Connecting the Smart Home through Platforms

Origins of the Smart Home Space

The smart home concept is not new and before it became ‘smart’ it was a multiple decade struggle known as home automation. Pico Electronics were the pioneers in the space when they introduced in 1975 the X10 protocol, a general purpose home automation technology that used electric power transmission wiring for signaling and control developed. Fast forward almost 4 decades into the future and it’s estimated that since then only 1.5 million homes have installed automation systems, in other words it never took off. It never took off because the previous generation of companies tackling this sector, were pipeline businesses.

Originating from the industrial era, this corps of companies were focused on linear value creation and followed the dogma that dominant positions in the market were a product of controlling unique internal resources and erecting competitive barriers. Unfortunately, these strategies were often executed at the expensive of the user experience. For multiple decades fragmented, expensive and clunky were the best words to describe this space. However, a new generation of companies have emerged with a different approach; a platform one.

Platform Business

Companies with a platform approach focus on exponential value creation by orchestrating external resources and engaging in vibrant communities. They are masters at pulling in users and producers → creating the infrastructure to facilitate interactions → matching user needs and producer goods / services.

It’s no surprise that the largest tech companies — Google, Amazon and Apple are all platform businesses. Together they have, although at times be-grudgingly built the platforms on our smartphones and the internet that we all rely on.

  • Google — Android, Youtube, Brillo
  • Apple — iPhone & iOS, Apple Watch & WatchOS, Mac + MacOS, HomeKit
  • Amazon — AWS, Amazon Marketplace, Kindle, Alexa

By now it’s clear that platform business will be the ones who enable help us to finally cross the chasm of fragmented homes into a connected home. We won’t have to wait long either — Google, Apple and Amazon each have launched their own respective smart home platforms.

  • Google — Android, Youtube, Brillo
  • Apple — iPhone & iOS, Apple Watch & WatchOS, Mac + MacOS, HomeKit
  • Amazon — AWS, Amazon Marketplace, Kindle, Alexa

What is not clear is who will capture the most value and emerge as the dominant platform in your home. Is it Google and Apple who have a duopoly over the smartphone platform or Amazon who infamously flamed out with their Fire Phone?

If you were to bet safe, Google and Apple would be your choice. For one, the two of them have a proven ability to pull in both users and developers, key components to any platform. Second, they have immense repository of information about you to power services to better serve you. Third, they are the only ones that have direct access to you on your smartphone, which is your most important and used device.

But safe isn’t always right, and I think Amazon has a shot. I think the advantages you have in smartphone industry are disadvantages in the home; I think Amazon’s head start matters; I think Amazon’s online retail advantage is a secret power; I think Amazon’s focus on the long term strategy to tax everything gives them a unique edge.

Now let me explain why.