In Silicon Valley, the house next door might not be full of people

SAN JOSE, Calif. – In Silicon Valley, the house next door might not be full of techies, but it could be stuffed with tech products.

Up in the East San Jose hills, where suburban developments give way to isolated homesteads, Netgear rents a house where it tries out equipment to make sure it's ready for market. Nestled into a residential neighborhood in Menlo Park, start-up Plume rents a new two-story house to test its Wi-Fi system. On Communications Hill in San Jose, KB Home has a model house to show off the smart home products customers can get preinstalled. And start-up Abode uses three homes rented by its co-founders as its labs.

From San Jose to San Francisco, companies that are inventing the future are increasingly turning to houses to test and show off their products before they are rolled out to consumers nationwide.

"This is where the sausage gets made," said Plume CEO Fahri Diner. "This is literally our test house."

Take Netgear. The Wi-Fi router maker rents a 2,500-square-foot, two-story home in the hills east of San Jose's Alum Rock neighborhood. From the outside, the mauve-colored house looks unremarkable, except for the large plot of land it sits on.

But inside, along with furniture like couches, tables, chairs and beds, the home is full of routers, televisions, computers, tablets and smartphones. Those devices are used to test and measure the signals coming from Netgear's Wi-Fi devices. Pretty much all of Netgear's Wi-Fi products, except for its lowest-end devices, get tested at the house — sometimes multiple times — before they head to store shelves, said Mark Merrill, the company's chief technology officer.

The location of the company's San Jose house, which it first started renting more than four years ago, is no accident. Netgear was looking for a place that was close to its headquarters so its engineers could easily swap out equipment or make adjustments. But it wanted a location where it wouldn't have to worry about competing with signals from nearby houses.

Plume took the opposite approach: It wanted its equipment to compete with other signals. The company's Wi-Fi devices are controlled from cloud servers that are programmed to switch channels on the fly depending on demand and interference, said Diner, its CEO.

It also wanted a house close to its Palo Alto headquarters; it previously had a larger home it used in farther-out San Mateo.

Plume has been testing its Wi-Fi system in the house since late 2015, soon after the home was built. It has set up loads of equipment — some $20,000 worth of smart televisions, game consoles, computers and smart home gadgets — to test and stress the home's Wi-Fi network.

"We wanted to make our system very resistant and consumer tolerant," Diner said.

Another start-up, Abode, has a different spin on the Valley-home-as-tech-lab trend. The company, which offers a smart home and house security system, uses the homes rented by its founders to test its equipment. In an older, two-story mission-style home he rents in Saratoga, co-founder Chris Carney has set up automatic door locks, sensors that can tell if windows or doors are open, security cameras that start recording if they sense motion, and an Amazon Echo.

Part of the reason Carney chose the Saratoga house was to be in an area where cellular coverage was spotty, Franks said. Abode's system uses a cellular connection as a fallback way to connect to the internet and to determine a house's location, and the company wanted to test how its system would handle the challenge, he said. Carney also wanted a larger house where he could install several different home automation products and connect them to Abode's main "gateway" gadget, Franks said.

"We had to figure out how to adapt our service for urban vs. nonurban environments," Franks said.

Like Abode, KB Home's house is filled with smart home equipment. But in its case, the house, which is right next to a new development on Communications Hill, is more a showcase than a lab.

Starting last fall, the homebuilder began offering to install home automation products that are compatible with the Home app on Apple's iPhone and iPads in the south-central neighborhood in San Jose and another one in Fremont. The model home it uses to demonstrate the products includes an automatic door lock, remotely controllable window shades and lights, a smart thermostat and a baby cam.

At least in Plume's case, it appears that tech products make for good neighbors. People who live near the company's house had no idea it was being used as a test lab and had few complaints.

Tech companies occupying houses that might otherwise be available for families could be courting controversy, given the sky-high rents and home prices in Silicon Valley. But they're likely having a minimal effect on the housing market, said Chris Trapani, founder and CEO of the Sereno Group, a Bay Area residential real estate firm. Trapani said he hadn't heard of other companies using houses as test labs and doesn't believe the practice is widespread.