1 Thing That Could Derail Apple's HomeKit Plans

Qualcomm's building a strong alliance of companies for its Internet of Things platform -- bringing even more competition to Apple's home automation plans.

Jul 6, 2014 at 10:45AM

There's a quiet storm brewing in the home automation space. While some companies are striving to create products that will allow users to adjust the thermostat with their tablet or unlock the doors with their smartphone, Apple (NASDAQ:AAPL) and Qualcomm (NASDAQ:QCOM) have set their sites on creating platforms that will allow all of those devices to communicate with each other.

Though the home automation sector -- part of the larger Internet of Things -- is poised to take off, there are currently no set standards for getting third party devices to communicate with each other. Apple and Qualcomm both want to change that, and Microsoft (NASDAQ:MSFT) just joined Qualcomm's alliance to help beat out the iMaker.

Making new alliances
Apple announced its HomeKit platform -- which helps third-party home automation devices work together -- just last month. But back in December an alliance was built around Qualcomm's standard language for Internet of Things devices, called AllJoyn. This group of companies known as the AllSeen Alliance includes Haier, LG, Panasonic and other.

Although it's not as flashy as Apple's branding, this Qualcomm video shows just similar the HomeKit and AllJoyn platforms are:

What's interesting about Qualcomm's group is that earlier this week Microsoft decided to join the alliance, which is the first major mobile consumer tech company to sign up. While Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) Nest just launched its own open platform for home automation and Apple is building HomeKit, Microsoft is throwing its weight behind AllJoyn. The company's presence in AllSeen is significant because it could point to how future Windows devices interact with home automation.

Nest's platform doesn't currently support the Windows Phone OS, and Apple's HomeKit is only for iOS devices, so it's not that much of surprise Microsoft is teaming up with AllJoyn. But the three major mobile companies all backing separate home automation standards -- and all of them can't win out.

Apple Homekit

Apple wants to control home automation devices with HomeKit. Source: Apple.

What's at stake
The home automation market is expected to hit $16.4 billion by 2019, spurring Google's Nest, Apple, and Qualcomm to create their own standards.

In addition, Juniper Research estimates that home automation security and control services could hit $12 billion, worldwide. 

The company, or companies, that dominate the home automation platform space will have the most influence over this revenue and which third-parties are making money from it.

Foolish thoughts
Apple will have to fight off Google and Nest and now Qualcomm and Microsoft in the home automation arena, and that's not going to be an easy task. While iOS devices can work on both Nest's platform and AllJoyn, HomeKit will be iOS exclusive. This means consumer adoption may be what ultimately decides who wins out.

Right now, Apple is at an advantage in the space because of the proliferation of their mobile devices (particularly in the U.S.), a strong developer network and solid branding of HomeKit. Many consumers still haven't heard of Nest, and they almost certainly haven't heard of AllJoyn, meanwhile Apple has already launched commercials showing off what HomeKit can do.

Having said that, the home automation space is still very much up for grabs. And it's not going to be long before we start seeing which platform developers and consumers prefer. Taking the long term-view, it's hard to imagine just one platform taking the entire home automation sector. I think Apple will have a big slice of it, but the company needs to woo consumers and developers now in order to get there. 

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Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), Google (C shares), Microsoft, and Qualcomm. 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.

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