Google Wants to Control Your Home

In my article here last week, I discussed how Alphabet Inc. (GOOGL) unveiled a range of updates and new innovations at its recent Google I/O conference.

Among them was Google Home – a dedicated in-home device similar to Amazon.com Inc.’s (AMZN) Echo, combined with a huge expansion to Google Now, which has been renamed Google Assistant.

Google’s goal? To harness its Big Data and machine-learning capabilities to make Google Home easier to use, more intuitive, and eventually more capable than Echo.

Will it succeed?

Google Plays Small Ball to Achieve a Bigger Aim

Off the bat, Google Home will have the same basic capabilities as Echo.

For example, it can control many of the devices in your home, such as music, as well as creating shopping lists and reminders.

But when Google Home ships to consumers later this year, it’ll actually do a little less than Echo. Not by fault, but by design.

That’s because while Echo is set up to work with a host of third-party applications – from a variety of “universes” that control lights, thermostats, alarms, and even applications like Uber and Yelp – Google only wants to work with the third-party applications that are set up to share information with the company.

In other words, it wants both you and the third-party providers to be more dependent on Google as an intermediary.

No surprise there, right? But it’s not just about Google’s megalomaniac inclinations…

The All-Knowing Google Machine

For sure, Google’s approach will give the company more control over its customers. But it claims those customers will also get a big benefit.

Namely, over time, Google will learn each user’s habits and desires and will be able to fine-tune its services accordingly.

For example:

  • Gmail already knows how to identify tracking numbers from most shipping services. With Google Home, you can simply ask, “When are my packages arriving?” and Google will look in Gmail, find any current tracking numbers, and let you know when they’re expected.
  • It will work directly with Google’s Chromecast – a massively successful TV device – so you can tell Home, “Google, find footage of Amazon’s recent rocket launch and play it on the TV.”

Google Home will initially ship with the ability to interact with only one Google account, but over time, it should be able to recognize who’s speaking and automatically use that person’s account, so that any results are optimized for that person. And it will be able to sync devices in several rooms, a key disadvantage with Echo.

But Google and Amazon can’t expect to have this market to themselves. Indeed, there’s another giant with designs on this growing field…

Three’s a Crowd?

Apple Inc. (AAPL) is preparing a big update of its own for Siri – and it promises to eclipse both Google Now and Echo in terms of capabilities.

Siri works through existing iPhones, of course, and Apple hasn’t announced any plans for a separate device.

But this prompts a big question: Is the market large enough for three Smart Home assistants from these tech giants?

In fact, it’s not just these three vying for control of the home.

For example, privately held Soundhound recently launched Hound to rave reviews. Soundhound’s edge is in voice recognition and contextual understanding, gained from its primary product that identifies any song simply by allowing Soundhound to listen to it.

For now, the market is probably fairly small.

We’ve discussed before that not many people need the home-controlling capabilities of these devices – and a recent survey in Britain confirms it. PricewaterhouseCoopers found that only 30% of British households planned to buy smart home devices within the next two to five years.

The numbers don’t look much different in the United States, either. And only some of those 30% will also want a central device separate from their smartphone to control their gadgets.

But that market should grow with two unstoppable trends:

  1. Voice Recognition: Forget touchscreens, buttons, and dials… people are increasingly turning towards voice recognition to control our devices. After all, speech was our first means of communicating with each other – and we’re now using it as a means to communicate with machines.
  1. Improving Capabilities: Technology and devices are constantly evolving. While many people may find little value in a device that switches a light on or off while you’re in the same room, on a cold, snowy day, the ability to say, “Google, start my car and put the heater on maximum,” will be pretty attractive. Being able to then say, “Check the traffic and find the shortest route to work through the snow, then send the route to my car’s navigation system,” will be a nice bonus.

Are We Really Ready for “Smart” Stuff When This Mainstay Device Is Becoming Trickier?

Now, for all these new-age smart gadgets with equally new-fangled capabilities, we’ve identified one old-school home device that’s actually becoming harder to manage – and success here could be the thing that really drives this “smart” adoption:

The television.

Americans watch nearly 2.5 hours of television per day – but sometimes, it seems much of that time is spent actually finding programming!

The problem is only getting worse, too, what with programming coming from multiple sources – the cable company, Netflix Inc. (NFLX), Hulu, Chromecast, and others.

But the FCC mandate for cable companies to make their programming information open-source creates an opportunity for a single device to track all that programming.

And if that device can also do all the other things that Amazon Echo and Google Home do, it could become a true hub of information and expand the size of the potential market for these devices.

To living and investing in the future,

Greg Miller

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In my article here last week, I discussed how Alphabet Inc. (GOOGL) unveiled a range of updates and new innovations at its recent Google I/O conference. Among them was Google Home – a dedicated in-home device similar to Amazon.com Inc.’s (AMZN) Echo, combined with a huge expansion to Google Now, which has been renamed Google...

Greg Miller

, Senior Analyst

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