Is Samsung Falling Behind Apple Inc. and Google Inc. In This $71 Billion Market?

By Markets Fool.com

Samsung recently delayed its new smart home devices, which were expected to launch later this month. The devices, which form the backbone of the company's smart home ambitions, will now "most likely" arrive in the third quarter of 2015. Will this setback give Apple and Google an early edge in the smart home market?

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Samsung's SmartThings hub. Source: Samsung.

Samsung's mobile woes
To understand what home automation means to Samsung, we should first review the company's mobile woes.

In smartphones, Samsung's global market share fell from a peak of 35% in 2013 to 20% at the end of 2014, according to IDC. That was caused by companies like Xiaomi and Micromax launching comparable devices at lower prices, and Apple nullifying its big screen advantage with the iPhone 6 and 6 Plus. As a result, Samsung's mobile earnings plunged 64% year-over-year in the fourth quarter of 2014, resulting in the company's first annual earnings drop in three years.

Samsung tried to distance itself from other Android devices with unique curved devices like the Galaxy Edge Note and Galaxy S6 Edge. It also tried to diversify its top line with smartwatches, VR headsets, and investments in medical devices. To break away from Google, it launchedits own app store, music streaming service, and mobile OS, Tizen.

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The company installed Tizen on its Gear smartwatches, cameras, and a smartphone, but the fledgling OS is still dwarfed by Android in terms of users and apps.In January, Samsung announcedthat it would launch a "flood" ofTizen-powered deviceslike smart TVs and appliances throughout 2015.

That strategy was intended to complementits 2014 acquisition of SmartThings, an open platform for smart home devices.

Samsung's smart home ambitions
Last November, Samsung launched the SmartThings hub, which synchronizes data from Samsung smart devices to a mobile app on iOS, Android, and Windows Phone. New Tizen-powered devices were expected to eventually connect to the hub as well, which would give the OS a new life in home appliances.

The SmartThings companion app. Source: Samsung.

Unfortunately, the original SmartThings hub was plagued by connectivity disruptions and stability issues. The delayed next-gen hub was intended, along with the new devices,to fix those problems by processing data through local connections instead of the cloud.

The smart home market, which Juniper Research expects to growfrom $33 billion in 2013 to $71 billion in 2018, could help Samsung simultaneously diversify its top line beyond mobile devices and strengthen its consumer electronics business.

Apple HomeKit and Google Nest
Meanwhile, Apple and Google are leveraging their dominance of mobile devices to expand into the smart home market. Apple's platform, HomeKit, is expected to turn the Apple TV into a smart home hub. Google is using Nest, the smart thermostat it acquired for $3.2 billion last year,as its hub.

Both Apple and Google will rely on partners to create smart light bulbs, smart locks, and other devices to synchronize to their hubs. Many smart devices will be compatible with more than one platform. Samsung can sell its own smart devices via its consumer electronics arm, as well as rely on industry partners.

The official launch date for the HomeKit platform remains unknown, although some HomeKit-compatible products have already reached the market. According to recent rumors, Apple might launch HomeKit after the Apple Watch arrives on April 24, which would give developers a chance to develop watch-based smart home apps.

Nest, which has been commercially available for several years,has a head start over Samsung and Apple. However, Google hasn't disclosed any official sales figures. Back in Jan. 2014, Morgan Stanley estimated that Nestwas selling 100,000 thermostats monthly, which would only equal annual sales of 1.2 million units worldwide. By comparison, there are over 115 million households in the U.S. and 1 billion Android handsets shipped last year.


Google's Nest Thermostat. Source: Google.

To early to call
Samsung's delay of its next-gen smart home devices was disappointing, but Google and Apple aren't that much farther ahead. However, tech investors should keep a close eye on the smart home, IoT, and wearable markets, which could become major growth industries over the next few years.

The article Is Samsung Falling Behind Apple Inc. and Google Inc. In This $71 Billion Market? originally appeared on Fool.com.

Leo Sun owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). 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.