Shoppers visit the Apple store which changes its logo color to red in support for those living with HIV, in Hong Kong, during the World AIDS Day Sunday, Dec. 1, 2013.
We're a week away from Apple's Worldwide Developer Conference (WWDC), and the rumors are in full force. Today's report from the Financial Times that the company will aggressively enter the nascent field of the "Internet of Things" (IoT) with a proprietary smart home platform is the most solid rumor to date about what Apple will focus on at its annual software opus.
The news makes sense. Putting aside Google's game-changing acquisition of Nest, which took competition in the IoT space to a new level, Apple was already moving in this direction. With iBeacon technology, Apple has already begun leveraging the iPhone as a device that interacts with its environment as opposed to a digital window that only comes alive when you're using it. In CarPlay, Apple already has a platform for extending apps to other devices. And the rumored iWatch will combine both concepts in a device that's even more personal than a smartphone.
Still, smart appliances aren't new (Samsung and others have been messing around with connected fridges for well over a decade), so why should Apple count on any more success than existing players in the space?
For a few reasons. Broadly, Apple's brand is one of the strongest in the world, and the technology that powers Internet-connected devices has matured: broadband is commonplace and connections have better security and reliability. But there are also some specific things that Apple can bring to the table:
1. User experience
If you've ever bought a "smart" home appliance, you may have regretted it once you tried setting it up, a process that can often be tedious (Nest is a notable exception). If you're lucky enough to get your device up and running, you're then at the mercy of the sometimes shaky software skills and resources of the manufacturer in order to get it to work properly.
"Most people who buy these products chuck them after a few months," says Gilad Meiri, CEO of Neura, which makes Internet of Things software. "And even if there is value, the user experience is just sh-t. What
Apple is known for is user experience design, so I think they're going to lead and give other players something to aspire toApple is known for is user experience design, so I think they're going to lead and give other players something to aspire to."
Apple keeps its ecosystems fairly closed, but that typically translates into a consistent user experience — something the IoT industry desperately needs.
The Financial Times report notes that Apple will green-light products for the program in a manner similar to how it designates "Made for iPhone" products now. That will instantly create a hurdle manufacturers need to clear while ensuring that customers get a consistent experience from any product with the label.
2. A reason to buy
Another big hurdle smart home products have is that there isn't an organic demand for them. Although they solve problems, most people don't see the problems in the first place, or don't immediately think that a piece of technology can solve them (high power bills usually lead someone to turn off lights and unplug appliances, not download an app).
"The consumer isn't screaming 'I want it,'" says Meiri. "[Internet of Things] is a supply-driven phenomenon."
Apple could more easily persuade someone to buy a smart home hub for their house if, as the FT suggests, it were disguised as an Apple TV. The next generation of Apple TV will apparently also double as a smart hub for the home — a clever Trojan horse approach that could quickly insert Apple's tech into millions of homes.
Apple is estimated to have sold more than 14 million of the current generation of Apple TV, currently selling about 2 million per quarter. By contrast, Nest is estimated to be selling just 100,000 thermostats a month and just issued a recall of its smoke detector. As long as the price of Apple TV doesn't go up, the hidden-smart-hub strategy could instantly give Apple a leading position in the category.
3. Established partners
In some ways, Apple has been ahead of the game in the IoT space. The iPhone has supported Bluetooth Smart (aka Bluetooth Low Energy) products since the iPhone 4S debuted in 2011, which has already led to several smart accessories like heart rate monitors, wireless cameras and simple sensors.
"Android made a bet on NFC (near-field communication), and Apple bet on Bluetooth LE," says Meiri. "
Apple won big time. Today NFC is still nothing, and Bluetooth LE is all over the placeApple won big time. Today NFC is still nothing, and Bluetooth LE is all over the place."
Thanks to that foresight, Apple already has a long list of partners who sell connected devices in the Apple Store: Philips Hue lights let anyone with an iPhone customize their lighting with a tap; Dropcam provides an easy way to set up a home security system; Even Nest has a presence in Apple Stores (although we'll see if that will endure in the wake of Google's acquisition of the company).
As closed as it often acts, Apple can't make broad initiatives in a vacuum, and it will no doubt have several partners ready to launch on its new smart home platform on day one, with several others jumping in shortly afterward.
4. Privacy and Security
Nest is probably the most successful smart home device so far, but Google made a significant misstep when it disclosed in a letter to the Securities and Exchange Commission (SEC) that it envisioned ads on thermostats in the future. Nest CEO Tony Fadell quickly set the record straight, but the damage was done: The statement aptly encapsulated people's fears about smart technologies — that they'll send data to corporations about our most personal spaces to make a quick buck.
Although it would probably be more marketing than anything else, Apple will no doubt play on that fear to convince people it will be a fairer guardian of our privacy than Google when it comes to smart home tech. Security will also likely play a part in that message, and this is where Apple's iOS record will help: Although iOS provides less flexibility than Android, it is, by its closed nature, far less likely to encounter malware.
5. Going beyond the home
Finally, Apple's iBeacon technology and as-yet-unannounced iWatch provide a more complete "smart life" concept than Google does. Yes, when you include Android Wear and third-party beacon technologies, Google has all the ingredients as well, but they're far from the vertically integrated approach Apple appears to be going with.
An iPhone owner wearing an iWatch, with a CarPlay-enabled vehicle and Apple's new system at home will have continuous access to every smart device in their home — this would enable the person to, say, check a security camera's feed on the watch or car dashboard (only when parked, of course). Throw beacons into the mix, and you've also got instant access to information from third parties. Like the playlist at the gym? Why not send it to your Apple TV to play the second you get home?
Smart homes and the Internet of Things are relatively new concepts. Although they're workable and have real benefits, you don't really know you want them until you have them. But if there's a company with a long track record of successfully selling products like that, it's Apple.