Can Apple Take Over Your Home?

Travis Hoium (0:02)

Can AAPL take over the home? Motley Fool Hidden Gems Investing starts now.

Welcome to Motley Fool Hidden Gems Investing. I'm Travis Hoium joined today by Lou Whiteman and Rachel Warren. And guys, AAPL came out with some new products yesterday. That wasn't the big show that they often put on, but these were some pretty notable product line expansions. Rachel, we've got some new home security system. They didn't quite call it security systems, but security cameras, doorbells, indoor cameras. Pretty high price point compared to what we've seen in the past. Some of these things are $300 instead of under $100, which you can get from a lot of these services. And then the other thing is the home view, which is essentially an iPad with a speaker for $300.

Are you going to buy one of these?

Rachel Warren (0:52)

You know, I'm not necessarily waiting in line to buy one of these. And I'm saying that as someone who's pretty locked into Apple ecosystem as a consumer, I'm a long time Apple shareholder. So I'm not a hater here. But I don't think this is the most revolutionary thing they've put forward. Now, just to talk a little bit about what they've released. They launched HomeView. This is a $299 smart home command center. It's got a seven inch liquid retina screen. It's got the A18 chip, camera that's available in tabletop or wall mounted versions. And then Apple also debuted what they're calling the Apple Home Collection. It's essentially a curated storefront of premium accessories, like cameras, thermostats, deadbolts. And they co-develop these with Schneider Electric and LG Electronics.

Now, what's interesting is HomeView, you've got your typical multi-user facial recognition. They've got widgets you can swap for up to six family members. That's actually a feature that the regular iPads still lack.

It's designed to stay online even if your Wi-Fi drops. The ecosystem is restricted though. HomeView lacks the proper app store for streaming or games. You have to have an iCloud Plus plan for video recording. This offering is also currently blocked from the EU markets because of the Siri AI restrictions that are still being ironed out. But to me, looking at this, sensors are about 40 bucks, the cameras are about $200, the deadbolts can be up to $350. So this is significantly more expensive than say using Amazon Alexa or Google Home alternatives or say Nest or Ring hardware. Are consumers going to want to switch to that? I don't know.

Travis Hoium (2:26)

Lou, what struck me here when you look through the product lineup for basically everything that they announced. I mean, the home view is kind of just an iPad with a speaker attached to it.

The home security stuff is products that exist. It seems a little bit like coming out with the iPhone, but doing it in 2015 instead of 2007 where there's already an established market. I have one of these systems where I have a couple of cameras around the house. We have internal sensors. There's no way that I'm either switching from what I have now or spending anywhere near the price point. And I seem to come back to that with all these Apple products, despite the fact that I've got a ton of Apple stuff in the house.

Lou Whiteman (3:09)

Stop me if you've heard this before, but welcome to the age of incrementalism, right? Because that's what we're talking about here. Rachel's right. It's not inspiring. It's no more one more thing where it's just some crazy new thing that you never knew you needed. Now, it's just adding layers or adding functionality to your established ecosystem. You're right. It's overpriced, but it also comes with the Apple brand. I think they'll sell fine. They also have partners here. So they're not really taking on the risk or the development. I think that this is a no-brainer to do, but it's not a revenue mover. I think the most interesting part of this to me is, and this may be where we're going here, is there was a lot of talk about, Siri AI in the house will carry usage limits. And if you want to get past those usage limits, you're going to pay them more money. So there is, if there's a path here, I don't think it's in the hardware, it's in the services going up. First of all, you gotta get everybody addicted to the products, though.

I have a smart home, I have all of this stuff.

And to be honest, it's all neat, and I don't know if I'd pay a dollar for any of it. So I think they have a big hurdle to get to where they want to do. But I think the plan is expand the ecosystem that you've already has it established, kind of just the incremental revenue there, and look to a future where the home really is smart, and you can jack up the price for some of these series services and other things.