In this type of business, the (product) costs are all in the software. BOM is many times negligible compared to the retail price of the product(s).

I'm pretty sure that the market for a network thermostat at this stage is very limited, which is another reason for a fat margin.

There are a lot of other avenues for low BOM-cost products with high margins and quite large market potential. Can't get past the need to spend time/money on software though, because at the end of the day, that's what's going to make or break the product (and differentiate it from the competition).