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Who holds the key to the smart home? written by Sangeet Paul Choudary, published in The Hindu Business Line. January 1, 2017

The war for controlling the smart home ecosystem is on. Apple has been courting developers to work with its digital assistant Siri that powers its HomeKit for a while now. Last October Google called coders to its open developer platform Actions to create applications around Google Assistant and Google Home. Microsoft has just started to woo third party device makers and developers to play with Cortana, whose skills kit runs parallel to Amazon&rsquos virtual voice assistant Alexa.

 

The giants aside, a whole range of smart product startups, starting with Nest, have also been eyeing this potentially lucrative market. Traditional electronics manufacturers such as LG, Samsung, and Philips too have been trying to make their way into homes through a connected ecosystem of smart products.

 

The race for control of an ecosystem is always a fascinating one to observe. In smartphones, Apple and Google took firm control through their platforms, while Microsoft lorded over desktops with Windows. The next big battle is for supremacy of the connected home platform. The one who wins control of this platform may well get to wield power in an Internet of Everything world &mdash hence this race assumes much significance.

 

Past examples have shown us how winning the ecosystem war often hinges on the love a platform gets from third-party developers. In smartphones, Google&rsquos openness endeared it to developers helping it make the most used platform globally. On the other hand, Apple&rsquos appeal lay in the fact that it helped developers make more profits.

 

It&rsquos nascent days yet, but it appears that in the smart home ecosystem play Amazon has got third party software and hardware developers most excited if you go by the sheer number of apps built around Alexa.

 

Echo was the first use case for Alexa built by Amazon itself &mdash the hardware that connected to the software, and helped home owners buy things from the e-commerce giant&rsquos store.

 

But now Alexa is integrating with hundreds of non Amazon devices. It works with more than 6,000 third-party developed applications and has got big consumer durable brands such as Whirlpool to connect their fridges and washing machines onto the platform.

 

Going by the demos at CES this year, in the home of tomorrow, people could ask Alexa how much water is being used during a shower, find out what is cooking in the kitchen, change the music in the living room. In most of these use cases, Alexa controls a non Amazon device &mdash a shower head, an oven, etc. The ecosystem has swung in place.

 

Very early on, Amazon also smartly launched a $100 million investment fund for startups to create products around voice applications demonstrating a cohesive strategy to wrest control of this space.

 

A powerful key

 

Alexa, introduced in 2014, was by no means the first-mover into connected homes. The battle for control of the connected home started with the rise of the Internet of Things (IOT). Different companies tried different strategies. Looking back, there were two notable approaches.

 

The first approach was to launch a smart product and use that to create a connected product ecosystem within the home. An early example of that was Nest (acquired in 2014 by Google/Alphabet), a start-up that sold &lsquoLearning Thermostats&rsquo with eventual sights on owning the smart home ecosystem. Another early entrant was Philips with its smart bulb &mdash Hue &mdashthat tried to control everything from lighting to music in a home.

 

The smart product approach had its limitations, though. With every company trying to enter the market with its own product, the landscape got rapidly fragmented. Every brand wanted to push for its own ecosystem. But the problem was that no single smart product gained enough traction for others to want to partner with it. There was hardly any interoperability.

 

Smart platform

 

The second approach adopted by players like Wink was to build a smart platform rather than a product to enable connectivity in the home. The Wink platform serves as a central hub for multiple brands, including Honeywell, and promises users a single unifying app to control them all. Wink also partnered with HomeDepot so that the retailer only stocked products that worked with Wink. This approach failed because simply having a common interface wasn&rsquot compelling enough for partners to integrate with the platform.

 

Amazon&rsquos Alexa is trying a third strategy, which addresses the limitations of the first two approaches. First, Amazon&rsquos Echo is a critical entry point into the smart home ecosystem. Unlike a smart bulb or thermostat, Echo is an interface that helps you with the ordering and reordering of supplies needed to run a home. It owns a critical use case for the home. Second, this use case is compelling enough for all sorts of brands &mdash from FMCG to durables to furniture &mdash to want to integrate with Alexa, which powers Echo.

 

Imagine, how features like auto-replenishment where the device is programmed to order stuff that is getting over would appeal to say, a detergent brand, or a milk brand.

 

Thanks to its ownership of user engagement, Amazon can allow third parties who are interested in targeting connected shoppers. Google, Microsoft, and others can provide an in-home assistant but they cannot support this critical use case that Amazon does as a retailer.

 

Amazon also has cracked the code on how third party players can hook on to Alexa. It offers them two options &mdash companies can either manufacture devices with Alexa&rsquos intelligence embedded inside or they can build products and services that can be controlled externally by the voice assistant. For example, Uber and Domino&rsquos Pizza have built tools to integrate into Alexa.

 

Loudest voice

 

Of course, the battle is not over yet. At CES this year, we saw a lot of smart home products that were integrating with Apple&rsquos Siri. Hyundai has announced it is integrating some of its cars with Google Home. Microsoft&rsquos Cortana is treading the route it knows well - business productivity &mdash and has made some connections in the car industry as well. Facebook and Samsung are nursing ambitions to get into the smart home and plotting ways to do so.

 

Also, the debate on whether text, touch or voice will wield more control over the home is still on. At the moment, it looks like voice will rule. We have to wait and see which of these assistants will have a commanding voice within the smart home. But as of now, our bet is on Alexa.

 

Paul Choudary is the author of Platform Scale and Platform Revolution and the founder of Platformation Labs. Narayanan is Editorial Consultant

 

(This article was published in the Business Line print edition dated January 25, 2017)