7: Why Apple won't make smart home accessories
People who want Apple to make everything in their smart home don't think through the realities of the business
Apple is growing into a seemingly limitless number of markets. I can talk to my Apple voice assistant to set a HomeKit scene for my workout on Apple Fitness+ which connects my Apple Watch with my Apple TV box. Doing this exercise will help me buckle down and focus on my Apple Mac later that day as I work on a custom enterprise iPhone app for a client. And this is all after an evening where my wife and I finished the latest episode of The Morning Show on Apple TV+, staring actors we wouldn’t have dreamed would be in Apple’s original content five years ago.
But then the scene I trigger for breakfast after my workout doesn’t work because a smart light is offline and we wonder, “why can’t I just buy Apple products for my smart home?”. This is exactly the question Parker Ortalani posed in his recent, thought-provoking article on 9to5Mac entitled “Opinion: HomeKit is doomed to fail if Apple doesn’t make their own automation hardware”. While I can relate with the sentiment, I don’t think Apple will make their own smart home products, and more importantly, I don’t think it means HomeKit is doomed.
While I might be working out with an Apple Watch, I and the trainers in the Apple Fitness+ videos aren’t wearing Apple-branded clothing. For this, Apple often collaborates with Nike. Without dissecting this business relationship, it’s easy to see that the companies are focused on largely different product lines and have different areas of expertise.
Thanks to Eve for sponsoring this week’s issue of Apple Home Weekly.
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Antitrust Scrutiny
Apple is currently under lots of government scrutiny around the world for its App Store practices. Any move where Apple started making privileged, premium products to compete with existing business partners like smart home accessory manufacturers would be met with many officials, eager to find another story they could use in their case against Apple.
Margins
I am not privy to the margins of specific smart home manufacturers, but I get the impression that to compete in the market, you need to accept margins that are not large enough for Apple. Add to that requests from Ortalani in the above article to add U1 chips and Siri to these devices and you are quickly looking at a $99+ light bulb, collecting dust on display in an Apple Store.
Not in Apple’s wheelhouse
Apple has a certain set of core competencies for which they are world-class. They can design and oversee the manufacturer of great cameras, screens, speakers, processors, and impossibly small devices. While the processors might carry over, I imagine this is different from making a smart plug, a light bulb, or certainly more permanent items like smart switches and thermostats. Apple could certainly hire or reallocate talented individuals to make these new products a reality, but it’s another challenge for starting this kind of project, and a risk for why it might not succeed.
One product doesn’t fit all markets
Apple can make one iPhone that is largely the same worldwide. As far as I can tell, this is true across most of their product line. The main difference for each country is in the software. This isn’t true with home technology. Different countries and continents have different standards for light switches, electrical outlets, and more. Differences for these would eat further into the margins for home accessories. In his article, Ortolani uses Amazon as an example of a smart home platform vendor making products. The key difference between Apple and Amazon is that Amazon is much more focused on the US market than Apple. Amazon also appears to have more tolerance for lower margins, and even losing money on products that it monetizes in other ways.
An Incomplete Solution
I could potentially see Apple making a camera, or at least integrating a camera you could use with HomeKit into another product. But without a more complete line of smart home products from Apple, you lose the ability to simply tell someone to just buy the Apple-branded products for a solid user experience.
Why Apple isn’t doomed
Apple continues to partner with smart home manufacturers who make quality products, and it uses Apple retail stores and Apple.com as a way to showcase them. The last time I visited, Apple’s Michigan Ave store here in Chicago had a great display of what an Apple home can look like, featuring products and interactive controls. These manufacturers are already experts in making accessories and are better suited to face the challenges inherent with the space.
Ortolani starts off his article referencing Steve Jobs’ quoting Alan Kay’s theory of “People who are really serious about software should make their own hardware.” The way Apple has done this in the home is by releasing integrated software experiences that hardware manufacturers can be a part of by meeting hardware requirements. HomeKit Router, HomeKit Secure Video, HomeKey, and CarPlay are all examples of Apple taking this route. You can always find things to complain about with these features and options, but HomeKit Secure Video and CarPlay have rich support from a wide array of companies. I would argue this strategy continues to be a success for Apple.
While my logic is true about most accessories, I still think there are specific areas that fit Apple’s core competencies where they are and should make a difference in the home. Earlier this year, Mark Gurman reported that Apple is working on a TV set-top box that is a soundbar and camera. This sounds like a great product. I would also like to see Apple expand its current HomePod lineup and start making premium smart home displays.
My video
Eero's new pro mesh Wi-Fi system brings Wi-Fi 6 speeds and capacity and support for Thread and Zigbee for smart home accessories. But after upgrading from their second-generation system, is the Eero Pro 6 still my choice for home Wi-Fi?
Around the web
I went long on my article in this issue, so I’m going to save some things here for next week.