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Consumers will love Apple’s entrance to the smart home, but smaller device makers may not

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With the smart home gaining ground among device makers and even mainstream consumers, Apple’s(s aapl) plans to enter the space make sense. And if the Financial Times’ version of those plans are true, then Apple is going to replace intelligent hubs, like those from SmartThings, Revolve or others, with the iPhone, and will likely charge device makers to participate in the auto-magical consumer experience Apple is reportedly building. This will be great for consumers, possibly challenge some device makers and help push the smart home into the mainstream.

The Financial Times reports that Apple is gearing up to launch a device-centric smart home program focused on the iPhone. The idea would be that companies integrate some Apple software into their devices that allows them to be controlled by the smartphone through the Made for iPhone (or similar) program. There may be additional security checks to ensure devices are certified to some Apple standard for privacy and security.

Is this your new home hub?
Is this your new home hub?

Consumers could then hit up an Apple store and purchase an array of devices that might work with their iPhone and whatever home automation software that Apple will build. Given what I hear about a few products hitting the market later this year in Apple’s stores, it’s true that Apple is about to unleash several highly anticipated smart home devices to the consumer market via its retail channel. It’s already the exclusive retailer for Hue lights and offers the Nest thermostats, Belkin’s WeMo products and the Dropcam line of cameras.

No hub, less complexity

But perhaps more interesting — and more telling– is what Apple doesn’t offer at the moment. It doesn’t offer any Z-wave or Zigbee products which don’t convert back to Wi-Fi and it doesn’t offer any smart hubs. Such hubs help tie myriad connected products under one app, and let consumers program their own smart home. For example, I’ve programmed a variety of lighting recipes that integrate Hue lights with Lutron lights and have also created recipes that let me get a series of actions going when I enter or leave my home.

The Staples home hub programming can be tough.
The Staples home hub programming can be tough.

But doing so wasn’t easy. Most hubs require a willingness to parse through radio standards (does this hub support Z-wave? Are my locks going to work with an Insteon system?) and then force you to figure out how to program the actions you want to take. It took me a year and three software upgrades before I could create the Away recipe that would turn off lights, turn up the A/C and lock doors that my husband wanted using SmartThings (More on that next week’s Gigaom Internet of Things podcast).

But Apple’s software is excellent. It is already implementing Bluetooth compatibility with home entertainment via Airplay and fine-grained presence information that will be essential in the smart home via iBeacons. So in the Apple world, media streaming and presence are already there. Now it just needs the devices themselves and then the software to tie it all together.

But what about those devices?

Apple’s existing Made for iPhone program lets hardware providers get technical resources that ensure their products “just work” with Apple’s phones. Makers of speakers, docks, cars and other products offer Apple a licensing fee in exchange for these hardware and software resources and then get their products certified. However, details of the program are pretty closely guarded, such as how much one pays to Apple. And hardware firms have to apply and sign an NDA in order to get access to these resources. So basically you apply for this certification without knowing exactly what you are applying for.

Will this be part of new connected devices for the home?
Will this be part of new connected devices for the home?

So if this program or a similar one is set up for the smart home it’s an open question of how it will affect smaller device-makers. Right now, a huge majority of connected devices design for the iPhone first and Android(s goog) second, so clearly the makers of these products have their eyes on Apple from the get go (it’s partly because of the audience demographics but also because it’s easier to develop an iOS app because the market is less fragmented). But will they be able to afford the licensing fees? Or will they be willing to let some of their potential company value in terms of the data gleaned from the device and the app itself fall into Apple’s purview?

In all likelihood, participation in a program like Apple’s could mean they become solely a device-seller as opposed to a services company that happens to have a device. That’s not to say this will happen, but it could, especially for consumers who are looking for the Apple software to program their smart home and have no interest in the other aspects a lock-maker or smart camera provider might offer. So device companies will have to weigh what they pay Apple to participate in the program, understand how the consumer might choose to use the Apple software and then decide if it makes sense to gain a larger audience at the expense of giving up some money and data.

The ecosystem should rejoice

So far this news is nothing but good news for companies trying to make a go of it with a smart home play. Yes, a portion of Apple’s millions of iPhone users may elect to buy into the Apple software and certified devices vision, but like the iPhone helped usher in both the modern smartphone (the concept and devices was around before the iPhone) and the App store model, if Apple does well it will drive demand for other smart home products.

So while Google has spent $3.2 billion on buying Nest, and may be in talks to buy Dropcam, the biggest challenge for it might be in deciding if it wants to follow a device-centric model as opposed to one focused on deriving data from devices. Not necessarily to put ads on devices, which is just stupid, but to help allay the threat that the smart home means to its advertising business.

I use the smart home to keep my eyes off of screens, relying on recipes I’ve built to flash my lights or turn on devices to let me know when I need to come back to my computer. My goal will eventually be to have my computers suggest everything from hot new restaurants to what I should cook for dinner that night, which means Google’s search revenue will be partially dis-intermediated. I think tie-ins to connected products and even APIs created by consumer product companies will be the new search or banner ad for the connected home. The information Google can collect from connected devices and it’s scale might allow it to become a warehouse for directing the right ad to the right consumer when they need it. Much like it does now via search.

If that’s the case, then Google needs to follow on Apple’s heels like it did with Android and build out a more open ecosystem for connected devices. It also needs to think about where the intelligence in the smart home system resides and own that platform. If it’s a smart hub, then it needs to get into that market with a strategic purchase, and if it’s a phone it needs to make sure the Android platform can catch up with media streaming, presence and other necessary elements that will help define success in the home.

Maybe it should join the AllSeen Alliance and encourage vendors like Samsung to do the same. Then it could offer a credible open source platform for the smart home and spend its efforts thinking about how to deliver context-based advertising via new mediums that are a bit more subtle than AdWords on a Nest thermostat.

It also would let others build the type of software that Apple is reportedly building and ensure that a device that isn’t owned by Google could play nicely in a consumer-oriented smart home experience. Meanwhile, the rest of those out there building connected home platforms should double down on their esoteric radio protocols and build awesome systems or figure out how to succeed if Apple, Google, AllSeen or another platform makes it so the mainstream consumer doesn’t need a hub.

7 Responses to “Consumers will love Apple’s entrance to the smart home, but smaller device makers may not”

  1. Connected SMART Home

    If their smart home is cloud based, is this not an issue for the home owner with loss of broadband, change if provider, etc

    Surely a locally connected device at the centre of the home would be better?

    It could also act as a gateway to the home for added security.

  2. David Janes

    My thought – all wild speculation of course – is that all Apple devices will be able to act as proxies, including iPads, etc.. Again we can look at what Apple did in the past: iBeacons in Apple stores are not done with dedicated hardware but with iOS devices.

    The nice thing about the Apple TV is it’s (relatively) inexpensive. I had a note written down speculating that Apple could introduce an even lower cost iOS device, let’s call it an Apple Pi, but it doesn’t seem like their style.

    Of course, we could be all wrong and what Apple is really doing in the home is getting into streaming / shared media to compete with Sonos, etc.

  3. David Janes

    My bet is on something subtle. It’s amazing what Apple has accomplished with iBeacon / Bluetooth Low Energy just by saying “if you use BLE in this particular way / broadcast this format message” you’ll get these particular benefits. And they were seeding the market with hardware for years before people saw that benefit!

    So we might — really just speculating here — see something like a spec for devices to broadcast there capability and room location, and an SDK do deal with that info.

    The other killer advantage Apple has is all the hardware in people’s houses. Apple TVs, Macs, Routers, etc.. Apple _already_ has with Bonjour a system where some computers pretend to be other computers when they’re not on. If there was some sort of IFTTT rules in this system “when the door bell rings, play this sound / when the temperature reaches 77, close the blinds” those rules could easily be sent to other Apple hardware for execution when the time is right.

    Finally, BLE is going to be nerve system of Apple’s solution, with WiFi being the backbone. No ZigBee compatibility. No Z-Wave compatibility. No Lutron, No NFC (good gawd). Apple’s backing BLE all the way.

    Apple’s biggest weakness in this world is there failure to set the world on fire with their cloud services, which is what will be needed to control this system from outside the home.

    • David, I couldn’t agree more on Apple’s weakness here. I also worry that if it does rely on an Apple TV box as some kind of headless server/hub as some of the stories have supposed, that it will limit the audience. I’d rather see an iPad or the phone carry the intelligence or perhaps have a certification process that allows for other devices to act as the intelligence eventually.

  4. Kayla Smith

    Great Article. Social media gets a lot of attention with marketing to the point it seems over-hyped. However, using video affiliate marketing with finally seems to be unlocking the real potential of social media. Thoughts?

  5. Sebastién

    Interesting article. My comment is that although Bluetooth (and iBeacon) is a good idea, it lacks some things that other wireless protocolls offer. If I have for exanple an energy harvesting device like an enocean door/window sensor the BLE spec is just not suitable for this. => Having just one protocol is just not going to be possible due to very different requirements. For me the key is that those different protocols should be abstracted so that I as an app developer do not have to care about the protocol and I as an end customer can chose the best device/wireless protocol for the job. Personally I like OSGi in this regards.