I recall reading official stories that said the Cloud centric model was chosen primarily to reduce the cost of the Hub V1 (Kickstarter) and “SaaS” was / is getting extra trendy at the time.
But it is also a fact that the margin for “services” is quite a lot higher than hardware, particularly if you’ve permanently locked-in your customers to be dependent on the service (i.e., SmartThings hubs are quite useless if Samsung pulls the plug; or, more likely, adds irresistible upgraded software services that are only available for a subscription fee).
Also; as @geko pointed out in a dead-on post, (but was apparently deleted?):
The article in the Forbes magazine that predates acquisition by Samsung shed some light on SmartThings business strategy at the time.
The bigger opportunity for SmartThings and the whole Internet of Things industry is in selling services. Insurance companies want to issue more intelligent policies based on live data emanating from your home. Elder-care companies are eager to charge families for the ability to monitor the condition of their loved ones via smartphone monitoring. Companies like SmartThings would receive a portion of each sale made through its system.
It’s not a secret or a conspiracy theory … but a valid business model that all large consumer-oriented corporations are extremely interested. And Samsung is one of the largest. That’s why they picked a cloud-based platform, not a stand-alone one like Vera, which has always been open to OEM partnerships by the way. The amount of data that can be mined via a Smart Home system is immense. This fact should not be ignored.
Why do I dig up the above quote the grave? Because it is very relevant to this conversation…
Indeed, SmartThings’s “Terms of Use” state that the data we generate can be used by SmartThings anyway they want (including sold) – but in anonymized form. The Terms also state that we will be notified if the system is used for targeted advertising (or something like that…).
In short: I think it is possible for some consumers to be concerned that they believe they are buying a home automation system, but, in reality, are paying to be a part of a marketing machine. Of course, in this age of Google etc. (free search, gmail, Android), this paradigm should come as no surprise to anyone. Yet … it still can feel like a violation.