Apple Inc. Gets Serious About The Internet Of Things

Apple (NASDAQ: AAPL  ) is in need of a major growth driver.

Although a few of us have been arguing in favor of Apple's growth prospects for what seems like ages, this has been the consensus view of Apple stock for the better part of the past two years.

With Apple's World Wide Developers Conference set to kick off with its highly anticipated keynote address on June 2nd, the speculation about whether or not Apple will unveil its next game-changing product will assuredly reach a fever pitch in the days to come.

And if one recent leak is to be believed, Apple appears poised to introduce the world to what it hopes will be a key new growth driver at the WWDC keynote: the connected home.

Apple coming into play for the Internet of Things
According to reporting first broken by the Financial Times, Apple will use at least some portion of next week's keynote address to unveil its play on the connected home.

Although the details remain somewhat unknown, as Apple always tries to keep as tight a lid as possible on its upcoming product specifics, the overall theme of the device/service is clear enough. With a connected home offering, Apple appears to be creating yet another platform that will enable what should become an increasing number of connected devices to all communicate with and be controlled by some unified device.

The report cites Apples plans to use the iPhone or iPad as a kind of universal remote for all things connected in the smart home of the future, although there will also be some kind of integration into Apple TV as well. Imagine being able to control the lighting, temperature, entertainment, and security functions in your house all with a simple swipe or click of your iPhone. That's the kind of easy unification Apple appears to be targeting with iHome. And if this in fact proves to be the case, Apple investors should be jumping for joy.

How big a win is this?
Apple plans to structure the financial terms similarly to those of Apple's current Made for iPhone program, which generates a licensing fee for Apple for every device it approves. And given that Apple currently sells the most popular smartphone and tablet in the world, it seems there's certainly money to be made for its investors.

The Internet of Things is as big a buzzword as you can find in tech today, with estimates on the overall revenue opportunity seeming to defy imagination: one recent estimate from Deutsche Bank called for $400 billion in Internet of Things-driven revenue by 2023. However, one of the current problems keeping this massive trend on the tarmac is a lack of engagement from the developer community, a problem Apple's connected home would help solve.

By giving developers easy access to Apple's massive installed user base, Apple could be creating a fresh potential revenue stream for connected home software and hardware developers to tap into, which will hopefully incentivize more commercial interest around this big ticket trend. In a way, you can think of Apple as helping to solve the "last mile" problem, the final hurdle required to get software for the smart home into the smart home, for which Apple will be able to collect a small fee.

There's also a potential secondary win for Apple here as well, as smart home offerings could help to further ingrain the already massive stickiness of Apple's overall platform in much the same way that Apple's current app ecosystem helps incentivize its users to continue to purchase Apple products. As with apps, consumers would be substantially less likely to migrate away from Apple's hugely profitable hardware if that means they'll also lose the various disparate elements of their smart home in doing so.

More growth for Apple
So while the particulars still remain far from concrete regarding the connected home, it appears to be a clear win for Apple investors.

As growth concerns have been the primary overhang for Apple's stock price performance over the past two years, the introduction of a connected home offering would help alleviate at least some portion of such issues.

Either way, we're only days away from Apple's WWDC keynote address, a moment we're all eager to see unfold. So as this and other key Apple storylines unfold further in the week ahead, make sure to continue to check back for all our Foolish coverage of Apple.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recent recruited a secret-development "dream team" to guarantee their newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are even claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of these type of devices will be sold per year. But one small company makes this gadget possible. And their stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
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!

DocumentId: 2975330, ~/Articles/ArticleHandler.aspx, 9/1/2014 5:27:33 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement