Alphabet Inc.’s (NASDAQ:GOOGL)smart-home products subsidiary Nest has a lot of work cut out for it as it seeks to rebuild its shattered customer perception. This follows its decision to disable a range of old products, sparking a chorus of condemnation from distressed consumers.
The company’s decision to close its Revolv smart-home hubs means the $300 devices and their accompanying apps will stop working completely. Most consumers had interpreted the company’s decision to shut down the devices as an indication that it will discontinue further support for the devices, making them vulnerable to hackers.
Predictably, the decision has infuriated customers and triggered a public debate on customer rights and ownership privileges as we edge towards a much connected future.
Decision will Reverberate across IoT Market
The long-term repercussions of Nest’s decision to shut down the Revolv smart-home hub will no doubt reverberate across the nascent Internet of Things (IoT) market.
While the IoT market is a bit different from the smart-home market, the concept is similar in that it involves devices that are connected to a central control hub. The IoT market, which is fast gaining traction, is the potential goldmine of the future for technology firms.
To illustrate the potential of IoT, U.S. oil firms have adopted the technology in order to cut down production costs by making their operations more efficient. A joint study by Microsoft Corporation and Accenture found that 89 percent of oil and gas executives surveyed believe that IoT could be leveraged to improve operations. This includes using IoT devices to survey land for potential oil finds and oil extraction.
In the nascent smart-home market, companies have found convincing consumers to buy new devices an uphill task. However, this hasn’t deterred the likes of Nest, which has a sizeable market share that, as we have found, was built on questionable business practices.
Nest Advertised “Lifetime Subscription”
Nest advertised its Revolv smart-home hubs as having a “lifetime subscription”. Nest had previously bought Revolv, which dealt in smart-home devices, nine months after its own purchase by Google.
The acquisition was primarily to bring Revolv developers into Nest, which immediately discontinued sale of Revolv devices and put the developers into its “Work with Nest” project.
However, Nest still offered support for Revolv customers, as they were marketed with a “lifetime subscription. This farce meant the products would be provided with lifetime updates and support as well as other features.
But last month, Revolv announced that it was discontinuing its operations and said it would halt sales of its existing line of products in May 2016. The company’s founders, Mike Soucie and Tim Enwall said they wanted to concentrate on the Work with Nest project.
The bone of contention with its customers is the fact that its website no longer mentions “lifetime subscription” on its products and also tells users all its products have no warranty cover. The warranty is listed as being valid for one year against defects in workmanship and materials and has already expired.
Angry consumers such as Arlo Gilbert have lambasted Google, questioning their ownership rights if companies can remotely and forever shut down their devices.
Nest CEO Tony Fadell is of the opinion that the company has the right to do so. This stand is likely to put him in trouble given the emerging revelations that he didn’t have rosy relations with Dropcam founders. Nest acquired Dropcam in 2014, before differences between Fadell and Dropcam executives sparked a flurry of resignations in the acquired firm.
While it isn’t clear whether Nest made any attempt to warn its consumers of the looming shutdown, the decision will cost the company a lot. Most startups find getting new customers a monumental task, and therefore damaging any customer trust will make it harder to win them back.