One of the most promising areas of technology growth is in home automation, which could be the next big revenue source for consumer electronics companies. That’s why Google (GOOG) bought Nest, Samsung (SSNLF) is after SmartThings, and Intel (INTC) is determined to provide the chips and security powering the “Internet of Things.” The IDC says the Internet of Things — comprised in large part by smart home technology — will be worth more than $7 trillion by 2020.
Did I say next big revenue source? Maybe that should be the next mother lode for companies looking for the next smartphone or tablet boom.
I’m a big fan of home automation, and not just because it promises to be good for the bottom line of big tech companies. It has huge potential for consumers. Smart home technology can save me money, put me in finer control of my home, offer new capabilities and help me reduce my environmental footprint.
Unfortunately, the current state of home automation is a mess.
The Problems With Smart Home Technology
Don’t get me wrong, there’s lots of very cool gear and it’s already doing some very cool stuff. Indeed, it has the “cool” factor locked down. But there are competing standards even for things as simple as the wireless protocols used by these devices: Each manufacturer uses their own app to control their devices, and few can share data or interact effectively with each other.
Smart home app-overload has reached the point where Philips (PHG) — an early home automation success story with its Hue smart LED lighting — recently introduced a revolutionary new way to control its Wi-Fi connected LED lights: a light switch. Sure, the switch is web-enabled and powered by kinetic energy, but the point is, there was enough pushback over having to whip out a smartphone or tablet and launch the Hue app to control the lights that Philips finally caved and released what amounts to an old-school light switch.
This shows just how badly consumers need something like HomeKit. For home automation to take off, there needs to be a degree of centralized control for all this smart home technology.
Take my house, for example. As I’ve collected various home automation bits, I’ve also accumulated apps needed to control each of them.
There’s the motorized Wi-Fi connected door lock, IP cameras, smart thermostat and various security and safety sensors. Then there’s Hue LED lighting and its app. Another collection of smart light switch replacements, a few smart power outlets and a connected outdoor camera.
Some of these are tied together through a home security system, but many operate independently. Together, there are a half a dozen control apps on my iPhone, each with its own interface — which is bad enough — and virtually no communication between devices.
That’s where Apple’s HomeKit comes in.
HomeKit the Best Solution So Far
Apple isn’t releasing new devices employing smart home technology — at least not yet. Instead, HomeKit is a software framework intended to connect third-party devices to iOS, and to each other. By providing the application programming interfaces and the framework, Apple is positioning the iPhone (or iPad) as the single remote control that makes home automation user-friendly.
The company is also pushing Siri as a big part of HomeKit.
For example, HomeKit would support grouping devices and their actions together based on a trigger. Saying: “Siri, I’m going to bed” could trigger connected lights to dim, exterior security lights to turn on, the TV to switch off, the doors to lock and the thermostat to switch to a different temperature. Or iOS proximity sensing could automatically open your garage door, unlock the front door and turn on air conditioning as you approach the house.
If all this sounds a little familiar, Samsung unveiled a very similar platform called Samsung Smart Home at this year’s Consumer Electronics Show.
I’d give Apple and HomeKit the better chance of succeeding. Both home automation platforms require third parties to participate if they want to be part of it, and Apple has a long history of success with its MFi (made of iPod/iPhone/iPad) program. Samsung, on the other hand, plays by its own rules and doesn’t have a lot of friends in the industry. If you were wondering where the revenue is in this for Apple, according to AppleInsider’s Katie Marsal, AAPL currently collects a $4 per connector fee from makers of MFi-certified devices.
Android may dwarf iOS in market share, but Apple’s iOS devices still lead Samsung, and a large percentage of Apple products will be upgraded to iOS 8, where HomeKit makes its first appearance. Samsung Smart Home will face an uphill battle to convince third-party manufacturers to participate in a program that’s specific to Samsung devices, many of which will likely lack the software needed.
Some of the most groundbreaking smart home technology has been offered for sale at Apple Stores, showing there’s strong demand from iPhone and iPad users, too. The Nest Learning Thermostat put in an early appearance on Apple shelves, and the Hue smart LED system was an Apple exclusive for months.
Home Automation — Bottom Line
Home automation is becoming big business, but there’s a risk the party will come to a grinding halt due to fragmentation and app overload. In order to make all this smart home technology live up to our expectations, we still need simplified control.
With HomeKit, Apple is positioning itself to be the platform at the center of things — allowing smart devices to work together without having to be directly compatible with each other — with the iPhone as the single remote and Siri as the hands-free interface.
Apple’s cut of that Internet of Things payday may not include Apple-branded smart home technology, but if it becomes the company that makes the smart home work, it stands to sell a lot more iPhone and iPads while collecting a small licensing fee for each smart device sold.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.