Apple Knows That Home Is Where the Smart Is

Apple may be ready to make a big splash in the smart home.

May 27, 2014 at 10:17AM

Apple (NASDAQ:AAPL) is likely to generate headlines next week during its Worldwide Developers Conference, and one of the big stories may be the consumer tech giant's inevitable push into the smart home market. Financial Times is reporting that Apple will introduce a new software platform to developers next week that will mark its foray into the smart home.

Apple doesn't have much of a choice. Samsung and Google (NASDAQ:GOOG) (NASDAQ:GOOGL) have already declared the Web-automated home the next tech battlefield. It can't afford to be left behind the way it's been in wearable computing. It can't dismiss the next hot trend when it's losing share in the tablet market. The iPhone is doing well, but the last thing Apple wants to become is a one-trick pony.

If the Financial Times article is accurate, it wouldn't be a surprise. Apple CEO Tim Cook has promised that Apple will enter new exciting categories and it doesn't seem as if iTunes Radio and CarPlay will be enough. Improving your home to the point where thermostats, appliances, and lighting can be controlled seamlessly from iOS devices offers broader potential. It just needs to hurry up before Samsung and Google carve things out for themselves.

Google turned heads in January with its $3.2 billion acquisition of Nest Labs, the company behind the market-leading learning thermostat that adapts to usage and can be controlled remotely through smartphones. Shares of fellow home automation specialist Control4 (NASDAQ:CTRL) soared on the news, trading as high as $32.50 three days later. When Apple or some other tech giant didn't come calling, Control4 went on to give back most of those gains. It actually trades lower today than it did just before the Nest deal was announced. 

Samsung's big splash came a week before Google's Nest deal when it unveiled Samsung Smart Home during the annual CES expo. Samsung's platform promised to connect appliances, TVs, cameras, and more through its Android phones and Galaxy Gear line of wearable computing products. Folks would be able to remotely control lighting, air conditioning, and actual appliances. 

It will be up to Apple to see how far it's willing to chase Samsung and Google here. A smart home system isn't an iPhone. It won't be replaced every two years, making this a much smaller market in terms of revenue between upgrade cycles. Limiting access to iOS devices will also limit its appeal to iPhone and iPad owners, unlike rivals with much larger potential audiences. However, if successful, this would also be the feature that makes the iHome -- or whatever this is ultimately called -- so important to keeping iOS users from straying to rival platforms. Once Apple is automating your home, you're a captive audience. Apple just needs to give consumers a reason to consider its platform in the first place, and we're nowhere close on that front for now.

Leaked: Apple's next smart device (warning: it may shock you)
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Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple and Google (A and C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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