A strip mall in Avon that houses a day spa for pets and a chiropractor’s office is not the most likely location for an Internet of Things company. But it’s from here that iDevices LLC competes with the likes of Honeywell, Google Nest, and Samsung SmartThings.
Six-year-old iDevices makes remotely controlled grilling and kitchen thermometers for iOS and Android phones, and a Bluetooth-connected shower speaker.
Last month, the company launched a suite of products at Lowe’s nationwide, expanding into the connected home automation space: a switch that allows users to control electronic appliances throughout their home; a water-tight version outdoor switch; and a thermostat that uses the free iDevices connected App and Siri voice commands.
Plans are in place to launch four new products in the first quarter of next year and expand across China, Europe and the United Kingdom. The company retains all its functions in-house ranging from product design and development to marketing, distribution, shipping and customer service, with only manufacturing located in China.
So increasing the employee headcount from 19 last year to 63 currently, 55 of whom are in Avon, was a key growth strategy — although iDevices is still not profitable.
Many of the employees don’t look older than 35. As they walked back into the office in groups, wearing iDevices T-shirts, the plaza looked more like a tech firm campus. There’s a company café across the road where a chef, formerly from the Max Restaurant Group, whips up $3 lunches and $5 take-out dinners for the family.
There are walking meetings at a nearby trail and bikes to borrow when somebody feels like heading out for a ride.
“Apple has told us that we have world-class engineers,” said Chris Allen, 38, CEO of iDevices. He explained that he’s building a company that isn’t developing technology for technology’s sake, but one that will impact the quality of life.
“It’s being able to say ‘Hey Siri, turn on my goodnight scene.’ And have my lights turn off, my fan turn on, my temperature go down by two degrees and my door locked,” he said. “That’s providing real value.”
The company carries eight SKUs at big box retailers in the U.S., including Apple Stores, Amazon, Home Depot and Lowe’s, as well as in Canada, Australia and New Zealand. Allen won’t release sales totals but said the company has multiplied revenue 7.5 times since the launch of its first product, the iGrill, in 2010. To break even, he said, iDevices must post a 100 percent growth in revenue next year. “Given that we’ve almost doubled the product line, you can do the math,” he said, adding that he expects the company to break even in 2016.
iDevices has raised $20 million in venture funding to date, including $2.95 million in state money from Connecticut Innovations. Allen, a former stockbroker, is against the IPO exit route.
“Doing what Wall Street wants could actually hurt the company,” he said. Neither is he fixated on an acquisition. “It could be a buyout or we might just continue doing what we are doing.” He also does not want to raise any more venture money.
Meanwhile, some start-ups that launched after iDevices have enjoyed phenomenal success. Nest Labs, founded in 2010, was acquired by Google just four years later for a whopping $3.2 billion. SmartThings Inc., which had humble beginnings as a Kickstarter campaign in 2012, was scooped up by Samsung for $200 million in two years.
Allen is not the only CEO trying to enhance user experience and the quality of life. A Samsung SmartThings user wrote on the company website how his house helps him and his wife with parenting. It talks to their kids about their schedules and they never argue with the house! Then at 8:30 p.m, SmartThings sets the home to bedtime mode and they all wind down. CNet has named the product the best home hub.
Meanwhile Nest has just introduced Weave, which enables third-party devices to communicate with each other. Partners include Philips Hue, GE, and Hunter Douglas.
In the thermostat market, which iDevices just entered, it will compete with the three generations of Nest thermometers, first launched in 2011. Trane Inc., a global provider of air-conditioning systems, is also a leader in the segment. In the United Kingdom, iDevices will compete with Hive, a smart thermostat from British Gas.
In addition to stiff competition, barriers include consumer mindset, slow technology adaptation, and demographic preferences. For instance, only 25 percent of iDevices’ customers are age 50 or older. Also, connected home products are expensive, limiting mass-market sales. The iDevices thermostat with built-in Wi-Fi retails online at Lowe’s for $149. In contrast, a Honeywell manual electric baseboard thermostat – the not smart variety – retails for $19.97 online on Home Depot. Moreover, the long product life cycle of smart devices does not enable quicker replacements.
On top of that, bad user experiences with poorly designed products that flood the market tend to turn people away from smart devices, Allen said. Last year, iDevices itself had to recall some of its thermometers after the U.S. Consumer Product Safety Commission found that the plastic insulator lining the stainless steel probes could melt into the food because it was not heat resistant.
So what is the key differentiator? What is the main factor in influencing consumer behavior?
“Most consumers are looking for peace of mind,” Natalie Turner, a spokeswoman for Lowe’s said. “Peace of mind could mean that their kids are safe. It could also mean efficiency by having a lower electricity bill. It really depends on what the consumer is looking for.”
The industry is working to innovate to meet this need and iDevices has around 800,000 users on its applications. According to a recent Berg Insight report, the installed base of smart home systems surged 75 percent to 10.2 million in North America alone. It estimates that nearly 68 million homes in Europe and North America will become “smart” by 2016.
“We are really focused on the user experience on the phone,” Allen said. “We want to develop into a brand that people recognize and drive volume growth.”
Investors are bullish.
“They’re managing their cash very well,” said Liddy Karter, managing director of Enhanced Capital Partners in Stamford, which has invested multiple times in the company. “I think they’ve done a lot with little and their product launches are in markets that are growing.”
When asked whether six years wasn’t a long time for a start-up to still be in the red, Douglas Roth, director of investments at Connecticut Innovations, said, “It’s not all about the bottom line. It’s so neat that this company exists in Avon, Connecticut, and they have these world-class engineers and product developers,” he enthused.
“And they had a Lowe’s executive flying in a corporate jet to stand next to Chris Allen.”
