In August 2017, Reuters reported that AT&T was looking to unload their smart home subsidiary, AT&T Digital Life, in anticipation of the forthcoming acquisition by Time Warner. Now, nearly a full year later, AT&T has yet to announce a confirmed buyer of Digital Life and it seems that the overarching parent company has made a concerted effort to keep quiet about the business. Some analysts believe that this awkward silence is a sure sign that AT&T is looking to disengage from the smart home security sector altogether.
In addition to the lack of chatter surrounding AT&T Digital Life, there has been a steady decline in marketing efforts for the home security subsidiary and one analyst claims that most of the research & development department has been all but disbanded. Furthermore, Digital Life’s product and service offerings have not expanded and there have not been any updates regarding customer figures for the company.
The last updates to the mobile app and equipment on the Digital Life website were respectively published in July and March of 2017. At the end of 2016 AT&T Digital Life had around 630,000 subscribers and the overall home automation market clearly has an upside and continues to grow. One industry forecast has global smart security revenues growing from $10 billion this year to nearly $24 billion by 2022 – that’s a CAGR of 24.2%…which is nothing to shy away from by any measure.
AT&T Backs Off
Regardless of the good health of both the company and the industry, it appears that AT&T is disengaging from the smart home frontier. AT&T has not officially made any announcements pertaining to its Digital Life business, including whether the subsidiary was for sale last summer, why it didn’t move, nor whether the company is available for purchase today.
AT&T introduced Digital Life in 2013 and as of 2016 was accessible in 84 US markets. Numerous analysts believe that the AT&T subsidiary is still for sale and have hypothesized a number of explanations for AT&T’s unexpected strategic shift. One such reason is that home security is a very competitive industry and it typically yields low-margin figures. Another potential explanation is that the industry as a whole is growing more and more fragmented as homeowners have an assortment of DIY security options that offer comparable levels of security.
Home security is an extremely customized product and the subtle differences between customers make for a marketing nightmare. For example, a family with young children will likely have slightly different security needs than a family with a dog. The need for such specialized, hyper-focused, marketing in a low margin business is another possible reason why AT&T has decided to reallocate their resources. The resources that are currently dedicated to Digital Life could very easily go towards building on the companies current task of connecting companies serving the home to central stations – a task that AT&T already has a firm grasp on currently.