Is the Internet of Things Really the Next Apple Product Category?

Will the tech giant try to get smart in your house?

May 30, 2014 at 6:00PM

Apple (NASDAQ:AAPL) hasn't moved into a new product category since the iPad was released in 2010, and the masses have been clamoring for another big thing to come out of Cupertino. An opportunity arises at the upcoming Worldwide Developers Conference. Will an announcement be made?

Over the last few years, the rumor mill has indicated that a smart watch, a mobile payments platform, and an expanded Apple TV are imminent. In addition, a larger-screen iPhone is supposedly under development.

But something else had flown below the radar that makes sense to be unveiled at a developers conference. How will investors of Apple and competitors such as Google, (NASDAQ:GOOGL) (NASDAQ:GOOG) be affected? 

Smart home
The Financial Times reported that Apple will formally announce in San Francisco next week that it will develop a software platform that can be used to control gadgets in a home or office from a Mac, iPhone, or iPad, rivaling what Google entity Nest is doing. 

The news isn't really that new. Apple had filed a patent in this area, and several articles have been written on the subject.

Nest has already developed connected gadgets that can be controlled by a smart device, but the company had to suspend production of smoke/CO detectors and recall nearly 440,000 of them while it corrected a potential safety hazard. Apple will have to perform better if it intends to get into the market. Nest will have have to ensure no other issues arise in the future so others, like Apple, don't swoop in and take over the market. 

Smart MO
Apple would have to collaborate with others on a larger scale or make acquisitions in the space if it expects to make any headway in the Internet of Things, a potential multi-trillion-dollar industry, going forward. It has developed systems to interconnect its own devices. For example, users can pair Apple TV with iPhone and iPad via Wi-Fi. Now it might have to work with third-party sensor manufacturers, including Nest, and contribute to industry groups to develop standards. This is all new for Apple. Its modus operandi has been to work in secret and then announce a new product or service at the end. 

Google, which got into the business by acquiring Nest for $3.2 billion , has no problem throwing things out there and letting the chips fall where they may, all while taking in lots of cash from its superior web search platform. Whether or not Nest will make an impact in the Internet of Things remains to be seen, but a big part of the Nest deal probably involves the technical prowess that Google now has access to. Something like that can't be measured with any degree of accuracy. 

Smart upgrade
In the shorter term, Apple investors would most likely profit more from an iPhone upgrade. Enhancements such as a larger display that would rival phones from Samsung would pay off.

The iPhone, which Apple has sold more than 400 million of since 2007,  would probably continue its epic run with a 4.7-inch or 5.5-inch display. The extra space under the screen would also allow Apple to increase the battery capacity, another big selling feature these days. 

Google was smart and got out of the handset business by disposing of the former Motorola Mobility unit it had acquired just a few years earlier. Investors were happy about this turn of events, as the operation was reportedly losing money and Google got to keep the Motorola patents, estimated to be worth about $5.5 billion. 

Foolish conclusion
Apple could make an announcement next week at its Worldwide Developers Conference in San Francisco and say that it would like to get into the Internet of Things in a bigger way. If it does, investors should pay attention to exactly what will be coming out of Cupertino. A blockbuster release could really move the needle for investors. However, it is more likely that a lower-key software platform will be in the offing. Shareholders might be more interested in what the company has to say about the next iPhone.

Google will continue to plod along, buying up companies like Nest in order to selectively profit from smart, interconnected homes and offices, while still raking in tons of cash from its search business.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its 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!

Mark Morelli owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (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.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

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." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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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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