Fountain Valley-based D-Link Systems Inc. is making an aggressive move into the connected-home market with a slew of new products, big retail distributors, and its first national TV campaign.
The company, a longtime leader in Ethernet hubs, hopes to capitalize on one of the fastest-growing segments in technology.
D-Link kicked off the campaign last month with the launch of a home automation website featuring new motion sensors, smart plugs and IP cameras, along with cheery jingles. There’s also an offering of do-it-yourself projects and a universal app that allows users to remotely access and communicate with devices.
The company is not the first to the party, but prior success in other emerging businesses and a global distribution network has D-Link casting an optimistic look on opportunities.
“We don’t get these opportunities very often. There’s market demand. We have channel distribution, the right products; we have the right message,” said Vice President of Marketing Daniel Kelley. “Everything is aligned, and we need to throw some fuel on that fire.”
D-Link is the North American unit of D-Link Corp. in Taiwan, which generates about $1 billion in annual sales. The parent company doesn’t break down revenue for its regional operations around the globe.
Its connected-home products are carried at Office Depot, Office Max, Fry’s Electronics and Best Buy, as well as online retailers Amazon.com and NewEgg.com.
New distribution partners are expected to be announced in the coming months, providing D-Link with a bolstered retail network to go head-to-head against other consumer brands.
Big Competitors
Big competitors include Google Inc. in Mountain View, which acquired smart thermostat maker Nest Labs late last year for $3.2 billion, and Playa Vista-based Belkin International Inc., which acquired Cisco Systems Inc.’s home networking group based in Irvine in early 2013. The sale of Linksys LLC, founded by Orange County residents Victor and Janie Tsao, was projected to be at far less than the $500 million Cisco paid them in 2003, largely based on the expectations of the now-defunct Flip video-camera.
D-Link introduced its first IP camera, controlled and viewed online, in 2002. It now offers 45 models geared to consumers and businesses. Its aggressive marketing and pricing strategy for cameras the past five years paid off as Wi-Fi became ubiquitous. D-Link is the market share leader in the U.S. in the consumer category, holding a nearly 40% share, according to Port Washington, N.Y.-based NPD Group Inc.
It hopes to score a similar success with its Wi-Fi motion sensors and smart plugs, which connect into wall sockets and provide users local and remote control, power scheduling, energy use statistics, and overheating protection for any device connected to the smart plug.
Early sales of the $50 smartplug have been brisk, according to Kelley, with data showing that a majority of buyers typically purchase more than one unit.
“We were shocked at how well they did out of the gate,” he said. “There’s not a lot of companies making these.”
D-Link hopes to ride the next wave of innovation like it did in the early 2000s when demand for Wi-Fi and wireless home networks exploded, fueling growth and crowding the field with numerous competitors.
The company has a chance to get to another lead, as adoption and awareness in the new market for home-automation products is in its infancy.
U.S. sales for connected-home devices are projected to hit $10 billion this year and are forecast to grow to $44 billion by 2017, according to London-based trade group GSM Association.
“It’s not a mass market yet,” Kelley said. “Right now we’re at the cusp of crossing that chasm on Wi-Fi cameras and smartplugs.”
Beginnings
Entrepreneur Ken Kao established D-Link as Datex Systems Inc. in 1986 as a product developer. A year later, his brother Roger came to the U.S. and established the U.S. subsidiary in Orange County.
Datex, which changed its name to D-Link Corp. in 1992, specialized in adapter cards for early-based Ethernet and then moved into hubs and switches in the late 1990s.
One of its first flagship products was called the D-Link card, a network interface card that connected computers to the Internet. It cost about $40 when competitor versions were selling for hundreds more and primarily to large corporations.
“We really started to make a name for ourselves,” Kelley said. “We were the lower-cost alternative to the big boys out there, and that really began our true track record.”
Its roots in networking provided the foundation for its strides in routers and modems over the past decade. D-Link still maintains the No. 3 spot in enterprise switches, with a 16.5% global market share, behind leader Cisco and No. 2 Hewlett-Packard, according to Stamford, Conn.-based industry tracker Gartner Inc.
D-Link generates about 40% of its annual revenue from the business-to-business segment.
Product design and manufacturing are largely handled at its Taiwan headquarters, although longtime Chief Technology Officer A.J. Wang splits time between Asia and OC.
About 200 people work at its 120,000-square-foot building in Fountain Valley, primarily in corporate functions, such as marketing, sales and accounting, although the site does handle warehousing, distribution and some engineering for the U.S. market.
The company employs more than 3,000 people in 127 offices worldwide.
