Apple strategy in 'smart home' race threatened by Amazon

Fri Jan 27, 2017 8:04am EST
 
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By Stephen Nellis

SAN FRANCISCO - In less than a year, Amazon's combination of the Echo speaker system and the Alexa voice-controlled digital assistant has come close to delivering on the elusive promise of easy-to-use technology that can control gadgets in the home with a few spoken words.

Yet Amazon.com Inc's (AMZN.O: Quote) surprise success sets up a long-term battle with Apple Inc. (AAPL.O: Quote) and Alphabet Inc's Google (GOOGL.O: Quote) for primacy in the connected household. And the contours of that competition are following a classic tech industry dynamic.

Amazon is pursuing an open-systems approach that allows quick development of many features, while Apple is taking a slower route, asserting more control over the technology in order to assure security and ease-of-use.

The strategic importance of the "connected home" niche looms large: Amazon wants a way to own its customer interactions -mainly shopping online - without an Apple phone or a Google Web browser as an intermediary.

Apple needs to keep the iPhone at the center of customers’ lives, and has built a whole home automation architecture, called Homekit, into its smartphone.

Google, for its part, is investing heavily in both intelligent assistant software and home-automation devices like the Nest thermostats and, more recently, the Google Home speaker. But Google is behind in the race, with its speaker only hitting the market in November and compatible with a handful of gadgets beyond Nest and Dropcam, which the company also owns.

“When the iPhone rolled out in 2007, everyone developed [software] for that. Right now, everyone is developing for the voice-activated Internet,” said Mark Mahaney, an analyst and managing director with RBC Capital Markets.

Mahaney estimates Amazon sold as many as 10 million Alexa-enabled devices over the holiday season. Google hasn't disclosed sales for its Home speaker. Apple has declined to comment on reports that it has a voice-activated speaker in the works.   Continued...

 
FILE PHOTO: An Apple logo hangs above the entrance to the Apple store on 5th Avenue in the Manhattan borough of New York City, July 21, 2015. REUTERS/Mike Segar/File Photo