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
Last week I dropped in on "Hotlanta," Georgia to moderate Light Reading's inaugural DroneComm conference – a unique colloquium investigating the potential for drone communications to disrupt the world's telecom ecosystem. As you will see, it was a day of exploration and epiphany...
LRTV Documentaries
Verizon's Emmons: SDN Key to Cost-Effective Scaling

5|22|15   |   03:53   |   (0) comments


For Verizon and other network operators to ramp up available bandwidth cost effectively, they need to move to SDN and agree on how to do that.
LRTV Documentaries
Lack of Universal SDN a Challenge

5|21|15   |   04:51   |   (3) comments


Heavy Reading Analyst Sterling Perrin talks about how uncertainty about SDN standards and approaches may be slowing deployment.
LRTV Custom TV
Steve Vogelsang Interview: Carrier SDN

5|20|15   |   05:02   |   (0) comments


Sterling Perrin speaks to Steve Vogelsang, Alcatel-Lucent CTO for IP Routing & Transport business, about the new Carrier SDN-enabling Network Services Platform and the operator challenges it solves.
LRTV Custom TV
Carrier SDN: On-Demand Networks for an On-Demand World

5|20|15   |   20:52   |   (0) comments


Steve Vogelsang, Alcatel-Lucent CTO for IP Routing & Transport business, talks about requirements and benefits of Carrier SDN during the keynote address at the Light Reading Carrier SDN event May 2015.
LRTV Documentaries
The Security Challenge of SDN

5|19|15   |   02:52   |   (0) comments


CenturyLink VP James Feger discusses concerns that virtualization could create new vulnerabilities unless network operators build in safeguards.
LRTV Custom TV
NFV Elasticity – Highly Available VNF Scale-Out Architectures for the Mobile Edge

5|18|15   |   5:50   |   (0) comments


Peter Marek and Paul Stevens from Advantech Networks and Communications Group talk about their NFV Elasticity initiative and the company's latest platforms for deploying virtual network functions at the edge of the network. Packetarium XL and the new Versatile Server Module: 'designed to reach parts of the network that other servers cannot reach.'
LRTV Huawei Video Resource Center
Bay Area Spark Meetup 2015

5|14|15   |   3:54   |   (0) comments


Developed in 2009, Apache Spark is a powerful open source processing engine built around speed, ease of use and sophisticated analytics. This spring, Huawei hosted a meetup for Spark developers and data scientists in Santa Clara, California. Light Reading spoke with organizers and attendees about Huawei's code contributions and long-term commitment to Spark.
LRTV Custom TV
The Transport SDN Buzz

5|12|15   |   06:01   |   (1) comment


Sterling Perrin, senior analyst at Heavy Reading, speaks with Peter Ashwood-Smith of Huawei and Guru Parulkar of ON.Lab about the evolution of transport SDN and the integration of technologies.
LRTV Custom TV
Next-Generation CCAP: Cisco cBR-8 Evolved CCAP

5|5|15   |   04:49   |   (0) comments


John Chapman, Cisco's CTO of Cable Access Business Unit and Cisco Fellow, explained the innovation design of Cisco's cBR-8, the industry's first Evolved CCAP, including DOCSIS 3.1 design from ground-up, distributed CCAP with Remote PHY and path to virtualization. Cisco's cBR-8 Evolved CCAP is the platform that will last through the transitions.
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.
Upcoming Live Events
June 8, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 9-10, 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
Network functions virtualization (NFV) is not the easiest of topics to take on board, so here's a Light Reading infographic, developed following conversations with the folks at HP, that helps make sense of where NFV is taking the industry.
Hot Topics
AT&T Testing Virtualized GPON
Carol Wilson, Editor-at-large, 5/15/2015
Choosing a Technology Supplier? Consider Changing Your Selection Criteria
Steve Saunders, CEO and founder, Light Reading, 5/18/2015
Verizon Saves 60% Swapping Copper for Fiber
Sarah Thomas, Editorial Operations Director, 5/19/2015
Chattanooga Charts Killer Gigabit Apps
Mari Silbey, Senior Editor, Cable/Video, 5/20/2015
Smarter 'Dumb' TVs Will Drive OTT Adoption
Mari Silbey, Senior Editor, Cable/Video, 5/18/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
With 200 customers in 60 countries, Stockholm-based Net Insight has carved out a solid leadership position in one of the hottest vertical markets going in comms right now: helping service providers and broadcasters deliver video and other multimedia traffic over IP networks. How has Net Insight managed to achieve this success in the face of immense competition from the industry giants?
My ongoing interview tour of the leading minds of the telecom industry recently took me to Richardson, Texas, where I met with Rod Naphan, CTO and SVP, Solutions, ...
I recently popped down to Texas to chat with CEO Eric L. Pratt about his company, Taqua.
Cats with Phones