Verizon Gambles on Home Automation

2:00 PM -- Home automation has loomed as a potential source of revenue for telecom service providers for several years now, but there have been few bold ventures into this realm, and for good reason.

As skeptics are quick to point out, delivering home automation on a mass-market basis requires a level of expertise and customer support for which telecom service providers may not be prepared, all to deliver a product that consumers may not know they need.

So why is Verizon Communications Inc. (NYSE: VZ) venturing where others, such as Microsoft Corp. (Nasdaq: MSFT), have gone, only to face defeat (or worse, apathy)? (See Verizon Tests Home Monitoring.)

For one thing, Verizon's test of home automation is actually an effort many years in the making. Within its own R&D facilities in Waltham, Mass., Verizon has been developing home-automation applications and services for many years now, and publicly demonstrating them for at least the last four years.

Verizon has also been working with -- and investing in -- partners such as 4HomeMedia Inc. , which developed the software that enables the connections with electrical meters and a variety of devices in the home. Motorola Inc. (NYSE: MOT) ended 2010 by acquiring 4Home. (See Verizon Invests in 4Home and Motorola Acquires 4Home.)

The other difference from previous efforts is that Verizon is now in position to combine cloud-based intelligence and applications with advanced in-home wireless capabilities that can use auto-discovery and other techniques to reduce in-home complexity.

Of course the major challenge remains to convince consumers that they need to use an iPhone or their PC to lower their thermostat or turn off lights. That's a challenge technology can't solve. Verizon will have to convince consumers that they can save enough money on their utility bills or by eliminating separate home-security systems to justify the cost of the new service.

I think this is a risk worth taking, if a home automation service can generate incremental revenue, and it's highly likely Verizon won't be the last broadband ISP jumping into this risky pool.

— Carol Wilson, Chief Editor, Events, Light Reading

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