It's probably more about control than cost. Our company's product is similar to Automatic's, in that, in theory, you could have everything be done on-device and not need a proprietary backend at all.

Other than the fact that this is difficult to keep up-to-date and working, it increases the hardware cost significantly. Instead of having a very cheap microcontroller handling everything, you might need something more capable and more expensive.

Development cost goes up too, since instead of writing your integrations in Python, Go, JS, or whatever, you need to write your integrations on your embedded system.