Eero is responsible for introducing two major trends to Wi-Fi routers: mesh networking and subscriptions. But after Plume — another mesh router startup — said earlier this week that it’s going to start requiring a subscription just to buy a router and keep it fully functional, Eero has said it doesn’t plan to follow suit. “We’ve never had plans ever at Eero to do that,” Eero CEO Nick Weaver said on a phone call. “We’ve never had plans and certainly don’t have any future aspirations for requiring a subscription with the core product we sell.”
Though Eero does offer a premium subscription plan, it includes services above and beyond the basic functions of a router. For $99 / year, Eero adds content filtering, malicious site blocking, and subscriptions to other security products, like 1Password and a VPN. The service is optional and has never been required to use Eero’s routers.
Weaver compares Eero’s approach to that of Sonos and Apple. Apple, he says, sells “a premium product, [and] the margin of that product and overall totality of the business is enough to support the ongoing platform cost.” Eero is designed to be the same way. Its best-selling bundle — a three-pack of routers — sells for $399. Prior to the subscription news, Plume’s three-router bundle sold for $179; it now sells for $39 but requires the annual fee. The technology isn’t exactly one-to-one, but the pricing difference speaks to Eero’s structure for its products.
Eero hasn’t publicly stated how long it intends to support each of its routers, but Weaver says new features will still come for “many years” after production stops on a given unit. “It’s a really long window on security vulnerabilities” after that, he said.
Weaver believes that every hardware company will need to structure its business to support continued device updates. “Every single device manufacturer on the planet, regardless of the product category that they play in, is going to need to update the software for their devices,” he says. “Every single device that runs software needs to have a mechanism to measure how it’s performing, improve that performance [or reliability], and react instantaneously to security vulnerabilities.”
Even if Eero’s cloud were to disappear tomorrow, the company’s routers would largely remain functional. There are some key abilities that are enabled by the cloud — including setup — but its core functions as a router would continue as well as they do today, Weaver said. That’s because Eero uses its cloud to analyze Wi-Fi data and fine-tune its algorithms, but the actual application of those algorithms is done on the routers themselves.
Plume, on the other hand, uses its cloud backend to much more regularly manage Wi-Fi behavior. The company’s CEO, Fahri Diner, said on a phone call that Plume’s management features are “all enabled by the cloud and it cannot be done locally” because it would require storing and processing too much information. “This is ultimately the crux of why it makes a lot of this cloud control very exciting,” he said.
Earlier this week, Plume announced that it is going to begin requiring a subscription to even purchase one of its routers, let alone keep them fully functional. Though the company focused on a $60 / year subscription in an initial phone call with me, Plume’s website — which seems to be only partially updated right now to reflect the changes — currently makes no mention of the annual plan. Instead, it only advertises a $200 “lifetime membership,” which essentially returns its routers to being regularly priced products.
Though Plume distributed some mixed messaging on what would happen to its routers if annual members stopped paying the fee, Diner confirmed that they would continue to work, even without these cloud features. “What people will lose ... is all of the interesting features we have,” he said. That includes things like parental controls, but, more importantly, it includes communication features that Diner claims make Plume routers more reliable than a typical mesh system. If your subscription lapses, Diner says, “our fallback is effectively what others provide as their standard solution.”
Plume’s unusual pricing structure could be off-putting to consumers who don’t want to make a long-term commitment to a single company or just aren’t used to leasing hardware. And to an extent, it seems like that’s fine with Plume: Diner describes the company as “B2B2C” (business to business to consumer) and says the “lion’s share” of its revenue comes from relationships with ISPs, like Comcast and Bell Canada, which distribute routers using Plume’s tech.
“Our belief is the carrier market is much, much larger than direct to consumer,” Diner said. “Ultimately, I see this direct-to-consumer market shrinking over time.” Internet providers are increasingly offering Wi-Fi systems as part of a bundle, and Diner believes more people will come to see Wi-Fi as an extension of their broadband service. “We’re looking at internet service providers like Comcast and Bell who have offered this as a managed service; it’s going very, very well ... and that’s part of the reason we are confident [in the subscription model] — notwithstanding the initial knee-jerk reaction.”
Plume intends to stay in the consumer market so it can keep getting “direct feedback” from customers, Diner said. But it’s unlikely that we’ll see Plume court consumers as aggressively as other companies, like Eero. Its pricing model, instead, seems to be a reflection of the company’s business realities: there’s no point in sell straight to consumers unless it can make the kind of recurring revenue it gets from internet providers.