Smart Home Company Insteon Switched Off Its Servers Without Telling Customers in April 2022. Its Status Page Kept Reporting "All Services Online" While Its Chief Executive Shortened His LinkedIn Name to "R. Li."
Insteon made light switches, plugs, thermostats, sensors and keypads that talked to each other over a proprietary "dual-mesh" protocol, half radio and half household wiring, and to the internet through the Insteon Hub. The hub was what made the app work, along with schedules, remote control and the integrations with Amazon Alexa and Google Assistant. Insteon's biggest moment in the technology press, according to Ars Technica, had been as one of two launch partners for Apple's HomeKit in 2015. Its parent company, Smartlabs Inc. of Irvine, California, also owned the retail site smarthome.com, which mostly sold Insteon equipment.
On Friday 15 April 2022, Insteon customers began reporting that the app had stopped working and their hubs could no longer reach the cloud. Nobody from the company said anything. The press email address bounced, the phone numbers either failed or were always busy, and the official forum had disappeared. Insteon's own status page continued to report "All Services Online."
The LinkedIn Profiles
Stacey Higginbotham, who covers the Internet of Things, went looking for someone to ask, and found that the management team had left before the servers did. The former chief information officer listed his role as ending in April 2022, and the chief research officer listed his as ending that year. The president and chief operating officer listed his as ending in 2020. Insteon's Twitter account had not been updated since June 2021. A call to Smartlabs' listed number returned a recorded message from Verizon asking the caller to check the number and try again.
The chief executive, Rob Lilleness, had removed Smartlabs and Insteon from his LinkedIn profile altogether. Lilleness had founded Richmond Capital Partners, which invested $7.3 million in the company in 2017, and he was installed as chief executive. Ars Technica noted that Insteon had since removed the blog post announcing that acquisition from its own website. After Higginbotham contacted him on Saturday, Lilleness shortened his LinkedIn display name to "R. Li." By the time Ars had finished writing its story on Monday, his name and photograph were gone too. On Tuesday he replied to her through LinkedIn: "Unfortunately, I am not involved with the company." As Higginbotham later wrote, this was true.
The Assignment
Smartlabs had already stopped being the company on 22 March 2022. It had transferred its assets that day to a new entity, SmartLabs (ABC) LLC, under a general assignment for the benefit of creditors, a state-law alternative to federal bankruptcy that needs no court. The paperwork said that Smartlabs "is indebted to various creditors and is unable to pay its debts in full, and has decided to discontinue its business." On 12 April, three days before the hubs went dark, the new LLC sent creditors a letter asking them to file claims by 18 September 2022. Customers heard nothing.
The explanation for customers went up on the company's website on the evening of Wednesday 20 April, and an email followed the next day. According to the notice, Smartlabs had been in financial trouble in 2017, taken on new capital and new management, and then lost its footing in the pandemic and the supply-chain disruption that followed. It had been looking for a buyer since November 2021. "The process resulted in several interested parties and a sale was expected to be realized in the March timeframe," it said. "Unfortunately, that sale did not materialize." The notice acknowledged the "extraordinary following and community" around the products and closed: "Although incredibly difficult, we hope that the Insteon community understands the tireless efforts by all the employees to serve our customers, and deeply apologize to the community." When The Register reported the notice, the status page still showed everything was fine.
The Light Switches
The switches kept working as switches, which is what they had been before anyone connected them to anything. Without the cloud, the app could not change a schedule, add a device or pass a voice command from Alexa. Home Assistant, the open-source home automation platform, updated its Insteon page with a warning: "The Insteon company has shut down and turned off their cloud as of April 2022. Do not factory reset your device under any circumstances as it will not be recoverable." Setting up a hub involved contacting Insteon's servers, and there was nothing left to contact.
Mike Richardson, a professional Insteon installer in Arizona and California, told The Register that his phone had been ringing constantly since the shutdown and that Insteon had not told him anything. He had stopped installing the product about nine months earlier. "It was too hard to get parts," he said. "It wasn't overnight." A modem needed to run Insteon devices on a third-party controller had cost about $50 two weeks earlier. Prices on eBay had since gone up. A visitor to the r/Insteon subreddit registered Insteoff.com.
Michel Kohanim, chief executive of Universal Devices, which makes an Insteon-compatible controller, said on his company's forum that Insteon had about 100,000 hub users and that he was in talks with the firm handling the assets. In her analysis on 22 April, Higginbotham was doubtful about a revival. A buyer, she wrote, would have to pay for Amazon servers, updates and the rebuilt Alexa and Google integrations without "the promise of some sort of new revenue," and "many customers are likely to cut their losses as opposed to paying a new company to restart the service."
The Subscription
On the afternoon of Tuesday 7 June 2022, users on Reddit noticed that their hubs were back online. Nobody had announced anything. The Insteon homepage still carried the letter explaining why the company had shut down. Universal Devices, it turned out, had bid for the business and been turned down. The buyer was a group of Insteon customers led by Ken Fairbanks, who had been vice president and general manager of SmartLabs from 2004 to 2007 and has since been a member of an Orange County seed-stage venture fund.
The new owners wrote that they had brought the hubs back before they even had access to the website, the email provider and the social media accounts, because "Every day more customers were giving up hope." The statement promised "to listen, communicate and be as transparent as possible in everything we do." The restored service came with a subscription: $39.95 a year, or $69.95 for two years, for hub service, app access, notifications and the voice assistant integrations. Customers had to create new accounts, since the company did not want them using their old hub accounts.
The company's website now describes Insteon's technology as "a robust, always-on, and dependable network," and says it is in more than five million devices worldwide. In 2022 the service went off without notice and came back on without notice, almost two months apart. Its customers bought the company, and the service it came back with costs $39.95 a year.
Filed from public reporting:
- Stacey on IoT — "Insteon is down and may not be coming back"
- Ars Technica — "Shameful: Insteon looks dead—just like its users' smart homes"
- The Register — "Smart home biz Insteon goes silent as cloud services stop"
- The Register — "Insteon's vanishing act explained: Smart home biz insolvent, sells off assets"
- Stacey on IoT — "The end of Insteon and why the smart home keeps faltering"
- Stacey on IoT — "Users report Insteon's servers are back online"
- IoT M2M Council — "Insteon is back following takeover by users"
- GearBrain — "Insteon Smart Home System is Back in Business – Check Your Hubs"
- Insteon Technologies — "Our Story"
