Madcodger, I don't know how long you have been into home automation, but I can start the long list of past projects where the company had big intentions and are no longer in existence (and this is only in the past 13 years).
This sad list includes both hardware and software products, as well as overall integration ideas.
You make an excellent point about a company needing to correspond to the 'bottom line' as they do indeed have to make money in the end.
The main problem with having your current product tied to the cloud though is, as was mentioned earlier, longevity.
One quick example that comes to mind is Belkin's method of implementing their new IP based automation switches. You can not access these switches via the WiFi in your home, i.e. you HAVE to go to their servers. While I agree, they do this for the iYuppies (we HAVE to coin that phrase here in our glossary) that just want to switch something on with their iDevice, this product is very susceptible to performing in the far future (IMO).
I don't know about the average person, but when I spend big bucks and put the time and effort into installation of switches in my home, I would most likely want them to work for ten plus years (with replacements on failures of course over that long of a time).
This is a little different than just throwing away your latest iDevice and getting a new one.
I'm no marketing expert, but I would bet if people do indeed want the product to 'just work', if the company DID release the API to that product it might not even matter, as they would just continue to buy/use it.
If another company say did indeed create a competitive application, wouldn't this actually help promote that product's hardware sales?
Just offering my opinion of course, but I really think this is the wrong way to go; and, unfortunately you see a lot of company's starting to go this way, which will give home automation a bad rap in the future when these products become book ends or charity contributions in the future.