Wink Subscription Announcement Emphasizing Smart Home’s Trajectory

In May, long-time North American market smart hub and smart home platform provider Wink told its customers that its smart home installations would stop working unless customers signed up for a US$4.99 per month subscription package. The switch to subscription fees came as the company tried to battle “long term costs and recent economic events [that] have caused additional strain on our business.” The announcement, made on May 6, 2020, initially gave Wink users just seven days’ notice before service would end for those who did not switch to the new subscription arrangement.

According to the company, the cost of maintaining its cloud system demands more from subscribers than hardware fees. Over the years, the company has expanded its product offering from a smart home hub to include motion and contact sensors, alarms, and water sensors, but there have been longstanding issues with the availability of these devices and how much commitment the company had to them. For example, in mid-2019 the company posted a response to a Reddit community acknowledging issues on product availability including the key hub offerings and emphasizing the company was not “dead” just focusing on platform stability and product development.

Wink has built its presence in the market—connecting close to 4 million devices during six years of operation—through an ability to support leading devices and systems in the market. This includes 38 brands listed on the company’s website including many of the largest smart home players

The company also faces deep-pocketed competition from voice control platform players that have increasingly developed their offerings to become direct controllers for a range of smart home devices as well as control interfaces and extensions to smart home systems. For its part, Wink supports an integration for Amazon’s Alexa platform to its offering, but not for the equivalent offerings from Google or for Apple. While such rivals have the resources to expand their smart home offerings, they are also better positioned than Wink to benefit from each smart home that uses their hardware and services. For its part, Wink remains committed to not leveraging smart home data as an additional revenue stream, maintaining its “user data should never be sold for marketing or any purpose.”

After its initial emergency announcement, Wink has pulled back on its immediate subscription demands. However, subscription in some form is still planned. By May 20, 2020, the company stated that despite having been in a “very rough spot” it would not implement subscription services immediately. Although none of the of the subscriptions that users immediately committed to would be collected in May, Wink said that the response had made it confident that it will be able to set a date further in the future for subscription services to begin.

In truth, Wink has been struggling for some years. Spun out of a tech incubator partnership between Quirky and GE in 2014, it was bought by Flextronics for US$15 million and sold to i.am+ in 2017 for US$38.7 million plus manufacturing commitments. Throughout, Wink has maintained a commitment to smart home hardware purchases as the key revenue stream. Rivals—with broadly similar approaches aimed at delivering multi-vendor, multi-protocol gateway and platform support—such as startups Revolv and SmartThings were acquired, while retailer offerings such as Lowes and Staples have shuttered.

With a business model still built around hardware revenues, it is difficult to see Wink’s decision to hold back subscription charging as anything but a short-term step. It is also hard to see how, even with subscription, the company’s future is secure. Even as smart home continues to push into more and more homes, growth is typically on the back of free smart home platform service supported by companies with the deepest pockets around. Amazon, Apple, Google, and Samsung all have the incentive and ability to support smart home services as an investment. Smart home service brings closer ties between consumers and the company’s core offerings but also brings valuable data that can be leveraged across the company providing service and sold to third parties.

At the same time, the growing appeal and value of smart home are bringing more and more smart devices and appliances into the market. For Wink there is a significant cost in maintaining and extending connectivity to these systems. For example, also in May, Wink announced that the Wink system would no longer be able to control Chamberlain MyQ smart garage door systems from June 1 onward. Wink said that, under terms of a new agreement between the two companies, Wink would have been required to generate tens of thousands of new MyQ users each year as well as pay hundreds of thousands of dollars in annual licensing fees to Chamberlain.

Earlier in the year, the company also had to tell users that Wink would not work with Nest products anymore if consumers migrated their Nest accounts to Google accounts as part of the shuttering of the Works with Nest program. The move effectively made Wink users choose between Wink connectivity and future management of their Nest products. Given the typical investment in a Nest thermostat, for example, end users were unlikely to favor Wink support over Nest device and account management requirements. 

Smart home is increasingly pulling in companies and products from the broader consumer market and not just smart home specialists. This was evident in the companies represented in the launch of the Connected Home Over IP (CHiP) project at the end of 2019. That raison d’ete for that project is to eliminate the cost and expense of managing multi-vendor integrations into smart home platforms. With a common application layer capable of standardizing integration between smart home devices and management platforms, the potential arises for fees such as those between Chamberlain and Wink to rescind. However, while that should help one pain point for Wink (which is not part of the CHiP development project), it will do nothing to tackle the escalating cost of delivering cloud management and support to a growing install base.

The focus on smart home by the largest Consumer Electronics (CE) players in smart home control means that the conditions that created potential for independent, low-cost, consumer-targeted smart home platform providers have all but disappeared. Now, CHiP promises to make the functionality delivered by these offerings unnecessary as well. At the heart of this is the cost of delivering a consumer smart home platform for free. While it is far from an end to the potential for hardware vendors in the market, it does signal a stricter bifurcation between hardware and platform provision. Increasingly, it will be cloud connectivity and driving value and revenues from its provision or avoiding its cost that will be key.

One clear example is the German-based smart home device specialist Eve. The company has built its device offerings around only Bluetooth connectivity in its devices. That means no cloud connectivity and no cloud maintenance costs for the company. Its end users either forego the away-from-home control that cloud connectivity enables or they leverage the Apple HomeKit capabilities in Eve’s offerings. Via the Apple HomeKit cloud platform—which requires a home iPad or HomePod in the home—Eve device customers can control their devices remotely, but with cloud integration and management costs borne by Apple, not Eve. The CHiP project promises to extend that HomeKit cloud connectivity into cloud-to-cloud connectivity, which would bring greater integration and interoperability to Eve devices but still without the associated long-term costs that come with cloud provision.

How long Wink can navigate in the changing smart home landscape by just introducing subscription remains to be seen.