The end of Insteon and why the smart home keeps faltering

It's a device that doesn't need to be cloud connected... that's cloud connected.

Smart home stuff needs a local network to the home, that's it. A server going down in Virginia shouldn't mean a person can't run their vacuum robot.

So do all their products now become e-waste or is there some salvageable value?

This is why I use z-wave and Home Assistant.

The reason these companies keep faltering is that they push cloud-based and/or locked in product ecosystems. Then they are either forced to a) operate on a pyramid scheme where new customers finance the ongoing costs of existing users or b) a subscription model that gives them a strong incentive to keep customers as locked into their ecosystem as possible. Either of these leave customers high and dry when the house of cards finally collapses, and since the products are cloud based (especially in case B where a lot of companies force you into cloud only access) your devices become bricks.

I'm not sure Matter is going to solve this because it doesn't do away with this business model. Zigbee and Zwave have been great options for ages that offer a lot of the same benefits with respect to local control and portability (as does Homekit to an extent), but people continue to buy into closed ecosystems like Insteon and then get burned. Of course companies like Wink and SmartThings have managed to build cloud lock in on top of Zigbee and Zwave, I can see Matter helping with that part of the issue if we can get interoperability at the controller level.

Insteon has been around for longer than Cloud existed, and their devices will work with HomeSeer or HomeAssistant. But non-techie people probably wont be able to get those working.

Maybe a glut of these will be on eBay soon.