How does ST make its money?


#1

I got the ST Hub and some other ST items along with some GE dimmers (that’s where most of my $$ have gone).

And now I just sit back and play around with programming it integrating with Sonos and Echo and such.

But how does ST make it’s money? I’m not paying a subscription so there’s no ongoing revenue stream yet here they are releasing updates, upgrading their infrastructure and all the things that I expect them to do but how do they afford it? They’ve got some back end processing that has to happen which isn’t the overhead of other systems that I buy and expect bug fixes and update for. And that’s the part I don’t get. How can they afford this back end processing without monthly subs?

Look, I’m not looking for another monthly bill…I’m just trying to figure out how they stay in business long term. I’m very happy with my ST setup and want ST to become the leader in this space.


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(Amauri Viguera) #2

There’s a popular theory about “data mining” going around, although how exactly that would translate into cold hard cash (or bitcoin) remains to be seen.

ST does have plans to have a monthly subscription for their home security solution, although it also remains to be seen how much money they can actually make out of that and whether or not they can work out the kinks in the system.

The whole idea of mining the data doesn’t really sound too plausible for me. Sure they know what kind of devices I have, and probably when I’m home or away and a few other bits, but I can’t really translate that into money for them. Sure, you can sell me a few more trinkets or suggest that I change energy suppliers or something based on my occupancy, but that’s entirely subjective and is not going to put a single dollar into their coffers if I choose not to participate.


(ActionTiles.com co-founder Terry @ActionTiles; GitHub: @cosmicpuppy) #3

Yup… I’ve given the same answer @viguera hints at … and a few variations, in many threads.

Run some searches and enjoy the reading and join the conversation…


(RH) #4

I think Samsung Apple, google and ever entity that makes anything) is collecting valuable data on what we want and how we use things as well as how we live our daily lives. Being server based allows this. Even the bitching about stuff that goes on here presents insight as to what we’ll tolerate and what we won’t. The integration of all things electronic and electric is the goal of all the manufacturers of said devices. That definition will change. You’ll wear electronically enabled shoes one day. Yes…you will. The plan is to make it more than a system of things, the plan is remove all differentiation between our devices, our lives and us as humans. It’s going to happen and it’s going to be WONDERFUL! Unless…it isn’t…


(Geko) #5

It may not make money today, but it’s an integral part of the larger Samsung strategy to offer real-time monitoring and control services to its business partners via its B2B SmartHome platform. At least this is my theory, based on publicly available information.

Take for example Samsung Smart Fridge that was announced at CES. It has a SmartThings hub built-in. It also has built-in inside cameras. You have to ask yourself why? Don’t you know what’s in your fridge? Sure you do, but your local grocery store does not, and they would be very interested to know when you’re about to run out of milk or eggs, so that they could sell you more. And guess what, you can buy them right there on that fridge using large 21" display. It’s genius! I’m sure Samsung will get a cut from every transaction (in addition to whatever fees the grocery store pays for using this service).


#6

If you’re typical, most of that playing around has been nearly futile, at the mercy of instabilities in the cloud, having to yank batteries to reboot, etc.

SmartThings is supported by the APA and by the companies behind Benzodiazepines Ativan and Xanax, both of which are even more addictive than the glimmer of hope you get from a SmartThings trigger working, even if just momentarily. Essentially ST is a gateway drug to more than just home automation.

Or so it seems.


(Tony - SmartThings Unpublished Contributor ) #7

My theory is that an eccentric billionaire promised to pay them every time its cloud-based system went down.


(Alex) #8

How much commission do you think Samsung can make on grocery sales? This is small potatoes to them, so to speak.

My theory is that SmartThings was created with the intend to sell it as soon as possible to the highest bidder. When it was conceived, it was revolutionary in some ways and HA was just emerging and IOT was just starting to make a buzz.

Then comes Samsung and decides that they want to add more features to their major electronics to make them stand out from the competition. So they implant $20 worth of ST hub hardware into every television. Promotional materials (plus 20,000 devs and vibrant community) look fantastic and they make money.

When I bought a new fridge, I bought one that had ice maker over one that didn’t. It’s been 7 years and I haven’t found the time to run the water line to it. Eventually I disconnected the ice maker to make more space in the freezer.

Same thing with new televisions: TV+HA > TV. SmartThings is just a feature.

I don’t believe SmartThings is making money, but they allow Samsung to make $$$.


(Geko) #9

It’s an economy of scale. How much Apple shaves off each ApplePay transaction? Not much, 0.15%. What is the size of the US grocery market? Well, in 2014 it was $594B (billion!) dollars. If Samsung gets 10% of that market, that’s $89.1M annual revenue. Not too shabby! And that’s only one potential revenue stream in the US market only. Any questions?


(Alex) #10

Darn, this makes it a much more mundane conspiracy!


(RH) #11

Well I want one. The glass door is cool! Tap on the glass and lights up inside! Wave your foot underneath the front and the doors glide open. Damn it I want to be Gearge Jetson!


(Amauri Viguera) #12

My problem with this theory – and the whole “data mining” theory as a whole – is that there are plenty of easier and cheaper ways to get to this market. My supermarket already knows when I buy milk. They know exactly how much I bought, when I did it, when that particular bottle expires, etc. They have also suckered me into providing them with free analytics and tracking by giving me their “loyalty” doodah that I diligently scan every time to save a few pennies.

THEY can go ahead and say “Oh look, every time he buys a gallon of milk, he comes back in 2 weeks to get another one. It’s always the same brand, even though the other brand is cheaper or we have it in sale…” – so they know exactly how to target me effectively with ads in their app, coupons, brain waves, music in the store, whatever.

By comparison Samsung would know that I got a gallon on milk in the fridge. They have no idea when it expires or how much is left. They also don’t know about which cereal I like or how many bananas I got left.

I get that “big data” is a big market, but the percentage of brand loyalists that will deck their entire house in Smart Samsung products will still not yield them any significant revenue from what I can see. If I get a Samsung TV, phone, watch and fridge, the amount of data that they can acquire will probably be staggering (assuming that I allow them to), and yet that doesn’t magically turn into money as far as I can see. There are only so many gym memberships or treadmills that they can sell me.


(Geko) #13

It’s ok to be a skeptic. The truth is that, this is where e-commerce is going. Look what Amazon is doing with Dash, one-hour delivery service, drones, etc. I’m sure Google has similar plans with Nest. Appliances are Samsung’s biggest money maker. They would be stupid not take advantage of that because someone else surely will.

They have no idea when it expires or how much is left. They also don’t know about which cereal I like or how many bananas I got left.

Oh yes, they do. Read more about the fridge. It’s smarter than you think. :smile:

Anyway, this is just one obvious example how SmartThings technology can be used to make money. I could think of half a dozen more, easily.


#14

The math doesn’t work because it’s starting from the wrong point.

The $594 billion is all groceries. Not just the ones in the non-freezer section of the refrigerator.

And that’s all refrigerators, not just Samsung high end models with cameras inside.

There are a couple of more population reductions in there, like the profit margin on refrigerated goods and the number of people who turn on the feature, but we’ll leave it there.

That 89 million is more like 400,000 once you start from the right place. And that’s the gross–Samsung still has to pay for the cost of installing and supporting the feature for both the refrigerator owners and the data service subscribers.

That data stream service won’t be profitable. And as @viguera pointed out, it has to compete with the loyalty program data, which is already nearly perfectly detailed. :hammer_and_pick: (And knows whether I buy organic celery or not and what’s inside that deli package, things a camera may not know.)

I’m not saying there isn’t some company somewhere that might not find the information valuable–just that it’s not enough to generate profits.

Far more likely that it will directly match Amazon’s concept: the refrigerator owner will sign up to replenish specific use of specific SKUs, like strawberry Greek yogurt, and The refrigerator will track just those items. Very much like how quirky’s egg minder works. But then that’s another order of magnitude smaller than the original numbers, since now it’s only some of the items that are in the refrigerator. But it won’t track the two quarts of onion dip you got for the Super Bowl party. :wink:


(Amauri Viguera) #15

It reminds me of the days of my cuecat barcode scanner and PERL, like a million years ago.

Seriously, all this HA stuff is just rehashed copies of stuff that everyone has done for a while. The only bad part about the whole thing was that you had to scan items when you got them home as well as when you threw them out, so that the database would be updated and it would remind you that you ran out of milk or whatever.

Then someone had the idea of doing this with NFC, or integrating the reader into the fridge, but that’s only gonna work for some things, some of the time.

I guess we’ll wait and see where this goes.


(Geko) #16

I stand by my estimates. Sure, Samsung will not be able to capture 10% of the grocery market tomorrow. But they are innovative, forward-looking company. They’re working hard to ensure that they will stay relevant and profitable for years to come. Connected home means more to Samsung than just sending you a text message when your laundry is done. The real money is in business-to-business partnerships and services they can sell to the third parties. Dr. WP Hong, who drives this effort at Samsung, is a very sharp guy, a visionary and SmartThings is a keystone of his strategy.

Bottom line, people who think that SmartThings is just another Home Automation system with a twist, just don’t see a big picture. It’s much more than that. The hub is just a development and test platform to bring this technology to the market.

P.S. BTW, this explains perfectly why we all feel like beta-testers (or Guinea pigs, if you wish). Because this is what we really are.


(Billy) #17

Your thinking the money is in Samsung using the big data… As a “data miner” I can tell you the value is in selling the rights and data.

So lets take the “electronic shoe” concept above… Nike has one already, no if you can pair that to smart things and it just reads the data when you come home then no more need for a nike app to force a sync - this makes sure nike gets the data it is looking for while giving you a portal on your phone to view the data for your workout… one that nike can market to you though.

For the Fridge, it’s not when the milk expires or what the store can do for you… that peanuts… It’s what the manufactures can discover about you, Stores don’t like to share their program details, so they charge good cash for it, most of the time you pay extra for the right to share to your distributor as well… But if you are able to tell when you bought the milk, yogurt or lunch meats you can tell people the items are going to expire, prompt then to rebuy or suggest a product that might last longer/taste better. you could also partner with Peapod to help them decide what items to carry locally (you know the local store isn’t going to allow sharing with a competitor).

The smart home could evolve to use things like the progressive safe driver module installed in cars, and update the data to progressive - by the way it also reads the mileage so oil change places would like to remind you to change your oil, and it also can read the computer diagnostics to let you know that you have something wrong with your car - oh and it know the amount of gas in the tank so the local gas station can send you a coupon for a free coffee with a fill up if you try then instead of the normal station you go to.

Add in some TV functions to monitor for ratings of IP based viewing (getting Netflix type data from everything you view) and local commercial injection (some cable stations do this currently)… big money for that data…

DATA is the value, selling compatibility is a side venture as is hardware… If they can get the market to buy in to the product they can control the data… it a long term play, but one very much like google - just with out the need to have someone at their computer…


#18

Understood, but I stand by my professional assessment that the SmartThings hub technology is not the cornerstone of anything anywhere. :sunglasses:

You know my opinion, even though it’s not a popular one: I think Samsung already had a business strategy in place in 2012 based on the data cloud as a service and Artik as A hardware consumer of that service.

And that they bought SmartThings for the name (which they almost immediately trademarked in multiple areas, including appliances and televisions) and for the existing good buzz.

And it worked: Samsung was a featured name in pretty much every financial trade piece on IOT in 2015. And a lot of the technical trade press as well. So I think Samsung got their money’s worth.

As for the future: Samsung makes Bluetooth door locks–but they haven’t turned on the Bluetooth antenna in the SmartThings v2 hub. They’re heavily invested in the smart watch line: but they haven’t released a SmartThings app for the latest models. They just developed a new Z wave based security system for sale in Korea – – and it has no overlap with SmartThings. Samsung digital health is growing fast, but again no engineering overlap with SmartThings. So I’m seeing use of the name, but no cornerstone technology, either for the hub or the SmartThings cloud.

It will be interesting to see what actually gets released with the new televisions. And of course the refrigerator. :sunglasses:


(Amauri Viguera) #19

Well I think that’s the problem when making that comparison though… If I’m the kind of customer that will freely hand off that kind of data to the fridge or the TV, chances are that Google / Apple and my grocery store already have all the information they can use to one-up Samsung, and they have that data today, without me having to go buy a Samsung TV or refrigerator.

Who is Samsung going to peddle this data to, in 6 months or a year or whenever I decide to buy a fridge, that doesn’t already have it today?


(RH) #20

Technology is advancing. I know everyone knows this. Markets decide what’s a good or bad idea. I loved the Apple Newton, but almost no-one else did. This stuff is going to happen whether we like it or not. I’m excited by it. I’m old enough to remember when a color TV was a big deal, a microwave oven was sci-fi movie dream stuff and I once had a car with a navigation system that used small cassette tapes for mapping. Yes, really. None of this means Samsung is going to rule the world in this domain of IoT, but the concept is sound and people generally like this stuff. I mean after all… even those who have a negative view of this stuff are logged in here for SOME reason right? I doubt anyone setups a ST account just to spout how silly it is.