Revamping Apple's Home Strategy
Last week, news broke that Apple had hired Sam Jadallah, a former Microsoft executive and most recently founder of a smart lock company, to lead its various home initiatives. The announcement raised a number of questions, including the most obvious: What is Apple’s home strategy? Consensus in the press is that Apple is far behind Amazon and Google in the race to control the home. I’m not so sure about that. Instead, the entire smart home genre appears to be floundering. Jadallah’s hiring points to Apple reassessing how to best get the idea of an intelligent home off the ground.
The Smart Home
Starting a few years ago, the tech industry became desperate to position the smart home as the next big thing. Much of this was due to a strong desire to find growth after smartphones and tablets. Other companies were focused on moving past Apple’s and Google’s control over the smartphone and tablet paradigm. With wearables, success has been contained to a select few companies. Meanwhile, the smart home umbrella ended up covering multiple times the number of companies, including a long list of hardware-focused start-ups.
In one word, the smart home has been disappointing. The premise underpinning smart home adoption was that one smart device purchase would lead to another and then another. In reality, that kind of behavior has not become the norm. Despite there being plenty of products available, smart home adoption remains sporadic and disjointed.
While a few product categories, like stationary speakers, have gained traction in the home, such products end up being tangential to the idea of the smart home.
Amazon is considered to be the leader in the home, at least when going by the media’s perception. The company’s acquisitions in the space certainly help push the narrative of Amazon being aggressive and forward thinking. Similarly, for Google, considered a distant second in the smart home race, its Nest acquisition provided the company a decent amount of positive coverage when it came to smart home ambitions. However, that positivity is beginning to disappear based on increasingly questionable decisions like not disclosing microphones in products. Regardless, both Alexa and Google Assistant, Amazon’s and Google’s voice assistants, respectively, have never been short of praise in the press.
Problems
A number of issues are at the root of mediocre smart home adoption. The largest issue is that the vast majority of smart home devices lack an attractive value proposition.
Smart doorbells with cameras have become more about providing entertainment than anything else, serving as a way to see who stole packages off the front porch.
Smart power plugs end up being nothing more than a way to avoid changing timers a few times during the year.
Smart kitchen appliances controlled by voice still make more sense in cartoons than in real-world settings.
While a handful of interesting product stories exist in the smart home realm, they are few and far between. Instead, the way smart home gadgets have embraced voice assistants has ended up being more of a distraction than anything else. In the rush to add microphones and speakers to anything and everything, the smart home’s grand vision has been muddled.
Amazon and Google have used voice to hijack the smart home in order to push alternative visions, one around e-commerce and the other around delivering information, respectively.
Amazon is focused on becoming the go-to place for buying stuff in the home. For Amazon, the home is an e-commerce hub. Every one of Amazon’s actions within the home has been done in pursuit of this focus.
Google is focused on positioning its services as front-and-center in the home. For Google, the home is an information hub. Every one of Google’s actions within the home has been done in pursuit of this focus.
While there are some value-add propositions found with improving at-home shopping and delivery and having easy access to information-rich services, both home strategies amount to collecting as much user data as possible. In addition, neither strategy takes full advantage of the most powerful and valuable screens in our lives to push the smart home forward.
Amazon Echo and Google Home marketing are notorious for never showing other computing gadgets being used in home. There are zero smartphones, tablets, or wearables to be seen. It’s as if people leave their devices by the door when entering the home, only to pick them up on the way out. Amazon and Google both want people to think stationary smart speakers controlled by voice are adequate replacements for the various screens in their lives. The reality is that the best devices for consuming and transferring information in the home have screens and are either worn on us (wearables) or always near us (smartphones). It is far more useful and practical to get the day’s weather with a quick glance and tap at the wrist than by asking a digital assistant contained in a stationary speaker.
Apple and the Home
Apple’s approach to the home is quite different than the approaches of Amazon and Google. Apple is a design company tasked with coming up with tools that enrich people’s lives. Accordingly, the home is looked at as a place to use those valuable tools.
When it comes to the smart home, Apple has been following a three-pronged strategy:
Rely on HomeKit and third-party hardware to establish an ecosystem of smart home devices. These devices can be controlled and configured using the most valuable tools in our lives including iPhones, iPads, and Apple Watches.
Use select third-party hardware, such as stationary speakers and television sets, as Trojan horses for Apple’s content distribution services.
Remain selective when deciding to ship first-party hardware solutions for the smart home. Apple TV and HomePod are the rare smart home exceptions for Apple. Both end up being accessories for Apple users looking for the best content consumption experiences in the home. Other Apple devices for the home like the Beddit sleep monitor end up being tangential to the smart home idea.
After a slow start, Apple has seen a pickup in HomeKit adoption among third-party smart home products. However, the way expanded AirPlay 2 support has been generating greater buzz says something. With AirPlay 2, Apple uses third-party hardware as a way to spread its content distribution services.
The fact that Apple doesn’t sell its own television set implies that there are going to be many large, non-Apple pieces of glass being used to consume video content in the home. This explains Apple’s decision to bring AirPlay 2 support to most of the premium television sets available in the market. A similar story is found with cheap stationary speakers in the home. Apple knows people are tempted by $30 speakers in a can. A significant portion of stationary smart speaker sales can be attributed to two products during the holidays: Echo Dot and Google Home Mini. The primary use case for such speakers is music consumption. At the same time, a good portion of Echo Dot users are iPhone users. This explains Apple’s decision to make Apple Music available on Echo devices. Apple ends up leveraging its existing user relationships to push Apple Music.
Benefits and Drawbacks
One benefit found with Apple’s strategy is that the company remains focused on offering a few great experiences in the home. When it comes to delivering sound in the home, HomePod, especially when multiple HomePods are paired together, offers intelligent sound at a fraction of the cost of a high-end speaker system. Apple TV is the best way for iOS users to consume various video bundles on a large piece of glass.
However, there are also drawbacks to Apple’s home strategy. Apple is ultimately dependent on others for its smart home vision. This reality may result in lackluster device support in addition to questionable experiences in the home. Further, Apple has been facing a growing amount of backlash for saying no to certain products in the home. Some people want Apple to provide everything from the internet wired into homes and Wi-Fi routers connecting our devices to smart light bulbs controlled by digital voice assistants. This just isn’t realistic given Apple’s functional organizational structure and design-led culture.
New Hire
Apple recently hired Sam Jadallah, CEO/founder of Otto, a smart door lock company that went under before getting its $700 lock to market. According to CNBC, and apparently confirmed by Jadallah himself via Twitter, he will oversee Apple’s various home initiatives.
It would be a mistake to look at Jadallah's hire as a sign that Apple will open the floodgates and develop a wide range of smart home devices. Apple simply isn’t structured for such a scenario. Instead, Apple’s culture positions the industrial design group as the ultimate gatekeeper of the experience found with Apple devices. The implication is that Apple will remain very selective in terms of developing its own home products.
Instead, Jadallah will likely focus on coordinating Apple’s various home plays and more importantly, revamping Apple’s broader strategy for the home. This task includes coming up with tangible ways Apple’s teams can turn vision into reality. Based on Jadallah’s previous public comments regarding smart home devices and given Apple’s product philosophy, we have some clues as to what such a vision may look like. Here’s Jadallah in 2017 in a post titled “The End of the Connected Home:”
“Creating a product for the home is different than a wearable or a device that is easily replaced. Connected Home products are often installed. That installation dictates that they are reliable, durable and follow many of the rules of the products they replace. In our case, that requires a digital lock to be durable and to have design, and design options, that support the diversity of homes. Homeowners, beyond the early adopters, aren’t willing to sacrifice design, security or performance — they demand it all.
I’ll refer to Connected Home products that meet this bar as ‘Digital Home’ products. The Connected Home is far simpler — basic gadgets, obvious products with a primary value focus on connectivity. The Digital Home is the next wave of the Connected Home. Obvious products need not apply to the Digital Home, as they need to be very focused on the digital experience (connected, open, upgradeable) but also fit well into the home (designed as the home wants, not out of context design) and most importantly, be reliable, durable and classic as they are installed.”
In essence, Jadallah’s “digital home” concept describes a scenario in which design plays a much larger role in the home than what has traditionally been found in the space. It is this lack of design that has played a role in smart home products having questionable value propositions and resulted in mediocre smart home devices. With Otto, a company that reportedly was staffed with many former Apple employees, Jadallah was focused on developing a smart lock that would play in this new “digital home” era. His experience as an entrepreneur and product manager certainly fits with the idea that he will end up working closely with Apple designers on new experiences for the home.
Revamping
There are a number of ways for Apple to revamp its home strategy:
Leverage existing tools in our lives (smartphones, wearables) to push the idea of a digital home forward. Should a smart home require us to use our most valuable devices less frequently? This question is going to gain importance when people begin wearing smart glasses in the home. Since we are going to literally be wearing the most valuable and powerful tools in our lives, why not take advantage of those tools to improve the home experience?
Further incorporate design into the vision for the digital home. This step will involve addressing some obvious but incredibly important questions. How should humans interact with homes? How can digital home products improve our lives? Voice can’t be the only interface choice. Simply being able to unlock the front door with our voice or Watch isn’t enough.
Determine where the most important experiences are found in the home and come up with ways of interconnecting those experiences. There are various genres at play within the home (entertainment, utility, health monitoring, security, etc.) How should health monitoring devices in the home communicate with devices tasked with keeping our home safe? As it stands today, there is little to no relationship or connection between experiences. Instead, everything is either funneled into a voice assistant or a framework like HomeKit.
Apple is not opposed to the idea of moving into first-party solutions for smart home gadgets. The company sells Apple TV and HomePod, after all. Instead, Apple will continue to ask the following questions: Which smart home devices are capable of fostering experiences? Which devices have a long runway when it comes to adding features and capability over time? The answers to the preceding questions will be the devices most likely to be tackled by Apple designers and engineers.
Bumpy Road
In my view, the smart home path is going to be very bumpy going forward. We are trying to compensate for the lack of homes being built from the ground up with technology truly in mind. Having homebuilders simply add voice activated gadgets in new homes falls short. Instead, the only genuine answer is to have tech companies build homes themselves. However, that isn’t on the horizon at this point.
As highlighted in the following exhibit, the home represents a crucial part of the new tech landscape. The home is a treasure trove of data, and companies are looking to grab as much of our data as possible. This explains why monitoring within the home has been all the rage. However, the home has not been the recipient of a great amount of design attention when it comes to intelligence and personalization. Instead, we have a whole lot of questionable voice-controlled devices and not much else. Hardware start-ups have been focused on adding voice control to smart home devices without a clear reason or purpose. Do consumers really want to talk to or control dozens of smart appliances installed throughout the home? Are consumers going to be OK with installing microphones throughout the home? Based on the backlash to news of Google not telling customers about a microphone being included in Nest Guard, there is a good chance we are moving to a major backlash phase against the smart home.
In recent years, the topic of “controlling” or “winning” the home has been a popular talking point. Consensus has landed on the winner in the home being the company with the most capable voice assistant as measured by the number of skills or features. This type of thinking is off the mark. Few people are using these voice skills. This explains why tens of millions of smart speakers end up being used for little more than listening to music, a development that ends up helping push forward the music streaming industry more than the smart home genre.
Instead, the winner of the home is the company that ultimately is able to grab our time and attention. This is why Apple’s vision of the home being a place where we use tools to improve our lives makes sense. If someone is dedicating most of his or her time to an iPhone while in a room full of smart home devices, which company is actually winning in that room? If an Apple Watch is continuously worn and used in a home filled with smart devices, which company is actually winning in the home? The way we think about digital homes is in need of a major reset.
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