Tuesday, May 19, 2015

Apple needs to drastically change to succeed at IoT

“HomeKit is a framework in iOS 8 for communicating with and controlling connected accessories in a user’s home. You can enable users to discover HomeKit accessories in their home and configure them, or you can create actions to control those devices. Users can group actions together and trigger them using Siri.”

This is Apple’s introduction to HomeKit on its developer website. HomeKit was announced at last year’s WWDC conference and it promised to be more than an internet of things (IoT) system. It’s a framework for home automation. It enables devices, called accessories, to communicate with each other and with your i-device. A release date has yet to be announced, but that might happen as soon as WWDC this June.

However, it will not be easy for Apple to win the IoT war. Google already has IoT hardware on the market through the acquisition of Nest and is heavily focused on consumer data. Much more than Apple, but it might be key to succeed. Samsung already makes a lot of household machines and has the ability to create its own dedicated chips.

Let’s say Apple enters the IoT hardware business. Will people buy products for premium prices if there is a lot of competition that has much more experience with household machines and other things and sells them for less? And as I wrote earlier, it’s important that all these systems are open. We need to have a standard (like HTTP/HTML for the web) for these devices to communicate. I want to be able to buy the best smart fridge magnet out there, but it has to be able to communicate with the fridge that is possibly made by another manufacturer. Apple’s ecosystem is very closed however.

The new Apple Watch only works with an iPhone for example and HomeKit also seems to be centered around Apple devices. For now, Apple relies on third party hardware in the form of those accessories, which is quite unique on its own. I expect the Watch to play an important role in controlling the accessories. But is it smart to only focus on your own devices? What if people decide there are better alternatives to the iPhone at lower prices?

In our Apple initiation, we cited the IoT as a long-term threat to Apple as we believe the most viable route to monetizing the IoT not to be in the sale of the items at a premium price to alternative items, but the synthesis of their data streams. — Maxim Group
The question is whether or not it’s necessary for Apple to sell its own hardware. The reason Apple’s phone succeeded was because other smartphones sucked. the reason the iPad worked was because other tablets sucked. What if those third party accessories suck as well?

Other companies might have an advantage over Apple, so Apple has to drastically change. If it wants to sell hardware, it needs to ditch its premium pricing or it will have to rely on third parties. And it needs to gather a lot of data too. Something other companies have been doing for their entire existence.