Apple Knows That Home Is Where the Smart Is

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.

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  • Report this Comment On May 27, 2014, at 11:53 AM, legquarter wrote:

    Control IV is definitely the best in smart home automation. Apple needs to partner with the best in the business, AT&T is out shopping but Apple is the likely to make their move first.

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Leaked: Apple's Next Smart Device
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The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

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Rick Munarriz

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

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