The smart home industry has been pushing forward with many consumers at least intrigued by the idea of a technology-laden home that can actually make their lives easier. It's also not as far along as many would have thought by now, and that's largely due to the lack of dominant players in the space. Everyone's nervous the technology they spend thousands on today could go bust in the next few years.
However, a recent Forbes article suggests Vivint is the dominant player right now and will be for years to come, thanks to its unique business model that reduces the pain of spending thousands of dollars upfront for a possibly unnecessary technology (do we really need our phones to turn on the lights?)
The company owes its success, in part, to a business model that breaks with industry norm. Rather than sell you individual smart home devices, which can be pricey, Vivint relies on a subscription model. The company installs an average of $1,500 worth of hardware into a home–a mixture of gadgets made by Vivint and the likes of Nest and Amazon–and in return it charges a monthly fee that can total $480 to $960 per year. Customers sign a contract, which lasts between three and a half and five years. Vivint doesn’t actually start making a profit until about three and a half years into the relationship. It’s akin to carriers subsidizing the price of a smartphone. It helps customers avoid the sticker shock of an expensive purchase, and it gives the company a recurring revenue stream.