Is Assa Abloy's acquisition of August Home a sign of bigger things to come?
Assa Abloy on Thursday announced that it has signed an agreement to acquire August Home, one of the leading providers of smart locks and smart home access products and services. Based in San Francisco, August Home primarily focuses on developing solutions for the do-it-yourself (DIY) market.
According to Thanasis Molokotos, executive vice president of Assa Abloy and head of the Americas division, the acquisition of August Home will strengthen the company’s residential product portfolio through the addition of smart locks, video doorbells and solutions for home delivery.
“August is an entrepreneurial company that is innovating in the traditional lock space by enhancing access control through software and service experiences,” Molokotos explains. “It is a strong complement to our current focus.”
In addition, Molokotos says that August Home is very synergistic with Assa Abloy’s Yale brand and that their products will greatly complement one another moving forward. “August’s focus is primarily the DIY channel with retrofit locks that offer an exceptional user and software experience,” he says. “Through the Yale brand, Assa Abloy’s focus is on full replacement locks that are connected and served by the professionally installed channel.”
Founded by Jason Johnson and Yves Behar, August Home has developed three generations of smart door locks and two generations of video doorbells, placing them among the leaders in the smart home industry when it comes to technology, partnerships and retail sales. For example, the company has entered into recent partnerships with some of the world’s leading technology companies, including Amazon, Apple, Google, Nest, HomeAway and Airbnb. Last November, MONI Smart Security announced that it would also make the August Smart Lock and August Connect Wi-Fi bridge available to its residential and commercial customer base.
All of this has combined to make August Home, which has seen lock sales increase by 300 percent year-over-year with more than 260 million lock operations and 500,000 users, the industry’ best-selling smart lock.
When asked how August Home will be integrated into Assa Abloy, Molokotos said that they will “jointly evaluate” their opportunities once the acquisition closes, which is expected to occur during Q4. “We believe keeping the August culture and leadership intact after acquisition is vital for success for all involved so we are excited Jason Johnson will remain and focus on implementing the vision,” he adds.
“We have always admired the design and quality of Yale locks,” Jason Johnson, CEO of August Home, said in a statement “This is a great opportunity for us to work with the world’s largest lock and access company."
Molokotos says that everything will be “business as usual” for the company’s current employees and that they intend to operate and grow August Home as a standalone entity within Assa Abloy.
The acquisition is subject to regulatory approval and customary closing conditions. Financial terms of the agreement were not disclosed.
Acquisition Fills Product Gaps
According to Blake Kozak, principal analyst for smart home and security technology at IHS Markit, the acquisition will help Assa Abloy immediately fill several gaps in its smart home portfolio.
“First, Assa Abloy (Yale) did not have a smart door lock that could replace the door lock’s interior hardware, while maintaining exterior hardware. Second, Assa Abloy has had a door viewer in its portfolio since 2016 which replaces a peephole with a Wi-Fi camera, but with the August Doorbell Cam Pro, Assa Abloy becomes an immediate contender in the ever-growing doorbell market,” Kozak says.
Kozak says this move will certainly help Assa Abloy fast-track its smart home offerings and eventually allow them to compete with the likes of Nest and Ring, however; he says they will still need a few additional products to be able to do so effectively.
“However, what many smart home systems are missing is a connected lock (although many can be integrated), but Nest announced with Nest Protect the close collaboration with Yale,” he says. “Moreover, although both Kwikset and Schlage have door locks that are compatible with HomeKit, this acquisition further cements Assa Abloy’s lead with HomeKit compatible locks since Yale already has HomeKit products in their own product line and through OEM efforts.”
Market Impact
When it comes to the impact of this deal on the overall smart home market for connected security, Kozak says that Assa Abloy will have a much bigger play in the retail space moving forward. Although Yale branded locks can be found in hardware stores, such as Home Depot, Kozak says that August Home has been able to get their products onto the shelves of consumer electronics retailers like Best Buy.
“Overall, this acquisition puts Assa Abloy very close to having a full smart security solution. What is still missing is a camera product that can compete with Nest or Arlo and a central hub that can compete with the likes of SmartThings. In some regions, the Yale brand has a hub through a partnership that provides monitoring of door and window sensors, but the traction has been limited globally,” Kozak says.
Additionally, Kozak says this acquisition will place more pressure on companies like Kwikset and Schlage, two of the other major players in the smart lock market, to make changes to their product offerings.
“However, lock companies rely heavily on partnerships with professional security providers, such as ADT, and telcos with interactive security offerings,” Kozak explains. “As a result, this move by Assa Abloy will likely help them in channels such as retail and potentially the rental market but there is still plenty of opportunity for the likes of Kwikset and Schlage in professional channels.”
With Assa Abloy’s acquisition of August Home, IHS estimates that the combined company will have a 42 percent global market share in smart door locks. In order to make up for this, Kozak says the aforementioned companies of Kwikset and Schlage will have to either find new partners or make acquisitions of their own.
“The combined share of the remaining lock companies - outside of the top five - will make it hard for other lock companies to increase their share in the lock category solely through other lock company acquisitions,” Kozak says. “As a result, we could see these lock companies launch more products in other regions (such as in the Europe in collaboration with telcos), more closely partner with platforms that currently lack a door lock or acquire other companies that are heavily involved in doorbells, cameras or a security platform. As such, we can expect to see more lock companies making moves in adjacent security categories such as hubs/platforms, cameras, doorbells or security sensors.”
But with there being an estimated 30 smart home manufacturers with annual revenues above $10 million in 2016, Kozak says there are other acquisition targets that Assa Abloy and other companies could swing a deal with to round out their smart home portfolios. “This means there are lots of options for additional Assa Abloy acquisitions or other lock companies to make a move to enhance their position in the growing DIY smart home market,” he says.
About the Author:
Joel Griffin is the Editor-in-Chief of SecurityInfoWatch.com and a veteran security journalist. You can reach him at [email protected].
