Apple Inc. Gets Serious About The Internet Of Things

Apple is in need of a major growth driver.

Although a few of us have been arguing in favor of Apple's growth prospects for what seems like ages, this has been the consensus view of Apple stock for the better part of the past two years.

With Apple's World Wide Developers Conference set to kick off with its highly anticipated keynote address on June 2nd, the speculation about whether or not Apple will unveil its next game-changing product will assuredly reach a fever pitch in the days to come.

And if one recent leak is to be believed, Apple appears poised to introduce the world to what it hopes will be a key new growth driver at the WWDC keynote: the connected home.

Apple coming into play for the Internet of Things
According to reporting first broken by the Financial Times, Apple will use at least some portion of next week's keynote address to unveil its play on the connected home.

Although the details remain somewhat unknown, as Apple always tries to keep as tight a lid as possible on its upcoming product specifics, the overall theme of the device/service is clear enough. With a connected home offering, Apple appears to be creating yet another platform that will enable what should become an increasing number of connected devices to all communicate with and be controlled by some unified device.

The report cites Apples plans to use the iPhone or iPad as a kind of universal remote for all things connected in the smart home of the future, although there will also be some kind of integration into Apple TV as well. Imagine being able to control the lighting, temperature, entertainment, and security functions in your house all with a simple swipe or click of your iPhone. That's the kind of easy unification Apple appears to be targeting with iHome. And if this in fact proves to be the case, Apple investors should be jumping for joy.

How big a win is this?
Apple plans to structure the financial terms similarly to those of Apple's current Made for iPhone program, which generates a licensing fee for Apple for every device it approves. And given that Apple currently sells the most popular smartphone and tablet in the world, it seems there's certainly money to be made for its investors.

The Internet of Things is as big a buzzword as you can find in tech today, with estimates on the overall revenue opportunity seeming to defy imagination: one recent estimate from Deutsche Bank called for $400 billion in Internet of Things-driven revenue by 2023. However, one of the current problems keeping this massive trend on the tarmac is a lack of engagement from the developer community, a problem Apple's connected home would help solve.

By giving developers easy access to Apple's massive installed user base, Apple could be creating a fresh potential revenue stream for connected home software and hardware developers to tap into, which will hopefully incentivize more commercial interest around this big ticket trend. In a way, you can think of Apple as helping to solve the "last mile" problem, the final hurdle required to get software for the smart home into the smart home, for which Apple will be able to collect a small fee.

There's also a potential secondary win for Apple here as well, as smart home offerings could help to further ingrain the already massive stickiness of Apple's overall platform in much the same way that Apple's current app ecosystem helps incentivize its users to continue to purchase Apple products. As with apps, consumers would be substantially less likely to migrate away from Apple's hugely profitable hardware if that means they'll also lose the various disparate elements of their smart home in doing so.

More growth for Apple
So while the particulars still remain far from concrete regarding the connected home, it appears to be a clear win for Apple investors.

As growth concerns have been the primary overhang for Apple's stock price performance over the past two years, the introduction of a connected home offering would help alleviate at least some portion of such issues.

Either way, we're only days away from Apple's WWDC keynote address, a moment we're all eager to see unfold. So as this and other key Apple storylines unfold further in the week ahead, make sure to continue to check back for all our Foolish coverage of Apple.

Leaked: Apple's next smart device (warning, it may shock you)
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The article Apple Inc. Gets Serious About The Internet Of Things originally appeared on

Andrew Tonner owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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