7 ms·

Boss: We introduced Hue back in 2012 w/ a plan to lose money the first 3 years developing the hub, subsidizing partners, and getting our product out in the mark

Boss: We introduced Hue back in 2012 w/ a plan to lose money the first 3 years developing the hub, subsidizing partners, and getting our product out in the market. Tell me we're seeing a positive ROI now. Hue PM: Hue is profitable, but only marginally so. Our strategy of making up the initial investment on $60 per bulb hardware is being undermined by cheap 3rd party lighting fixtures. Plus we're incurring costs responding to all of these non-hue connectivity and reliability issues. Boss: We control a large enough market share now and most of the market is already heavily invested in our ecosystem. Cut off hub connectivity for these 3rd party products. People should not be using non-Hue approved hardware with our software. We're a for-profit company, not a government or a charity. Hue PM: That won't go over well with the early adopters and the tech community. Boss: I've already run the cost/benefit analysis. The tech community might be mad for a little while, but we've got our sights set on industrial and commercial contracts now that we've proved Hue's viability in the consumer market. Do it.

mbesto 11y ago
This is 100% spot on. I have been in meetings just like this in a past life.
- wlesieutre 11y ago
  While this may happen in other instances, Zigbee Light Link products like these are 100% targeted at consumer markets. If commercial/industrial applications are doing a ZigBee controlled building, they're doing it with ZigBee Building Automation. (alternately, EnOcean, Enlighted, etc. which also target commercial markets with wireless lighting controls) Light Link - "Smart, easy-to-use lighting control designed for consumers." http://www.zigbee.org/zigbee-for-developers/applicationstandards/zigbee-light-link/ http://www.zigbee.org/zigbee-for-developers/applicationstand... Building Automation - "Innovative, efficient and money-saving workplaces." http://www.zigbee.org/zigbee-for-developers/applicationstandards/zigbee-building-automation/ http://www.zigbee.org/zigbee-for-developers/applicationstand... It's conceivable that they could carry the Hue brand into other markets, but the existing Hue Bridge that just lost compatibility is definitely not that product.
  - wlesieutre 11y ago
    I should also point out that Philips owns Color Kinetics, the biggest player in commercial RGB LED lighting. It's very much not a market they need to break into. http://www.colorkinetics.com/ http://www.colorkinetics.com/ Much to the rest of the industry's chagrin, CK holds a couple of fundamental patents on colored lighting by mixing red, green, and blue. Not that color mixing or PWM were new in 1997, but I guess they smushed together enough ideas that the patent office thought it was novel. As far as I know, they do have some competitors (Lumenpulse comes to mind) but aren't under any significant threats in that market because every competitor pays them royalties anyway.
kamaal 11y ago
Fine strategy until the universal controller app arrives. After that, the same Boss would hope they should allowed their app to control third party bulbs, since that way at least they would have a brand presence, and by that way that would have allowed them to sell their bulbs better than others.
- bsder 11y ago
  Boss will be promoted by then because profit went up 150% for two quarters.
  - TeMPOraL 11y ago
    It's funny how in today's corporations it is in manager's best interest to make decisions that are profitable short-term but bad for the company long-term - the manager will be there for a reward, but long gone by the time consequences come.
    - kamaal 11y ago
      In my opinion this is the biggest fallout of an economy that doesn't reward loyalty. If the company looks at the employee like a tissue to be used and thrown, why is it so surprising to receive the same treatment back.
    - bigiain 11y ago
      See also politicians and societies...
- mmanfrin 11y ago
  This is why I am betting on Amazon for the long win; the Echo is continually expanding to be able to control any device that connects to the internet, and Amazon isn't trying to push their own brand of bulbs (yet). They seem to be building themselves as the point of contact for humans to set off [whatever automated thing some other company sells].
  - 11y ago
cbsmith 11y ago
That doesn't seem like a fair view of the analysis. If the real value was in the hub, and these other lights were getting a free ride on it, then the opportunity would be to charge more for the hub. What is far more likely to be the case is that the support costs around problems caused by random third party components messing with the Zigbee network were exceeding the value of providing that support, particularly when you factor in that the customers they really wanted to grow wouldn't be using anything other than Hue's. So, while blocking out 3rd party devices decreases the perceived value of the hub, the drop in perceived value is far exceeded by the drop in support costs. Easy win. It's still hostile, but to a distinct use case, rather than their entire customer base.
- crystalmeph 11y ago
  That's basically saying that you can't expect anyone to profitably provide support for a device that anchors an "open" system. There will always be bad actors who screw up the network for everyone else (especially when you're talking about a wireless network), and "civilian" (meaning non-tech-savvy) customers will usually call the network hub manufacturer for support, because that is where they will see the problem, regardless of where the problem actually originates. Put another way, if your analysis is correct, it presents a fundamental weakness in any standardized architecture that relies on a central managing device, which could prevent the development of a robust ecosystem with many vendors.
  - cbsmith 11y ago
    No, that's not what I'm saying. There will always be bad actors. Often you design a system to handle them in ways that minimize support costs. Consider the case of 802.11 or USB or ZigBee. In general, most of the value of providing a device that works with any of those is a function of how well it works with any other device. The support costs are also a function of how well the device interoperates with other devices. That pretty much kills the value of making a device that only works with a manufacturers own devices, and provides strong incentives to work with as many as possible as well as possible.
- deleted 11y ago
  [deleted]
MrZongle2 11y ago
Not shown: the part where the Hue consumer product line takes a nose dive, resulting in an organizational shuffling, the loss of some jobs, and general agony and frustration on the part of everybody in the division except for the Boss, who moves on to another position because he/she was able to demonstrate how they squeezed profit out of the product.
- pmontra 11y ago
  Also not shown: when the current hub technology is discontinued and replaced with something newer and better and incompatible and you need to replace all the lights in your house unless you want to stick forever with the old hub. Ops, new lights and other stuff that talks with the hub won't work with the old one so you hope you'll never need anything new anymore. Probably not something somebody in this kind of things does.
  - danieldk 11y ago
    FYI: it uses the ZigBee standard, so it is likely that it will always be compatible with some third-party hubs and lights. I also expect that newer iterations of the standard will have backwards compatibility. That makes this choice of Philips worse: they implement a standard, but then choose to ignore devices based on (probably) identifiers (and probably introducing incompatibilities). It's toxic to the whole ecosystem. I think that some of their marketing material stated that they were ZigBee-compatible. So, I guess I can now (theoretically) sue them as a customer.
uremog 11y ago
Just like with Keurig 2.0!
nqzero 11y ago
> Boss: We introduced Hue back in 2012 w/ the intention to bait and switch the market once we achieved market lock in. Do it now FTFY
mmanfrin 11y ago
s/Hue/Keurig 2
mdip 11y ago
There's two problems here: 1. The costs they're incurring supporting non-hue compatibility might very well increase. Lighting is something people think they universally understand -- if it doesn't work when they expect it to, they call. In the rest of the "lighting world", people expect the lamp won't have problems working with whatever switch they plug it into. I still hear people confused about CFLs that don't work with their dimmers. 2. The large enough part of the market that they control might be large when that market is limited to "extremely early adopters of this kind of brand-new technology". The market will grow in many stages over the next few years and this is way to early to start giving people another reason to avoid your products. I'm usually an early adopter of technologies like this, however, I've held off because there were only a handful of implementations out there and the use cases for them was still a "that'd be neat, but not worth the money". I've recently become very interested and will be buying something in the next 6-months, though this is making me reconsider that now. I know I'm a future customer of this segment of technology -- not just lighting but upgrading my existing home automation system -- and I'm starting with lighting. I'm not, yet, a customer because I haven't found a good mix of "good product", "good interoperability", yet. So they've gained lock-in of all of their early adopters -- a very short-term investment[1] -- and caused the second wave of (in this case, also) early adopters to look elsewhere. They're nowhere close to the market that even high-end, non-smart bulbs command and they won't see much of it this way. People complain today about having to buy special bulbs for their dimmer switches; this is a whole other level -- you can't even use the lamp you just bought. No way someone like my dad is going to be a customer. I can see how this might improve sales in the very short-term. It also might not. It will increase support calls. It will hurt their ability to get future customers and might even delay the next wave of adoption as people wait for fear of buying something that will become obsolete. These are all the things I'm thinking about as a person who really wants this technology, has the money to buy it, but doesn't have the money to do it twice. And I can live without it for a bit longer. [1] Short-term because the people who are buying these for the most part have a lot of disposable income or a very small deployment, so switching to something else isn't necessarily as much of a lock-in as they'd like. And this product in particular, the primary consumer is tech folks -- they'll hack together the interoperability eventually, defeating the purpose.
bby 11y ago
right on point my man

mbesto 11y ago

This is 100% spot on. I have been in meetings just like this in a past life.

wlesieutre 11y ago
While this may happen in other instances, Zigbee Light Link products like these are 100% targeted at consumer markets. If commercial/industrial applications are doing a ZigBee controlled building, they're doing it with ZigBee Building Automation. (alternately, EnOcean, Enlighted, etc. which also target commercial markets with wireless lighting controls) Light Link - "Smart, easy-to-use lighting control designed for consumers." http://www.zigbee.org/zigbee-for-developers/applicationstandards/zigbee-light-link/ http://www.zigbee.org/zigbee-for-developers/applicationstand... Building Automation - "Innovative, efficient and money-saving workplaces." http://www.zigbee.org/zigbee-for-developers/applicationstandards/zigbee-building-automation/ http://www.zigbee.org/zigbee-for-developers/applicationstand... It's conceivable that they could carry the Hue brand into other markets, but the existing Hue Bridge that just lost compatibility is definitely not that product.
- wlesieutre 11y ago
  I should also point out that Philips owns Color Kinetics, the biggest player in commercial RGB LED lighting. It's very much not a market they need to break into. http://www.colorkinetics.com/ http://www.colorkinetics.com/ Much to the rest of the industry's chagrin, CK holds a couple of fundamental patents on colored lighting by mixing red, green, and blue. Not that color mixing or PWM were new in 1997, but I guess they smushed together enough ideas that the patent office thought it was novel. As far as I know, they do have some competitors (Lumenpulse comes to mind) but aren't under any significant threats in that market because every competitor pays them royalties anyway.

kamaal 11y ago

Fine strategy until the universal controller app arrives. After that, the same Boss would hope they should allowed their app to control third party bulbs, since that way at least they would have a brand presence, and by that way that would have allowed them to sell their bulbs better than others.

bsder 11y ago
Boss will be promoted by then because profit went up 150% for two quarters.
- TeMPOraL 11y ago
  It's funny how in today's corporations it is in manager's best interest to make decisions that are profitable short-term but bad for the company long-term - the manager will be there for a reward, but long gone by the time consequences come.
  - kamaal 11y ago
    In my opinion this is the biggest fallout of an economy that doesn't reward loyalty. If the company looks at the employee like a tissue to be used and thrown, why is it so surprising to receive the same treatment back.
  - bigiain 11y ago
    See also politicians and societies...
mmanfrin 11y ago
This is why I am betting on Amazon for the long win; the Echo is continually expanding to be able to control any device that connects to the internet, and Amazon isn't trying to push their own brand of bulbs (yet). They seem to be building themselves as the point of contact for humans to set off [whatever automated thing some other company sells].
- 11y ago

cbsmith 11y ago

That doesn't seem like a fair view of the analysis. If the real value was in the hub, and these other lights were getting a free ride on it, then the opportunity would be to charge more for the hub. What is far more likely to be the case is that the support costs around problems caused by random third party components messing with the Zigbee network were exceeding the value of providing that support, particularly when you factor in that the customers they really wanted to grow wouldn't be using anything other than Hue's. So, while blocking out 3rd party devices decreases the perceived value of the hub, the drop in perceived value is far exceeded by the drop in support costs. Easy win. It's still hostile, but to a distinct use case, rather than their entire customer base.

crystalmeph 11y ago
That's basically saying that you can't expect anyone to profitably provide support for a device that anchors an "open" system. There will always be bad actors who screw up the network for everyone else (especially when you're talking about a wireless network), and "civilian" (meaning non-tech-savvy) customers will usually call the network hub manufacturer for support, because that is where they will see the problem, regardless of where the problem actually originates. Put another way, if your analysis is correct, it presents a fundamental weakness in any standardized architecture that relies on a central managing device, which could prevent the development of a robust ecosystem with many vendors.
- cbsmith 11y ago
  No, that's not what I'm saying. There will always be bad actors. Often you design a system to handle them in ways that minimize support costs. Consider the case of 802.11 or USB or ZigBee. In general, most of the value of providing a device that works with any of those is a function of how well it works with any other device. The support costs are also a function of how well the device interoperates with other devices. That pretty much kills the value of making a device that only works with a manufacturers own devices, and provides strong incentives to work with as many as possible as well as possible.
deleted 11y ago
[deleted]

MrZongle2 11y ago

Not shown: the part where the Hue consumer product line takes a nose dive, resulting in an organizational shuffling, the loss of some jobs, and general agony and frustration on the part of everybody in the division except for the Boss, who moves on to another position because he/she was able to demonstrate how they squeezed profit out of the product.

pmontra 11y ago
Also not shown: when the current hub technology is discontinued and replaced with something newer and better and incompatible and you need to replace all the lights in your house unless you want to stick forever with the old hub. Ops, new lights and other stuff that talks with the hub won't work with the old one so you hope you'll never need anything new anymore. Probably not something somebody in this kind of things does.
- danieldk 11y ago
  FYI: it uses the ZigBee standard, so it is likely that it will always be compatible with some third-party hubs and lights. I also expect that newer iterations of the standard will have backwards compatibility. That makes this choice of Philips worse: they implement a standard, but then choose to ignore devices based on (probably) identifiers (and probably introducing incompatibilities). It's toxic to the whole ecosystem. I think that some of their marketing material stated that they were ZigBee-compatible. So, I guess I can now (theoretically) sue them as a customer.

uremog 11y ago

Just like with Keurig 2.0!

nqzero 11y ago

> Boss: We introduced Hue back in 2012 w/ the intention to bait and switch the market once we achieved market lock in. Do it now FTFY

mmanfrin 11y ago

s/Hue/Keurig 2

mdip 11y ago

There's two problems here: 1. The costs they're incurring supporting non-hue compatibility might very well increase. Lighting is something people think they universally understand -- if it doesn't work when they expect it to, they call. In the rest of the "lighting world", people expect the lamp won't have problems working with whatever switch they plug it into. I still hear people confused about CFLs that don't work with their dimmers. 2. The large enough part of the market that they control might be large when that market is limited to "extremely early adopters of this kind of brand-new technology". The market will grow in many stages over the next few years and this is way to early to start giving people another reason to avoid your products. I'm usually an early adopter of technologies like this, however, I've held off because there were only a handful of implementations out there and the use cases for them was still a "that'd be neat, but not worth the money". I've recently become very interested and will be buying something in the next 6-months, though this is making me reconsider that now. I know I'm a future customer of this segment of technology -- not just lighting but upgrading my existing home automation system -- and I'm starting with lighting. I'm not, yet, a customer because I haven't found a good mix of "good product", "good interoperability", yet. So they've gained lock-in of all of their early adopters -- a very short-term investment[1] -- and caused the second wave of (in this case, also) early adopters to look elsewhere. They're nowhere close to the market that even high-end, non-smart bulbs command and they won't see much of it this way. People complain today about having to buy special bulbs for their dimmer switches; this is a whole other level -- you can't even use the lamp you just bought. No way someone like my dad is going to be a customer. I can see how this might improve sales in the very short-term. It also might not. It will increase support calls. It will hurt their ability to get future customers and might even delay the next wave of adoption as people wait for fear of buying something that will become obsolete. These are all the things I'm thinking about as a person who really wants this technology, has the money to buy it, but doesn't have the money to do it twice. And I can live without it for a bit longer. [1] Short-term because the people who are buying these for the most part have a lot of disposable income or a very small deployment, so switching to something else isn't necessarily as much of a lock-in as they'd like. And this product in particular, the primary consumer is tech folks -- they'll hack together the interoperability eventually, defeating the purpose.

bby 11y ago

right on point my man