Apple Entering Smart Home Tech Space - Analyst Blog

Reportedly, Apple AAPL is expected to launch a new software platform at the Worldwide Developer Conference (WWDC) scheduled to be held from Jun 2 to 6, 2014. Apple showcases its new software and technologies for developers in the annual Conference held in California.

The new platform will transform devices running on iOS mobile operating system into remote control for lights, security systems and other household appliances. The new platform will help Apple to expand its footprint in the emerging Internet of Things (IoT) market.

IoT refers to a situation when objects or people are provided with the ability to transfer data over a network without any human or computer-based interaction. This technology has evolved from the convergence of wireless technologies and the Internet. Per Gartner, IoT product and service suppliers will generate revenues in excess of $300.0 billion by 2020.

Apple will include the new technology into the iPhone 6. The technology will cover iPads as well as the likes of Apple TV, which is likely to get a hardware update sometime later in 2014.

Apple is planning to extend the technology beyond its own eco-system. Reportedly, the company is holding discussions with a selected number of device makers whose smart home products are expected to be certified to work in congruity with Apple's upcoming system.

Apple's expanding footprint into the IoT market is largely seen as a strategy to combat fierce competition from rivals such as Samsung and Google (GOOGL). Apple's move follows Google's acquisition of NestLabs in Jan, 2014.

Samsung had also recently entered the smart home industry space with its new range of refrigerators, washing machines and other durable consumer goods that can be controlled from its own smartphones.

In such a scenario, we believe that Apple's plan of extending the technology beyond its own eco-system will give it an edge over competitors like Samsung. Further, its loyal customer base, international expansion and solid cash position are expected to aid long term growth.

However, increasing competition from the likes of Google, Hewlett-Packard HPQ and Microsoft MSFT is expected to remain a headwind in the near term.

Currently, Apple has a Zacks Rank #3 (Hold).