Apple and Google Knocking on Door of Smart Homes, Reports Say

Apple and Google are on a track for competition -- or possibly cooperation -- in yet another growing tech battlefield.

by Jeremy C. Owens, McClatchy News Service / May 28, 2014
Honda smart home at UC Davis

Reports suggest Apple will introduce new software for controlling a connected home and Google is interested in adding to Nest's portfolio of "smart home" products.

The companies are on a track for competition -- or possibly cooperation -- in yet another growing tech battlefield, reports contended Tuesday, with the Silicon Valley titans focused on the market for "smart homes."

Google has already made a big play into the market -- which connects common household items to the Internet to make them accessible remotely, along with other new tricks -- with its $3.2 billion acquisition of Palo Alto's Nest Labs earlier this year. The Financial Times reported Tuesday morning that Apple would announce its first foray into smart homes Monday during the keynote address for its annual Worldwide Developers Conference in San Francisco.

The report says that Apple will introduce software that connects a user's lights, home security and other appliances, making them accessible through the Cupertino company's popular devices, such as the iPhone and iPad. Instead of accessing separate apps to turn off lights or begin preheating the stove for dinner, the new offering could allow users to access all their connected devices in one place.

"It is unclear exactly what Apple may be planning, but we suspect in its initial incarnation it will be a consolidating app for connected home devices, similar to what Apple has done with its GameCenter and Passbook applications," Raymond James analyst Tavis McCourt wrote in a note Tuesday.

The plan could boost sales for Apple's mobile products as well as offer interesting possible roles for other equipment as well as pathways to future offerings designed specifically for the smart home.

"More interesting would be the Apple TV peripheral turning into a home controller that provides the ability for consumers to automate scripts across multiple disparate apps," McCourt noted of one such possibility.

The Financial Times reported that Apple plans to play up the security of its offering in direct opposition to Google, which said in a filing last week that it foresees a future with ads served through the variety of new devices connecting to the Internet; Apple derives its revenues from the products it sells, while Google's main moneymaker is digital advertising.

However, the developing market could be a strong one for Apple and Google to find mutual gain, since Apple will not immediately be providing the hardware to which its software connects. Nest products are already sold in Apple stores, and The Information reported Tuesday that the Mountain View Internet giant is looking at purchasing Dropcam, which produces small cameras that homeowners can easily install and access through the Internet, to add to Nest's portfolio.

"It sounds like Apple's early strategy will lean on partners ... and it's hard to imagine a better, more Apple-like smart home partner than Nest," Quartz reporter Dan Frommer wrote Tuesday.

No matter the mechanics of the market, the opportunity is too large for either tech giant to pass up, McCourt wrote, predicting that the market could eventually produce revenues of $100 billion and more in the coming years.

"It is unlikely that any one company or even one channel strategy will win in the near term given the enormity of the opportunity," he wrote.

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