Thanks in large part to National Security Agency whistle-blower Edward Snowden, consumers are more concerned than ever with privacy and maintaining the security of their personal information. In light of Snowden's revelations, companies that rely on user data to better target ads or selectively push out data based on prior Internet usage face all-new levels of scrutiny.
The sheer volume of consumer information collected and analyzed by such companies is unprecedented, and companies including Google (NASDAQ:GOOG) (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), and Samsung (NASDAQOTH:SSNLF) will soon have access to even more of their customers' data. How? The advent of smart homes. Sure, these "big three" tech companies can already track their customers' smartphone use, location, online search habits, and a host of other semi-relevant data points. But if new predictions from research firm Gartner come to pass, perusing your emails or tracking which website you recently visited will be nothing compared to what's on the horizon.
How smart will a smart home be?
In just eight short years, according to Gartner, a typical home could have 500 or more "smart" devices helping us to manage our heat, appliances, and security, among various other functions. As an analyst at Gartner explained, "We expect that a very wide range of domestic equipment will become 'smart' in the sense of gaining some level of sensing and intelligence combined with the ability to communicate, usually wirelessly."
That sounds pretty good, right? Imagine being able to pull your smartphone out and check the status of your home by touring it via remote video. Or setting your home temperature with the push of a button on your way to work.
But as Gartner pointed out, many of these "smart" tasks and capabilities will be made available via multiple sensors in our appliances, security systems, and virtually every other item in the home. And each of those sensors will collect and analyze reams of data. All that information, just as with mobile usage and email tracking today, will eventually help data-intensive companies like Google, monetize all those smart gadgets. If you're a little uncomfortable knowing that your calls and emails are being tracked, imagine Google, Apple, or Samsung knowing when you arrive home from work, how you like your toast, or how often you do laundry.
The smart home players
Based on recent announcements and acquisitions, these three companies are betting big on smart homes. Though Apple didn't spend a great deal of time at its developers conference earlier this year introducing its HomeKit smart home solution, the system garnered a lot of attention. HomeKit is Apple's iOS solution to connect home gadgets with wireless technologies such as Bluetooth. The plan is to make an iPhone a central part of managing your day-to-day life.
Google and Samsung have taken the acquisition route to controlling our homes. Google earlier this year spent $3.2 billion for smart thermostat provider Nest Labs, which in turn acquired Internet camera guru Dropcam for $555 million. Google announced on Tuesday that the two technologies have been integrated, and are now able to connect to other household gadgets. And you can bet Google is just getting its smart home aspirations started.
Not to be outdone, smartphone sales king Samsung announced last month it was acquiring its own smart home solutions provider, spending a reported $200 million for SmartThings. SmartThings' technology enables people to sync their home gadgets using nothing more than a simple smartphone app and a centralized hardware hub.
Final Foolish thoughts
When technology giants Google, Apple, and Samsung go big into an industry, as each has in the smart home race, you can bet growth estimates like Gartner's aren't too far off. And it's not necessarily the revenue generated from those projected 500-plus gadgets in the home that are attractive to the "big three"; the gadgets themselves aren't expected to add a great deal to the top line. But as Google demonstrates with each successive blowout quarter, the more information it has on us, the more revenue it's able to generate via better targeting of ads, which in turn results in higher fees for each spot. And if smart homes become as prevalent as Gartner suggested, Google, Apple, and Samsung will know more about each one of us than ever before.
Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Apple, Gartner, 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.