Light Reading

Apple Joins Home Automation Wars

Mari Silbey
6/3/2014
50%
50%

Apple is ready to join the home automation wars. It's staking out a claim that falls somewhere between the cable and telecom companies, which want to sell home automation as a managed service, and the retail brands, which would prefer that consumers take a more do-it-yourself approach to smart home living. (See Betting on Smart Homes.)

At Apple Inc. (Nasdaq: AAPL)'s Worldwide Developers Conference this week, the company introduced HomeKit, a platform for connecting and controlling smart home devices through an iPhone or iPad. Apple is in the process of certifying hardware partners such as Koninklijke Philips Electronics N.V. and Honeywell International Inc. (NYSE: HON), and it plans to position itself as the glue that makes devices like smart light bulbs and connected door locks work together. (See Apple Launches Biggest Changes Since iPhone.)

If the strategy sounds familiar, that's because there are already many other companies working toward the same goal. On the service provider side, cable and telecom operators alike are selling home security and automation bundles in the hopes of generating new revenue from their existing broadband infrastructure.

So far, Icontrol Networks Inc. is the primary platform of choice used by cable companies. On the telco end, AT&T Inc. (NYSE: T) has built its Digital Life service on Cisco technology, and Verizon Communications Inc. (NYSE: VZ) is reportedly ready to jump back into the fray with a new platform provided by GreenWave. (See Cox Bets on Smart Homes in Vegas and GreenWave Crashes Smart Homes.)

On the retail side, the home automation market is coming together in two different ways. Big retail chains are teaming up with platform partners -- like Staples has done with Zonoff for Staples Connect, and Lowes has done with AlertMe for its Iris solution -- while other companies like SmartThings and Revolv are offering their own technology as independent platform providers.

Apple falls somewhere in the middle. On the one hand it looks very similar to other over-the-top retail providers. On the other hand, it has a huge ecosystem in place to enable subscription home automation services in the future if it chooses to do so.

Apple arguably made a strategic mistake when it bet on music downloads rather than subscription streaming services. However, the recent acquisition of the Beats Music streaming radio service looks like an effort to change direction. Why wouldn't Apple consider a similar move in home automation? (See Apple Confirms Beats Buy for $3B.)

Without a doubt, Apple has two major advantages that its smart home rivals can't match: the iOS operating system and hundreds of millions of mobile devices sold worldwide.

— Mari Silbey, special to Light Reading

(9)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
6/8/2014 | 10:50:10 PM
Re: Great analysis, but
mhhf1ve - Beats has a profitable business, experience making deals with the entertainment industry, and executive leadership Apple wants to bring on board. All of these are good reasons for the acquisition.
mhhf1ve
50%
50%
mhhf1ve,
User Rank: Light Sabre
6/5/2014 | 4:37:14 PM
Re: Great analysis, but
Ok. That makes the Beats acquisition even more puzzling because it's not like Apple needs the Beats music app UI and its small number of users. Maybe Beats has some magic that I'm not aware of? Fashionable design cred? Is that worth multiple billions of dollars?
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
6/5/2014 | 3:44:47 PM
Re: Great analysis, but
mhhf1ve - "Hmm. Not so sure that streaming services are actually doing so well -- the royalties that need to be paid to the labels could ultimately kill off these streaming services, unless Netflix-like deals can be hammered out with copyright owners."

Good point. OK, let me rephrase my earlier statement: Apple goes into markets where the idea is good, but the user experience is broken. And the user experience for Spotify andother streaming radio is just fine.
mhhf1ve
50%
50%
mhhf1ve,
User Rank: Light Sabre
6/4/2014 | 5:55:38 PM
Overall, though, where is the killer app in home automation?
Home automation isn't exactly a new thing, but it seems to be getting revived. However, I'm not sure where the extra value is coming from? Energy savings from "smart thermostats" is one thing, but... do people really need to be able to turn on lights and close garage doors remotely over the Internet? 
mhhf1ve
50%
50%
mhhf1ve,
User Rank: Light Sabre
6/4/2014 | 5:53:26 PM
Don't discount Google and Nest?
There are more Android devices out there than Apple iOS devices, so if Google can translate Nest products into more general home automation, Google also has a pretty huge ecosystem of connected devices to leverage.

The difference is that Google doesn't make that much money off selling hardware (yet?), and it only dominates in controlling the Android OS. But Microsoft made a lot of money just doing an OS, so Google might pull the same trick, but with embedded/mobile devices and Android.
mhhf1ve
50%
50%
mhhf1ve,
User Rank: Light Sabre
6/4/2014 | 5:50:20 PM
Re: Great analysis, but

Apple specializes in remaking markets that are broken. Spotify and other streaming companies are doing fine. 

Hmm. Not so sure that streaming services are actually doing so well -- the royalties that need to be paid to the labels could ultimately kill off these streaming services, unless Netflix-like deals can be hammered out with copyright owners.

 

Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
6/3/2014 | 5:39:06 PM
Re: Great analysis, but
Question is whether it's too late for Apple to regain the lead. 

Apple specializes in remaking markets that are broken. Spotify and other streaming companies are doing fine. 
msilbey
50%
50%
msilbey,
User Rank: Blogger
6/3/2014 | 2:15:44 PM
Re: Great analysis, but
Fair enough given that Apple did build the digital music business. You're right that they just held on to the model for too long. 
Mitch Wagner
100%
0%
Mitch Wagner,
User Rank: Lightning
6/3/2014 | 2:02:22 PM
Great analysis, but
Great analysis, Mari! But I have to strongly disagree with this: 

Apple arguably made a strategic mistake when it bet on music downloads rather than subscription streaming services.

iTunes was hugely successful for Apple. It destroyed and rebuilt the music industry in Apple's favor. It's one of the greatest business success stories ever.

Apple's mistake was hanging on to downloads too long. It failed to see that the industry has moved on to streaming now. It's not too late to catch up.  

However, the recent acquisition of the Beats Music streaming radio service looks like an effort to change direction. 

I believe that's exactly what Apple is doing here. I believe Tim Cook was being perfectly straightforward when he laid out the reasons for the acquisition: Acquire a strong, but growing music streaming business; get its smart, successful leadership on the team; and because it's a tactical win -- Beats is already profitable, and that's money that will now go into Apple's pocket. 

It'll be interesting to see whether Apple operates Beats as a separate brand. I think Apple will do that, and that'll be a first for them. The only other time Apple operated a separate brand was Filemaker, and that was another world. 
Flash Poll
From The Founder
Then pick up your axe, put on your spandex trousers and get yourself down to Light Reading's Big Telecom Event (BTE). Kerrang!!!
LRTV Custom TV
Meeting the Demands of Bandwidth & Service Group Growth

5|1|15   |   5:35   |   (0) comments


Jorge Salinger, Comcast's Vice President of Access Architecture, explains how DOCSIS 3.1 and multi-service CCAP can meet the demands of the bandwidth and service group growth.
LRTV Custom TV
DOCSIS 3.1: Transforming Cable From Hardware-Defined Network to Software-Defined Network

4|29|15   |   03:48   |   (0) comments


John Chapman, Cisco's CTO of Cable Access Business Unit and Cisco Fellow, explains how DOCSIS 3.1 can transform cable HFC network to a more agile software-defined network.
LRTV Huawei Video Resource Center
Predicting Traffic Patterns for Quality Mobile Broadband

4|29|15   |   6:45   |   (0) comments


Accessing information ubiquitously creates complexity and creates heavy traffic onto the network, especially at large-scale events like sporting events or festivals. In this video, Huawei's Mohammad Hussain speaks to experts about how to predict traffic and improve user experience during periods of heavy traffic.
Between the CEOs
Ciena CEO: The Web-Scale Revolution

4|28|15   |   10:32   |   (3) comments


Light Reading CEO and founder Steve Saunders goes head-to-head with long-time Ciena CEO Gary Smith to discuss the impact of the web-scale players, the New IP and 'white box' networks.
LRTV Documentaries
Cox Eyes Cloud-Based Home Networks

4|27|15   |   05:30   |   (0) comments


Cox's Jeff Finkelstein explains how moving services to the cloud will let cable deliver services faster and eliminate constant hardware replacements.
LRTV Documentaries
CableLabs' Clarke Updates Cable Virtualization

4|23|15   |   05:41   |   (1) comment


Former BT exec now leading CableLabs' NFV and SDN efforts explains key role of open source and updates efforts to virtualize the home network.
LRTV Interviews
Ericsson's CTO Talks Transformation: Pt. II

4|23|15   |   08:19   |   (1) comment


In the second installment of an in-depth two-part interview, Ericsson's CTO Ulf Ewaldsson talks to Light Reading CEO and founder Steve Saunders about cultural change, network slicing and technology advances.
LRTV Interviews
Ericsson's CTO Talks Transformation: Pt. I

4|23|15   |   09:27   |   (3) comments


In the first installment of an in-depth two-part interview, Ericsson's CTO Ulf Ewaldsson talks to Light Reading CEO and founder Steve Saunders about the incredible transformation underway in the communications networking industry.
LRTV Documentaries
LTE Paves the Way for the 5G Revolution

4|20|15   |   4:20   |   (0) comments


Håkan Andersson, head of 5G product strategy of the Radio Business Unit at Ericsson, discusses the role of LTE, the US and other industry verticals in building a true 5G ecosystem.
LRTV Documentaries
The 3GPP's Road to 5G Standardization

4|17|15   |   4:43   |   (0) comments


Satoshi Nagata, chairman of the 3GPP's TSG-RAN group and a manager at NTT Docomo, explains the standardization process for 5G, as well as the biggest challenges and opportunities.
LRTV Documentaries
AlcaLu CTO Makes the Case for a New 5G Air Interface

4|16|15   |   3:54   |   (0) comments


Michael Peeters, CTO of wireless at Alcatel-Lucent, explains why 5G will require a new air interface to meet its diverse performance targets.
LRTV Documentaries
AlcaLu + Nokia: The New Uber-Vendor

4|15|15   |   2:42   |   (4) comments


Heavy Reading Senior Analyst Gabriel Brown discusses the technological and competitive opportunities and challenges if a merger between Alcatel-Lucent and Nokia comes to pass.
Upcoming Live Events
May 6, 2015, Georgia World Congress, Atlanta, GA
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 10, 2015, Chicago, IL
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
November 11-12, 2015, The Westin Peachtree Plaza, Atlanta, GA
All Upcoming Live Events
Infographics
In its latest survey covering network operators' plans and strategies for ICT transformation, Heavy Reading asked telecom operators worldwide to identify the most important goals and objectives for their ICT transformation initiatives. Heavy Reading also asked operators about the importance of a "digital first" strategy, which enables customers to complete an interaction across different digital channels, such as web and mobile self-service and social media.
Hot Topics
Eurobites: Nokia Quashes Handsets Rumor
Paul Rainford, Assistant Editor, Europe, 4/28/2015
Verizon Builds Key Vendors Into SDN Strategy
Carol Wilson, Editor-at-large, 4/28/2015
Why Is Verizon Fighting With Programmers?
Alan Breznick, Cable/Video Practice Leader, 4/28/2015
Astellia Highlights Customer Care Disconnect
Ray Le Maistre, Editor-in-chief, 4/29/2015
T-Mobile Beats Sprint on Subs, Eyes Verizon on Network
Sarah Thomas, Editorial Operations Director, 4/28/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Light Reading CEO and founder Steve Saunders goes head-to-head with long-time Ciena CEO Gary Smith to discuss the impact of the web-scale players, the New IP and 'white box' networks.
Many leading communications companies can claim to have undergone significant periods of reinvention during their histories, but none have been through more major ...
Cats with Phones
Working With What You've Got Click Here
"It's pretty hard to answer these things without thumbs!"