Smart home company Wyze is experimenting with a rather unconventional method for providing customers with artificial intelligence-powered person detection for its smart security cameras: a pay-what-you want business model. On Monday, the company said it would provide the feature for free, after it had to disable it due to an abrupt end to its licensing deal with fellow Seattle-based company Xnor.ai, which was acquired by Apple in November of last year.
AI-powered person detection uses machine learning models to train an algorithm to differentiate between the movement of an inanimate object or animal and that of a human being. It’s now a staple in the smart security camera market, but it remains rather resource-intensive to provide and expensive as a result. It is more expensive than Wyze realized, in fact. That’s a problem after the company promised last year that when its own version of the feature was fully baked, it would be available for free without requiring a monthly subscription, as many of its competitors do.
Wooo boy. Wyze learning some hard lessons. The free person detection promised Nov 2019 when https://t.co/mNBGgEK3ph was acquired by Apple is too expensive to be free now that it’s in the cloud. They’re going to try voluntary payments from their customers https://t.co/8TSTq5FKrs
— Jimmy Hawkins (@prjct92eh2) July 20, 2020
Yet now Wyze says it’s going to try a pay-what-you-want model in the hopes it can use customer generosity to cover its monthly cloud costs. Here’s how the company broke the good (and bad) news in its email to the customers eligible for the promotion, which includes those that were enjoying person detection on Wyze cameras up until the Xnor.ai contract expired:
“Over the last few months, we’ve had this service in beta testing, and we’re happy to report that the testing is going really well. Person Detection is meeting our high expectations, and it’s only going to keep improving over time. That’s the good news.
The bad news is that it’s very expensive to run, and the costs are recurring. We greatly under-forecasted the monthly cloud costs when we started working on this project last year (we’ve also since hired an actual finance guy…). The reality is we will not be able to absorb these costs and stay in business.”
But Wyze says that while it would normally charge a subscription for a software service that involves recurring monthly costs, it promised 1.3 million of its customers that it would offer the feature for free, even if it required the company pay for pricey cloud-based processing. “We are going to keep our promise to you. But we are also going to ask for your help,” Wyze writes.
It sounds risky, and Wyze admits that the plan may not pan out:
When Person Detection for 12-second event videos officially launches, you will be able to name your price. You can select $0 and use it for free. Or you can make monthly contributions in whatever amount you think it’s worth to help us cover our recurring cloud costs. We will reevaluate this method in a few months. If the model works, we may consider rolling it out to all users and maybe even extend it to other Wyze services.
If Wyze is able to recoup its costs by relying on the goodwill of customers, it could set the company up to try more experimental pricing models. After all, radical pricing strategies and good-enough quality is how Wyze became a bit of a trailblazer in the smart home camera industry, and it could work out for them again if customers feel like the feature works so well it warrants chipping in a few bucks a month.
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