Apple Inc. (NASDAQ:AAPL) has fallen behind in the race to be the smart home hub. There are a growing number of smart products that support AAPL’s HomeKit standard, but it’s nowhere near the pace being set by rivals Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL).
As WWDC 2017 wraps up, Apple announced it’s making a big change to HomeKit, making it much easier for third party device manufacturers to adopt the standard in the hope of boosting its popularity.
However, the move to make HomeKit easier to adopt comes at a cost. Apple’s standard will be giving up some of the rock-solid security that gives it an advantage over competing standards.
Making Apple HomeKit Certification Easier to Boost Adoption
Amazon’s Alexa has thousands of “skills” that let its Echo smart home speaker interact with online services and control third party connected accessories, such as Google’s Nest smart thermostat.
Apple HomeKit has a much more modest adoption rate among device manufacturers and a big part of that is the current certification process.
Partners must become MFi licensed and use an Apple authentication chip in their device. Apple HomeKit certification is more costly and takes additional time in comparison to other standards.
The requirement for the chip in particular means that companies can’t simply use a firmware update to make their products HomeKit compatible, they have to be specially designed and manufactured.
As reported by AppleInsider, the company announced at WWDC 2017 that is loosening its licensing requirements and eliminating the requirement to use its authentication chip.
This means product developers can work on HomeKit-compatible prototypes without first having a MFi license. If they decide to go ahead and produce the device, they do still need that license, but Apple is hoping this move will encourage companies that aren’t already partners –and wouldn’t be otherwise– to try out HomeKit, then go ahead and potentially release a commercial product.
More importantly, not requiring the Apple authentication chip cuts manufacturing costs and opens up the possibility that smart home products could be made HomeKit compatible through a firmware update. That could even work for previously shipped products already in consumer’s homes.
Making it Easier for Smart Home Partners Means Loosening Security Standards
The downside to this move is that by employing software authentication instead of a specialized chip, Apple is giving up some of the security that made HomeKit smart devices far more resistant to potential hacking.
It’s a trade-off, but AppleInsider notes even Apple’s software encryption requirements are steep enough that the processors in some products may not be capable of handling the demand.
Why Apple’s Willing to Take the Risk
Hackers might launch a major attack on smart home devices. Then again, they might not. And even if they do, Apple’s HomeKit –even in its loosened state– still uses a strong encryption standard. HomeKit devices are likely to be less vulnerable than ones designed to work with competitors like the Amazon Echo.
With the smart home market predicted to be worth $121.73 billion by 2022, and Amazon taking a commanding lead, Apple clearly did the math and decided that loosening Apple HomeKit certification is worth the risk.
Together with its new Siri-powered HomePod smart speaker, AAPL stock could be a contender against AMZN and GOOGL for title of the smart home play.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.