AAPL Charges Into Internet of Things With Apple HomeKit

by Susan J. Aluise | June 5, 2014 11:13 am

AAPL Charges Into Internet of Things With Apple HomeKit

Ever wish you had a universal remote that you could use to manage your life? Alas, today’s technology won’t let you run the universe, but Apple (AAPL[1]) does have a plan to control your home and make it smarter: HomeKit. And AAPL’s opening salvo in the battle to manage smart home devices could become both an engine of growth and an edge in harnessing the Internet of Things.

HomeKit AAPL Charges Into Internet of Things With Apple HomeKit[2]
Source: Apple

The Internet of Things is a huge deal, especially for the companies that manage to insert themselves right in the middle of it. Consider this: The Internet of Things market will grow from $1.9 trillion (with a “T”) to $7.1 trillion in 2020[3], according to new research from International Data Corp. HomeKit was launched as part of the new iOS 8 mobile operating system at AAPL’s Worldwide Developers Conference (WWDC) in San Francisco this week.

HomeKit acts as an Internet of Things platform, creating a common interface for developers to securely integrate a wide range of home control functions like lights, thermostats, appliances, locks and other devices through the iPhone or iPad — and even with Siri.

So far, AAPL has inked partnerships with some heavy-hitters in home automation including Phillips (PHG[4]), Texas Instruments (TXN[5]), Sylvania, Schlage and iHome. The bigger deal here is that this capability clearly plays into the Internet of Things opportunity, helping AAPL to gain a foothold in the coming wave of machine-to-machine (M2M) communication and management.

Apple’s move into the Internet of Things couldn’t have come at a better time. Consumers are flocking to smart home devices — shipments of these devices will grow at a combined annual growth rate of nearly 30% between 2013 and 2019, according to ABI Research. But the growth is not simply a function of consumers buying more smart devices — connectivity and management of those devices in a holistic manner is driving trends.

Do-It-Yourself (DIY) home automation is growing fast as tech-savvy consumers are building out such systems on their own. Whether it’s controlling thermostats and lighting, streaming video or unlocking doors remotely, the full value proposition and convenience of these devices only can be realized if they can be accessed and controlled by smartphone apps and/or the web.

Since the real power of smart devices lies in connectivity and control, AAPL needs to move fast to enable the management of multiple smart devices through a central platform — an iPhone or iPad. Google (GOOG[6]) has already positioned itself in the Internet of Things market with its $3.2 billion acquisition of Nest Labs.

Nest’s technology — dubbed the Learning Thermostat — uses motion detectors to learn your routine, figure out when you’re home and when you’re away and programs itself to manage temperature accordingly. The device, which Nest says can save users up to 20% on heating and cooling bills, can be managed from a phone. GOOG, which clearly is suiting up for an Internet of Things battle, also is rumored to be interested in acquiring Dropcam, a provider of real-time cloud video recording capabilities.

Apple’s iOS 8 builds on its radically redesigned predecessor, iOS 7, which made its debut this time last year. Behind that familiar user interface lurks a powerful platform aimed at delivering high value apps that hope to convert “Android Switchers,” giving Apple an advantage on two fronts: mobile, and the Internet of Things.

Bottom Line: When it comes to the Internet of Things, Apple, Google and other heavy hitters are seeing gold. But the true power of the Internet of Things only can be realized by merging multiple smart home devices into a single automation platform. The concept of clicking a universal remote to control lights, cameras and manage all manner of smart home actions will deliver big for AAPL if it gains an early edge.

AAPL’s new iOS 8 platform in general — and HomeKit in particular — are robust enough to deliver a big piece of a massive market. With some 4,000 application programming interfaces (APIs) in iOS 8, APPL has given app developers far more flexibility – particularly evident in Extension framework, which allows apps to “mingle” securely. HomeKit’s opening scenes are exciting enough to draw consumer interest; all AAPL has to do now is out-innovate Google and get all those Android users to change the channel.

As of this writing, Susan J. Aluise did not hold a position in any of the aforementioned securities.

Endnotes:
  1. AAPL: /stock-quotes/AAPL-stock-quote/
  2. [Image]: http://investorplace.com/wp-content/uploads/2014/06/HomeKit.jpg
  3. $7.1 trillion in 2020: http://www.zdnet.com/internet-of-things-market-to-hit-7-1-trillion-by-2020-idc-7000030236/
  4. PHG: http://studio-5.financialcontent.com/investplace/quote?Symbol=PHG
  5. TXN: /stock-quotes/TXN-stock-quote/
  6. GOOG: /stock-quotes/GOOG-stock-quote/

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