addition to being an investor, British Gas was a user of its services, specifically in its Hive product, which lets you control your heating and hot water remotely. Hive is in use by 150,000 customers today.
Smart home technology may sound like a novelty to some, but it is more than that. It is a way of improving the efficiency and cost associated with energy use, and in many cases it can make everyday life simpler and easier for people.
Founded in 2006, Cambridge, UK-based AlertMe was an early mover in connected home technology — the idea of giving “dumb” services like your heating a network connection that helps calibrate and control them in a more efficient way. (And here’s an interesting fact: AlertMe was a partner of Google’s in one of the search giant’s earliest attempts to tackle the smart home, the now-defunct Powermeter.)
AlertMe provides an end-to-end service in the form of a platform that lets different devices and applications communicate with each other and provide a complete picture to customers of their energy use. The company had raised a total of $36.8 million from backers that also included Index Ventures, VantagePoint Capital Partners, SET Venture Partners and Good Energies.
“AlertMe has been the pioneer in establishing and growing the Internet of Things commercially in the UK and USA,” said Mary Turner, CEO of AlertMe, in a statement. “We have created a market-leading Internet of Things platform and a highly experienced team of technologists and operational capability, which together have given us proven ability to serve mass market customers. We are excited to move forward with British Gas, with an opportunity to roll out service for tens of millions of homes, and to realise our ambition for further global distribution.”
But even as an early mover, AlertMe didn’t really have much in the way of critical mass. The company says its technology was in use in 200,000 homes, with “personalized energy data services” in 500,000 homes, with many of those in the form of smart meters. (In terms of data points the numbers are much higher: there are 1 billion smart reader readings taken each month and 10 billion internet of things data points overall.)
With its new asset, British Gas, which is owned by energy conglomerate Centrica, will potentially be turbo charging AlertMe’s business, including rolling out new smart home products that control other aspects of the home beyond just heating.
In an email to existing Hive customers, British Gas says the acquisition of AlertMe means the company now has “all the technical parts in place” to launch a family of smart home products. “This move means we’ll bring you truly magical products which can help you to re‑imagine the way you live in your home much more quickly,” it adds.
Hive as Trojan horse
Interestingly, the smart hub that comes as part of a Hive installation uses the Zigbee smart home wireless standard. Its firmware is upgradable to enable it to become smarter and support additional devices.
In this context — and with the acquisition of AlertMe — the Hive thermostat can be seen as a Trojan horse into the smart home, and sets up British Gas to become a much broader player in the burgeoning smart home space.
Our understanding is that, in addition to other heating-related products (such as multi-room zones and radiator control valves), the utility company is eyeing up smart lighting as an additional Hive product or at least something that could be controlled and supported by the core Hive offering, perhaps via support for an existing third-party smart lightbulb product.
“We are very excited at the potential we’ve now got through technology, to help people manage their homes and lives more easily,” said Nina Bhatia, commercial director for British Gas, in a statement. “With access to new technology and skills we’re strengthening our capability at British Gas to develop a family of products that will put people in control of their homes in a way that’s simply never been possible before.”
The utility company currently has 11 million customers — and potentially more in its geographic footprint. With the acquisition, British Gas says that it will become the UK’s largest connected homes provider — although to be honest that isn’t really saying much. The market is nascent, to say the least, which is part of the reason why it’s significant that British Gas is making an early move.
Not too early, though, when you consider what its competition is doing. A number of other utility companies in the UK have recently signed partnerships with smart thermostat companies/startups, in a backdrop of new energy efficiency targets set by the UK regulator Ofgem. Google-owned Nest is being offered to Npower’s customers, Berlin-based startup Tado has teamed up with SSE, and French startup Netatmo has recently partnered with EDF Energy.
Meanwhile, today’s acquisition of AlertMe by British Gas comes at a time when we are seeing some significant interest and investment into connected come technologies, both in the form of infrastructure and also hardware.
That includes Sigfox just earlier this week raising $115 million to build out its Internet-of-Things-exclusive cellular data network; Apple’s efforts for its HomeKit SDK, and companies like Google paying billions to acquire companies like Nest and Dropcam to make sure it also has a place at the connected home table.