British Gas- Now A Broader Smart Home Contender

With the acquisition of AlertMe, British Gas says it will become the UK’s largest connected smart homes provider.
Published: Mon 16 Feb 2015

The connected smart home is emerging as big business. Big players like Google Nest, Apple HomeKit, Samsung and Mitsubishi are pushing into the market, vying for their place in the sun.

Already, a number of utility companies in the UK have recently signed partnerships with smart thermostat companies in response to new energy efficiency targets set by the UK regulator Ofgem.

Google-owned Nest is being offered to Npower’s customers, Berlin-based startup Tado has partnered with SSE, and French startup Netatmo has recently partnered with EDF Energy.

So, it comes as no surprise then that British Gas has just announced its intention to invest in AlertMe, a developer of platforms for running various domestic “smart” devices.

The smart home deal

The deal is valued at £65 million (US$100 million). This will give British Gas the opportunity to provide smart services that include heating, lighting and much more. The net cost to British Gas and its owner Centrica will be £44 million (US$68 million), after accounting for an existing 21% investment in the company.

In addition to being an investor, British Gas was a user of its services, specifically its Hive product, which enables remote control over heating and hot water. Currently, 150,000 customers use Hive. [Engerati – British Gas Is Bringing Innovation To Their Customers.] and [Engerati – British Gas to Take Control of Your Home-But in a Good Way.]

Founded in 2006, Cambridge, UK-based AlertMe was an early mover in connected home technology. In fact, AlertMe was one of Google’s earliest partners when it first began exploring the smart home market.

AlertMe provides an end-to-end service in the form of a platform that enables various devices and applications to communicate with each other. This helps consumers to view their consumption is a more holistic manner.

The company had raised a total of US$36.8 million from backers that also included Index Ventures, VantagePoint Capital Partners, SET Venture Partners and Good Energies.

Mary Turner, CEO of AlertMe, says that AlertMe has been the pioneer in establishing and growing the Internet of Things commercially in the UK and USA. But even as an early mover, AlertMe didn’t really have much in the way of critical mass. The company says its technology was in use in 200,000 homes, with “personalized energy data services” in 500,000 homes, with many of those in the form of smart meters. (In terms of data points the numbers are much higher: there are 1 billion smart reader readings taken each month and 10 billion internet of things data points overall.)

Controlling more than heating

With its new asset, British Gas, which is owned by energy conglomerate Centrica, there will be a potential to boost AlertMe’s business, including rolling out new smart home products that control other aspects of the home beyond just heating.

British Gas says the acquisition of AlertMe means the company now has “all the technical parts in place” to launch a family of smart home products.

The smart hub that comes as part of a Hive installation uses the ZigBee smart home wireless standard. Its firmware is upgradable to enable it to become smarter and support additional devices. In addition to other heating-related products (such as multi-room zones and radiator control valves), British Gas will probably have its sights on smart lighting as an additional Hive product or at least something that could be controlled and supported by the core Hive offering, perhaps via support for an existing third-party smart lightbulb product.

In this context — and with the acquisition of AlertMe — the Hive thermostat can easily be viewed as a Trojan horse into the smart home. It has the potential to establish British Gas as a much bigger player in the fast-growing smart home space.

As Susan Furnell, Founder at Furnell Consult pointed out in our article Multi-sided Business Models Will Unlock the Energy Control Products Sector, the opportunity for innovation will stimulate more partnerships and these partnerships will help reach the fundamental price so that the connected home sector can finally take off.