While Apple Inc.’s (AAPL) attention was on things like the Apple Watch, bigger iPhones and a new Apple TV, Amazon.com, Inc. (AMZN) quietly invaded the home with a smart speaker, the Amazon Echo. Now Alphabet Inc’s (GOOG, GOOGL) Google is in on the act with Google Home. So, when is Apple going to respond with it’s own take on the Amazon Echo?
Over the last few years, the biggest tech companies in the world have been duking it out over who is going to control the smart home. It’s not necessarily about selling “smart” devices (although Google did snap up Nest Labs for this purpose), but who ends up as the central point of control of all of this smart home tech.
Amazon Echo Is AMZN’s Way Into the Smart Home
Apple has been pushing HomeKit, Google has Weave and Samsung (SSNLF) has SmartThings. The idea is to encourage companies that actually make the connected devices like thermostats, locks, lights, cameras and appliances to adhere to your standard. Then your smartphone platform becomes the uber remote control that is the focal point of the smart home.
If consumers know that they can pick up your smartphone and speak to your virtual assistant to control any connected device in their home, that’s a significant competitive advantage. You’ll sell more smartphones … and as an added bonus, all of that valuable data flows through your hub.
However, AMZN — whose attempt at breaking into the smartphone market was a resounding failure — found a back door to the smart home: the Amazon Echo.
In the guise of a Bluetooth speaker, Amazon introduced its Alexa virtual assistant into the home. At first, Alexa was primarily focused on playing the music you want and ordering products from Amazon. But AMZN quickly started signing up partners in the smart home space.
The always-on Echo, with Alexa able to pick up voice commands from a distance (thanks to an array of omni-directional microphones) clicked with consumers and with smart home product manufacturers. With this function, there is no having to look for your smartphone to issue a command, with a relatively inexpensive Amazon Echo always ready to take your commands.
The Echo is now a very big deal. It has a huge range of smart home partners — including Alphabet’s Nest — and AMZN says it now has over 1,000 employees focused on the Amazon Echo and Alexa.
Where’s Apple?
If you needed any more proof that, the Amazon Echo was succeeding in its plan to do an end-run around smartphones that arrived a few weeks ago with the arrival of Google Home.
The big question now is: Where is Apple’s response? Consumers and smart home product manufacturers are piling on the Amazon Echo bandwagon.
The last thing AAPL wants to do is to cede the smart home to Amazon or Google, but having to pick up an iPhone to speak to Siri is proving to be an awkward, inconvenient and expensive method of controlling smart devices — at least compared to the unobtrusive, always-on, speaker-in-disguise Amazon Echo.
Wired just published a post with a headline that sums up how quickly this situation is turning dangerous for Apple: “The iPhone’s Biggest Threat Isn’t Android–It’s Amazon’s Echo.”
Apple may not have the artificial intelligence chops that Google has, but Siri is a capable virtual assistant. The company also owns Beats Electronics, which makes a very popular Bluetooth speaker.
It has sold its own line of routers — the Airport Express, Airport Extreme and Time Capsule — for over 15 years. Of course, there’s also the Apple TV, a connected box (now with Siri support) that’s in millions of homes and once again on an upswing in popularity.
In other words, Apple has all the pieces. It has also had a year to study the Amazon Echo in action and learn from AMZN’s mistakes. The two questions are: When is it going to pull the trigger and what form will AAPL’s answer to the Echo take?
Rumors have begun to circulate that Apple may be preparing to go much further than the Amazon Echo. Perhaps an Apple TV equipped with cameras and facial recognition that can identify someone who walks into a room and automatically adjust smart gear to match their preferences. Gizmodo called this prospect “Goddamned terrifying.”
It’s possible we will get a hint of what AAPL is up to in its bid to take on the Amazon Echo in a few weeks, at WWDC 2016. Whether that happens, it’s a safe bet that Apple engineers are working on it.
The Amazon Echo has proved Siri on an iPhone is not going to win the battle to control the smart home, and Apple is not about to walk away and leave the prize for AMZN and Google to fight over, especially in these days of declining iPhone profits when new sources of revenue are more important than ever.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
