Nearly five years ago, AlertMe was already looking beyond utilities to be a home energy platform provider to telecoms and other providers that might someday get into the connected home market.
In just half a decade, much has changed, and it was ultimately British Gas, a longtime strategic investor and commercial partner to the startup, that purchased AlertMe for a total of $100 million.
But instead of AlertMe tying its fate to that of a slow-moving utility, the agreement shows the extent to which utilities in competitive landscapes, such as the U.K., are trying to morph into becoming service providers more akin to telecom companies.
AlertMe has raised nearly $37 million since its founding in 2006. The company’s products are in more than 200,000 homes, and it provides energy data services to approximately half a million homes. British Gas already owned about 20 percent of AlertMe, making the net cost of the acquisition approximately $68 million.
“With access to new technology and skills, we’re strengthening our capability at British Gas to develop a family of products that will put people in control of their homes in a way that’s simply never been possible before,” Nina Bhatia, commercial director for British Gas, said in a statement.
The companies said the combination will create an opportunity to be a leader in intelligent connected home services. “This acquisition enables British Gas to become an international platform provider, a move similar to AT&T’s Digital Life licensed platform strategy,” said Omar Saadeh, senior analyst with GTM Research. Saadeh is authoring a new report, Energy in the Connected Home 2015, which will be available in March.
Although AlertMe started with a focus in the energy management space, it has always been a platform for other connected home services, such as security. AlertMe currently supports more than 50 devices. AlertMe was chosen by Lowe’s in 2012 to be the underlying platform for its Iris connected home offering. Essent, the largest energy company in the Netherlands, also uses AlertMe.
British Gas is just beginning to offer connected home products to its larger base of energy customers -- and then beyond. It has about 150,000 subscribers for its current home energy offering, Hive, which is powered by AlertMe and allows customers to control their heat and hot water remotely. The energy supplier serves about 11 million British homes.
Last summer, British Gas entered into a retail distribution partnership for Hive with one of the largest U.K. IT and home entertainment distributors, Exertis Gem.
The acquisition by British Gas could have implications for how AlertMe’s technology is used beyond the shores of England. British Gas is owned by Centrica Group, which also owns electric retailer Direct Energy in the U.S. and Bord Gáis in Ireland.
“We’re also very excited at the potential we now have to enable further development of connected home products and services in other parts of the Centrica Group,” British Gas' Bhatia said in a statement.
In the regulated states in the U.S., there is a question as to whether utilities are losing out on being a trusted provider for connected home services, or whether that’s a business they even want to be in. But in deregulated markets, such as the U.K., this acquisition is proof that utilities are ready to do far more than just deliver electrons.