The emergence of the smart home as a significant technological platform is a matter of when, not if, at this point. Although the high-level concept for this nascent technology market has existed for some time, we're now beginning to see the first tangible products hit the marketplace.
Apple fired the first major salvo in the still-evolving battle with the unveiling of its HomeKit OS at WWDC 2014. Likewise, Google's acquisition of Nest at the start of 2014 also demonstrated a clear interest in this nascent space; but the search giant only this year launched its own smart-home network -- Project Brillo, or Weave, more recently. And a recent Google product helps further deepen the company's presence in this critical, but still emerging, software space.
Google launches OnHubLast week, Google unveiled a next-gen WiFi router named OnHub, which combines some clever hardware upgrades to improve today's WiFi experience with Google's next-gen smart-home platform to support its long-term ambitions, as well. In terms of immediate improvements, OnHub incorporates a number of interesting design and hardware updates.
For starters, Google opted for a sleek design in hopes of enticing consumers to place the router in more public spaces in their homes, thus improving Wi-Fi signal quality versus the oft-hidden routers of yore. Looking to OnHub's innards, the router's intelligent antenna design and specialized software actively help optimize network performance, as well.
Dedicated Android and iOS apps enable OnHub owners to control an interesting number of network functions, like monitoring bandwidth consumption on connected devices, or prioritizing bandwidth toward specific devices or services. Many of these features have been seen across a number of next-gen routers launched this year, but it's the smart-home potential that makes OnHub a truly intriguing device for Google investors.
At the end of its introductory press release, Google also mentions that OnHub will connect with future smart devices and appliances as users add them to their homes. Said another way, OnHub appears to be a Trojan Horse for Google's smart home software platform of the future.
Moreover, Google plans to design future OnHub devices with a number of different hardware partners, including an ASUS product slated for release later in 2015. Beyond simply smacking of former Apple iPod chief and Nest CEO Tony Fadell, it appears OnHub also serves as a beachhead for Google's long-term smart-home ambitions.
More than just a router?The design, hardware, and service improvements alone probably make the OnHub a router worth at least considering for users in need of an upgrade. However, the device's positioning as a future centerpiece for the smart home certainly carries far great significance in the long run for Google and its investors.
With once-nascent markets like the tablet and smartphone market slowly edging toward maturity, technology businesses like Google and Apple, although different in how they make money, will need to continue to find new opportunities to expand their various products and services. And especially as their revenue bases continue to swell, both companies will need to unearth larger markets to help buoy their growth prospects and valuations.
As we've learned in the past, there's tremendous value to be captured for the companies that successfully position themselves as a software platform for any large tech market (Windows, iOS, Android), regardless of the specific monetization strategy. Looking at the current iOS-Android hegemony we see today in the mobile space, and accepting that mobile devices will largely serve as the connector between the smart home itself and the end user, Apple and Google remain the best-positioned companies today to dominate this eventual software space.
However, the final element both Apple and Google need in order to secure their likely dominance of this space is a dedicated piece of in-home hardware to serve as the center of their likely hub-and-spoke smart-device strategy. Hopefully, you see it by now, but the OnHub fills that exact strategic void for Google, while providing plenty of value to consumers in its current form, as well.
In discussing these future markets, any analysis risks coming across as overly futuristic. However, the smart-home market today reminds me a lot of the smartphone market of the early 2000s. Plenty of observers recognized its potential to add value for consumers.
However, that perfect combination of software advancement and hardware evolution had yet to reach critical mass, as the smartphone market did with the introduction of the iPhone in 2007. The first killer piece of smart-home hardware will come to market sooner or later. And with the advent of OnHub, Google investors should take comfort in knowing that, when it does, the world's search leader already has laid its foundation to thrive in this budding tech space.
The article Google Joins Apple's Push Into the Connected Home originally appeared on Fool.com.
Andrew Tonner owns shares of Apple. The Motley Fool owns and recommends 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.
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