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Amazon Threatens Apple Strategy in 'Smart Home' Race


01/28/2017


Coming close to delivering on the elusive promise of easy-to-use technology that can control gadgets in the home with a few spoken words are Amazon's combination of the Echo speaker system and the Alexa voice-controlled digital assistant in less than a year.
 
Despite that, battle for primacy in the connected household has started between Apple and Amazon.com Inc's surprise success and Alphabet Inc's Google.
 
While Apple is taking a slower route, asserting more control over the technology in order to assure security and ease-of-use, Amazon is pursuing an open-systems approach that allows quick development of many features.
 
Without an Apple phone or a Google Web browser as an intermediary, Amazon wants a way to own its customer interactions -mainly shopping online and hence the strategic importance of the "connected home" niche looms large.
 
Apple has built a whole home automation architecture, called Homekit, into its smartphone  and needs to keep the iPhone at the center of customers’ lives.
 
the Google Home speaker and intelligent assistant software and home-automation devices like the Nest thermostats are the areas that Google is investing heavily. But because its speaker is compatible with a handful of gadgets beyond Nest and Dropcam, which the company also owns and it only hitting the market in November, Google is behind in the race.
 
“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.
 
Over the holiday season, Amazon sold as many as 10 million Alexa-enabled devices, Mahaney estimates. While Apple has declined to comment on reports that it has a voice-activated speaker in the works, Google hasn't disclosed sales for its Home speaker.
 
By being the first to integrate home automation into a major platform with iOS 10, the company is leading the industry, Apple spokeswoman Trudy Muller said. “The number of HomeKit-compatible accessories continues to grow rapidly with many exciting solutions announced just this month,” she said.

The makers of household devices ranging from lighting systems to refrigerators are the key developer partners for the smart home.
 
There are currently about 250 devices that are certified to work with Alexa, and Amazon has encouraged rapid development of third-party applications with its open-systems approach and even financial incentives for some partners.
 
There are about 100 certified devices for Apple's Homekit, by contrast. And both the risks and the potential rewards of Apple's approach are exhibited by the reasons behind that gap.
 
Special chips need to be included by gadget makers to work with Apple’s system to be Homekit-certified. While prices are lower for larger buyers, those developers who order small volumes of the chips say they can cost an 50 cents to $. WiFi and Bluetooth networking chips that cost more than competitors are also required to be bought by the developers for Apple. Special factories that are certified by Apple can only make the devices.
 
In Comparison, smart home companies have to just write software code and submit it to Amazon for review for getting devices connectable in Alexa. No special chip is necessary. However startups must have their products physically tested in order to earn the "Works with Alexa" label. This label does help promote products on Amazon’s website but isn’t required to function with Alexa.
 
When it comes to privacy, security and ease-of-use, HomeKit gadgets, Apple's approach has some clear advantages. However Amazon can't guarantee the security of third-party devices unlike Apple, the company acknowledges.

(Source:www.reuters.com)