The automated home is one step closerDecember 10, 2012: 11:13 AM ET
By remotely controlling heat, locks, even the sprinklers, Vivint is making the house of the future a reality.
By Brian Dumaine, senior editor-at-large
FORTUNE -- The powerhouse private equity firm Blackstone recently invested in an Provo, Utah company that installs home security systems in an equity deal that valued it at $2 billion. What does Blackstone see in an industry that's not known for being particularly sexy?
It turns out that private company Vivint, which had sales of nearly $400 million in 2012 and is second in residential security only to ADT, is becoming much more than a security firm. CEO Todd Pedersen sees the security business as a way to sell his customers everything from smart thermostats, to lighting control systems to even rooftop solar systems. Says Pedersen, who favors plaid shirts and a baseball cap with "Vivint" scrawled across its front: "We've been an industry that hasn't innovated in 20 years. "
Pedersen aims to fix that. He figures that his 700,000 customers might want more than just security. His home automation system -- which comprises of a touch-sensitive control panel mounted on the wall, sensors, cameras, lighting controls, thermostats and smart phone apps -- can help keep your house safe and save energy at the same time. For example, the system links with the motion detectors of the home security system to tell when you're home and when you're not. When you're not, the heat is turned down and the lights are automatically turned off. Other systems like the Nest thermostat, which was created by former a Apple (AAPL) designer, tries to "learn" when you're home or not based on your past behavior. Pedersen claims his system is more accurate and says on average his customers can save $30 a month in heating, cooling and electric bills.
Vivint's system can also tell the homeowner exactly how much power he or she is using and how. It can also be hooked up to the rooftop solar systems Vivint now offers. Studies have shown that homeowners can cut their power usage some 10% when they know how much power they're using. Users can also control heating, lighting and door locks remotely from a smart phone or tablet. Coming home early? Just tell the system that you're arriving in a half hour and the house will start to heat up. The system can even control lawn sprinklers. If the local weather report is rain, the system, which is hooked up to the Internet, will know and won't turn on the irrigation system, saving water.
Vivant so far has signed up more than 170,000 of its customers for the energy-saving system. The full home automation packages costs $68.99 a month plus a $199 one-time activation fee. But the company is not alone. Its archrival ADT is starting to offer home energy systems. Tendril, a Boulder, Colorado company, sells sophisticated home energy management systems. And big cable companies like Time Warner (TWX), Verizon (VZ) and Comcast (CMCSA) have recently entered the home security and energy management space. Says Pederson, who sleeps only 4 hours a day: "What keeps me up at night is I'm always concerned that we're not innovating fast enough." He must be hearing some big foot steps behind him.