George West conducted interviews of industry leaders. These were published in the WTRS Newsletter on a regular basis.
| Rajiv Kapur – CEO of SmartLabs 1. Can you tell us a bit about your background? “I had just graduated from college in 1990 and was working in Southern California when I had an opportunity to work at Gateway in South Dakota. So I packed up my Honda and headed for arguably one of the coldest places around. After 18 months at Gateway, realizing that the cold winters of South Dakota were not for me, I took a position at Dell working as a member of their inside sales team. From there I moved to the marketing department to learn channel development and the importance of having a leveraged business model. I spent 2 years in China developing Dell’s business there and then moved on to Singapore and Taiwan as Country Manager and then over to a role as General Manager of the South Asian business. After 11 years of work at Dell, I decided to make the move to the Smarthome team. We had our second child while in Singapore and and decided it was time to stop traveling so much and spend more time focused on family. Also, the opportunity to help a great company like Smarthome expand their business and define the INSTEONTM strategy was one I could not pass up.” 2. Who is Smarthome? “Smarthome started 13 years ago as a retail distributor of electronic home improvement and automation products and has become the largest distributor of home automation products through our catalog and website Smarthome.com. Today through our technology division we have also become a pioneer and leading provider of home-control networking technology (INSTEON) and remote control lighting products. Our Smarthome.com division provides direct customer feedback to our technology and product teams on a daily basis. It is that feedback that has allowed us to develop INSTEON and deliver products to address real customer needs. We are now delivering the promise of the future today in a reliable and consistent manner that focuses on giving the customer be it the developer, partner and/or the end consumer the best value and experience. It is that leveraged business model that sets us apart from other competitors in this home control and automation space.” 3. What is INSTEON? “INSTEON is a two way wireless, dual mesh (RF+Powerline) home-control networking technology that simply, affordably, and reliably enables the integration of the home. Unlike other technologies like ZigBee and Z-Wave, INSTEON is a true mesh network verses a routed network. This means an INSTEON network does not require a master controller or network setup making installing INSTEON enabled products simpler for the consumer and less expensive for the manufacturer to integrate into their products.” 4. Why did you choose a dual-mesh solution for INSTEON? “Fundamentally, I believe that a dual-mesh network is a more robust network. We integrate the home’s electrical wiring with radio frequency (RF). There are devices in the home that will be battery operated like a door lock or motion sensor which makes RF ideal. Yet most of the devices in the home are connected to the homes electrical wiring like a light switch or an appliance. Our dual mesh approach allows devices to connect to the network through the most effective means. Thus, our decision to develop the network as a true mesh was a simple one. We also discovered two inherently and equally important attributes in developing INSTEON as dual mesh. We discovered that installing and using products was simpler for the end consumer. You do not have to be a networking expert or an early adopter of technology to get the power of INSTEON working for you. In addition we found that we could license and provide chip sets with INSTEON to developers and manufacturers at aggressive price points. At the end of the day if you can get INSTEON for virtually the same price as a wireless-only solution, why wouldn’t you buy it?” 5. Are you planning to migrate INSTEON to a standard radio technology? “We use industry standard radio technology today. In this regard our partnership with Integration Associates has been very valuable.” 6. INSTEON runs in the 900 MHz ISM band, do you see this as an obstacle to entering foreign markets such as China? “We have the flexibility to develop a 2.4 GHz solution for INSTEON if customers demanded. At present our plans call for using 868MHz. We considered 2.4 however it is not as effective as a frequency as 900 or 868 MHz for home-control networking and communications. We are actively talking to and looking for partnerships to work with INSTEON in Europe and Asia”. 7. What types of sales channels are in place today for INSTEON and how do you plan to develop them over time? “Currently INSTEON enabled products are available through the Smarthome.com website and catalog as well as, Amazon.com, Buy.com and HomeDepot.com. Also, INSTEON enabled products will soon be available through the SkyMall catalog. Our partnership with Ingram-Micro is a critical step to allow for the migration of the IT reseller to move into the CE space. Through our own efforts and those of the INSTEON development partners we will see INSTEON in mass market retail as well as in the builder community.” 8. What is the INSTEON Alliance? “The INSTEON Alliance is more of community than anything else. It is a group of companies and individuals who share the same basic thoughts on how to move the INSTEON solution forward into all markets and all product categories.” 9. What kinds of companies can join the alliance? “Our membership includes large OEMs, small and medium companies, and also individual developers. We like to think of it as the Linux business model. We are currently building membership in the INSTEON Board, which we will populate with representative companies that include all the types of INSTEON adopters: from the large OEM to the individual developer.” 10. What is an example of a company who would sit on your board? “Our target is 7-12 members representing all the components of the product chain; from a grass roots developer to a Fortune 500 company. Examples of companies that are ideal include those that might fly under the radar from a brand recognition perspective but have huge market shares in their categories of for example HVAC and security.” 11. Some competitors feel that your model of focus on affordability is not sustainable. What do you have to say about that? “We have the one company-one consortium model. Unlike the ideas held by our competitors, low cost of entry is actually a good thing for enabling the home automation market. The primary reason that we believe what we believe is because we have been delivering our products to customers for 13 years and we have spent a lot of time understanding their needs. Plus affordability means wider adoption of INSTEON and that is a great thing for our developers and customers today and those that we will be acquiring in the future” 12. What is involved in joining the alliance? “We offer three levels of membership. They range from $2,000 down to a $99 level. There are no hurdles to joining, simply a fee required. You will find details of the alliance and membership benefits at www.insteon.net”. 13. If I am an OEM/manufacturer thinking about doing an INSTEON product, what do you see as some of the more interesting applications? “This is the exciting part of INSTEON. The dual mesh network provides the foundation for enabling a broad range of new applications. Some of which do not exist today. Security, safety, and surveillance are gaining a lot of attention right now and we believe that home sensor products and solutions will see tremendous growth. INSTEON enabled sensors in a home will allow the home to contact its owner via email or cell phone when an invent happens in the home be it a door opening, water in the basement or changes in home temperature to a name a few. We are also seeing white goods applications like downloading recipes to your microwave. In the health arena we have run into bathroom scales that send data to your PC and also usage feedback from a heart patient’s treadmill to the Doctor. Also remote pool and spa control is a great application. The general theme of access control working with the automotive industry for automated garage door openers is another really interesting application. In the energy control area, an HVAC system which, in the middle of summer, will first lower your blinds, and then turn on the overhead fans before making the decision to turn on the air conditioner offers great energy savings to the home owner. There are tracking applications such as the “nanny-cam” or latchkey kid implementations that allow homeowners to monitor and record the comings and goings of children and those employed to care for them. Going beyond this, we envision INSTEON being used for the house just as OnStar is used in cars, with added services provided to the consumer. Finally, AV control looks very promising. The application of the home movie experience being automated and enhanced by INSTEON. One touch of a button to close the drapes, turn on the TV, bring the lights down, and turn on the video. Integrating INSTEON into the video tracks, something that could either be done by the Hollywood producer or very simply by the home owner themselves to create an interactive, 4D movie experience expanding on the Philips Ambian concept.” 14. To what extent is Smarthome.com a potential sales channel for OEMs who adopt INSTEON? “Members of the Alliance can get placement of their products on the Smarthome.com and INSTEON.net web sites and introduced to ours sales channel. They also receive co-marketing assistance, and many other benefits unique to our Alliance. In fact we will even work with our member companies to help them get placement on Amazon.com and HomeDepot.com.” 15. Will you license INSTEON technology for further development by parties outside Smarthome? “Yes. Our licensing model is absolutely unlike any other. There is no software license fee whatsoever for software developers developing INSTEON solutions. We also will license the technology for inclusion by manufacturers into their own products. There are currently over 40 INSTEON enabled products in development by our customers. First Alert, Broan, Somfy are a just a few of the companies developing INSTEON based solutions. We will be announcing more partnerships as well as more detail on our licensing program at CES in January.” 16. Based on your experience with the customer requirements in this space, how do you think end users will adopt these new wireless technologies in their homes? “To reach the home market, you need to solve three issues: Simplicity, Affordability, and Reliability. We have done that with INSTEON. Our dual-mesh and Plug and Tap ™ setup makes INSTEON products simple for consumers. Our licensing and chip costs are affordable to OEMs and this makes the overall products affordable for consumers. Our INSTEON dual-mesh capability along with the fact that each node in the network simulcasts the signal, makes our network the most reliable option on the horizon today. Finally, there are currently 7-10 million homes that have X-10 in them and those customers came to us looking for an option to migrate their solution. With the interoperability that INSTEON enables we help our customers to migrate on their own terms, on their own budget. That lowers the total cost of ownership for INSTEON devices and provides for the optimal customer experience.” 17. What can you tell us about your relationship with Intel? “Intel is very interested in the Electronic Home Improvement and Automation space. It would be inappropriate for me to comment further.” 18. One of the issues your competition uses is that you have an inherent conflict with the customers whose products you carry through your sales channel. To what extent do you give preferential placement to INSTEON products on Smarthome.com? “Smarthome.com is a separate company under our parent company SmartLabs. It has been the largest channel for a vast majority of our competitors sell through as well as our own branded products. For Smarthome.com to grow and continue its market leadership it is critical for that group to continue to offer products that consumers want to buy. Therefore the Smarthome.com team is brand agnostic and focuses on what sells. Metrics on what sells do not lie. INSTEON enabled lighting products are currently outselling our closest competitor over 150:1 therefore it gets good placement. In addition, if you examine the history of the company the proof of Smarthome.com’s position is the fact that that team has sold competitive products successfully for years.” 19. Can we expect to see announcement from Smarthome at CES? “We will be making a number of announcements about chip licensing, pricing, and roadmaps. These announcements will serve to expand on our support for both individual developers and OEMs. We will also be announcing new developer partners and details about the new corporate structure.” 20. Can you comment on a rumor that you are announcing a new line of affordable home control lighting products? “Happy to confirm the rumor and line of lighting control products. As proof to the cost effectiveness of INSTEON, we are introducing a line of basic INSTEON enabled lighting control products under the ICON name. The MSRP of an ICON dimmer switch is $19.99. The price of a “normal” dimmer switch is considerably more. The ICON line essentially offers the quality construction, sophisticated technology and outstanding performance of high-end devices at a fraction of the price.” 21. Is there anything else you would like to tell our readers as a final note? “Yes. If you are a developer or manager or executive in this space and you are not considering INSTEON, you are doing a disservice to your shareholders. You owe it to your company’s constituents to make an honest assessment. That is all I ask: find out about INSTEON. You may love it or you may not, but at least you’ve made an informed decision. We make it easy, a developers kit is available for only $99.00, compare that to development kits from our competitors.”. More information about INSTEON… This interview ran in our November 2005 newsletter West Technology Research Solutions, LLC © 2007 All Rights Reserved |