That's the first step (we're trying to launch a product) and ultimately the goal is enabling customers to completely sever the Plum cloud dependency. Right now if you want 100% of the features (schedules, scenes, provisioning, what-not), you have to connect them to the internet, but we want users to have all of the features without any need for Plum's servers. As it stands, about 40% of the features do not require Plum's cloud and actually don't even use it if it's available, so we're working in that direction.
We've also talked about open sourcing a subset of the cloud infrastructure so that users could prop-up their own servers if they really wanted "remote control" of lights (which does matter to people).
Privacy sensitive IoT devices are certainly possible but until more people care about their privacy, it will unfortunately be very niche and a bit of an after-thought to go the extra mile to provide services that can be decoupled from the "smart devices" in the home. Particularly so, considering there's a land grab happening in the IoT space right now and corporations are trying to dominate the home IoT platform.
Humans, in a capitalist society, pretty reliably follow "ask for forgiveness, not permission". Which is interestingly at odds with the more fringe ethical philosophies of free software, privacy respecting software, and generally "ethical" software (that obviously needs explication but I won't go into it here).