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A massive industry is slowly transitioning into the modern age of technology. And it’s right in front of you.
I’m talking about the connected home. I know…I find that term to be slightly annoying and overused too. But not so much that it will stop me from buying a smart thermostat and boiler alert system for our second home.
And in a few years I’m sure I’ll buy at least one door lock that I can control from my phone. Why not? The cost is not an issue when you need somebody to get into your house in a pinch. And it would mean no more hiding a key in locations that any crook in the neighborhood could uncover in 5 seconds.
What I find so compelling about this trend is that the connected home isn’t about one company entering the market and sucking all homeowners into its vast web of interconnected devices. It’s much more about an industry in its infancy where there are many players developing new and improved versions of all the home controls, equipment and appliances that we already use.
I expect that “dumb” thermostats will be virtually non-existent in a decade. You will absolutely be locking and unlocking your front door from your mobile phone – keys will be optional.
And you will be notified by an application when your boiler is due for an air filter, your water supply is leaking or your air conditioner needs to be serviced. You can do all of these things now, but I think they’ll be mainstream in what seems like the blink of an eye.
The opportunity is big enough to attract new entrants like Apple (NYSE:AAPL) and Google (NASDAQ:GOOGL), two companies that are also working to develop the “connected car” through new applications. I discussed this trend last Thursday.
There are smaller players too, one of which I recently recommended to 100% Letter subscribers. All are trying to develop partnerships and software that works with hundreds of products, from Nest thermostats to Samsung TVs to Quickset locks.
But the real winners will be consumers that can buy whatever smart home appliances they want without having to be loyal to one single company. The reality is that there are too many manufacturers’ products installed in homes for one company to own this market.
That’s why I think the smart money will be invested in companies that make it extremely easy to link up a smart device from any manufacturer to a single operating system. It has to be easy to connect, or consumers just aren’t going to do it.
I continue to believe that the “rising tide lifts all boats” phenomenon will help almost any quality company that has a foothold in the connected home market. It is early days…too early for one company to emerge as a dominant force. So just make sure you have some exposure to play the trend, whether that be with an aggressive small-cap play or a more diversified large cap stock.
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