There is a huge gap between the yearly fees of option 1 & 2.
I might miss something but if the business model was based on ~ $10/month/user how come it is still viable with ~ $ 4?
When you lease the device if the hardware fails then Space Monkey replaces it. If you own the device and it fails outside of the 1yr warranty, then you have to replace it. The difference is about recouping hardware costs over the lifetime of the device.