1 Way Samsung Plans to Take Down Apple

Samsung just purchased home automation company SmartThings -- pitting the two tech juggernauts against each other for control of connected homes.

Aug 19, 2014 at 9:00AM

As if the home automation space wasn't already about to take off with Apple's (NASDAQ:AAPL) launch of HomeKit next month, Samsung (NASDAQOTH:SSNLF) went and bought home automation company SmartThings last week.

The move places Samsung firmly in the connected home space, and pits it squarely against Apple's forthcoming platform.

Samsumg Smartthings
Source: SmartThings.

Opening up automation
Neither Samsung nor SmartThings released details of the purchase, though it is estimated Samsung paid about $200 million for the home automation start-up. SmartThings will remain independently operated, though CEO Alex Hawkinson and the company's employees will move to Samsung's Open Innovation Center in Palo Alto, CA.

Earlier this year Samsung released its own home automation platform, called Smart Home, but the SmartThings purchase put the company quickly into the homes of existing customers.  

Smartthings Ios App

SmartThings app on iOS. Source: SmartThings.

SmartThings sells home automation kits, sensors, alarms, automated light switches, and a central hub to connect devices. But the most important aspect of SmartThings, and why it's so valuable to Samsung, is the company's open platform.

SmartThings currently connects up to 1,000 third-party devices, featuring 8,000 apps created by 5,000 developers.

Why does that matter?

Because just like other home products, home automation devices aren't made by just one company. Many of the lamps, door locks, light bulbs, thermostats, etc., in your home are made by a variety of companies. The angle then for Samsung -- and Apple -- is to try controlling the platform of future connected devices, rather than selling their own devices.

Though SmartThings is now under Samsung, the company said it is committed to open development for both Android and iOS devices. In comments after a blog post announcing the deal, Hawkinson said "we are 100% open and there will be no slowdown in support for iOS, our plans for HomeKit, and so much more.."

So while Samsung's mobile devices live on Android, SmartThings devices and its platform will continue to work with the company's iOS app and apparently even pair to Apple's HomeKit platform.

That's a bit of a different strategy than seen for HomeKit, which will only work on iOS. Keeping SmartThings open to both operating systems may be Samsung's way of wooing both iOS and Android users, but it's going to have a hard time overcoming Apple's lure.

Apple Homekit

Source: Apple.

The Apple approach
Apple unveiled HomeKit at its developer conference in June. While it's an open platform in that developers can build apps for it and third-party automation devices will connect to it, only iOS devices can be used to control the system.

Apple is betting users will want to use its iPad and iPhone to control connected home devices, which could provide incremental sales of its high-margin devices. When iOS 8 launches next month, users will be able to pair home devices such as smart thermostats and connected lights, then use Siri voice commands to control devices individually or in groups.

With HomeKit, Apple can control the home automation space, while also giving its mobile users yet another incentive to remain within the company's ecosystem.

What everyone's fighting for
Transparency Market Research estimates the home automation market could hit $16.4 billion by 2019, up from just $3.6 billion in 2012. A Markets and Markets report says home automation will actually be worth $51.77 billion by 2020. That's a huge range, and it shows that no one knows exactly how consumers will respond to this nascent market.

It's too early to announce a home automation winner, but I think it's hard to bet against Apple. The company already has millions of developers creating apps for iOS, hundreds of millions of devices in the hands of users, and a very loyal following. Add to all that the fact that companies such as SmartThings will still play nice with Apple's HomeKit, and it's clear Cupertino has more than a few advantages.

The sheer size of Apple's mobile footprint ensures that nearly every home automation platform will have to support iOS devices. Meanwhile, Apple's HomeKit will go on being iOS exclusive, possibly driving incremental device sales.

We'll know more once iOS 8 launches and as consumers start purchasing more smarthome products. But if things do start moving in that direction, you can be sure Apple will benefit whether its devices are connecting to HomeKit, the SmartThings platform, or some other system.

Warren Buffett: This new technology is a "real threat"
At the recent Berkshire Hathaway annual meeting, Warren Buffett admitted this emerging technology is threatening his biggest cash-cow. While Buffett shakes in his billionaire-boots, only a few investors are embracing this new market which experts say will be worth over $2 trillion. Find out how you can cash in on this technology before the crowd catches on, by jumping onto one company that could get you the biggest piece of the action. Click here to access a FREE investor alert on the company we're calling the "brains behind" the technology.

Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. 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.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information