Microsoft Furthers Xbox Domination with Connected Home Acquisition

Since last year, Apple, Google (News - Alert) and Microsoft have been vying to acquire id8 Group R2 Studios in an effort to bolster their respective living room domination schemes. Now, Microsoft has won out in the quest for the home entertainment technology company, which holds patents for unifying control of devices within the connected home—particularly in the realm of home automation.

The Wall Street Journal is reporting that Microsoft (News - Alert) will be looking to R2 to beef up its Xbox strategy, which it has been steadily enforcing with the Kinect motion- and voice-control system, the SmartGlass remote access app for ancillary devices and a slew of content partners to take it beyond gaming.

R2 could further the supremacy of the Xbox within the home with the integration of utility controls. For instance, the R2 Control for Crestron software turns Android devices into tools for controlling home automation systems, lighting, security, thermostats, home theatre equipment and in theory pretty much any connected home device, including refrigerators that count calories for you and other Jetsons-like appliances.

R2 was launched in 2011 by Slingbox founder Blake Krikorian (News - Alert), who the WSJ said will likely join Microsoft’s Xbox team.

The home automation/connected home market is not a new target for companies—service providers like AT&T and Verizon (News - Alert) in particular have launched services to control security systems and monitor power consumption. But it is thus far not a mainstream one. Analysts say that is on the cusp of changing. In fact, Visiongain (News - Alert), for one, said that it’s a market that will be worth $101 billion in 2013.

“The connected home offers the potential for new revenue streams, as operators partnered with content providers and OEMs can capitalize on the unique opportunities offered by an emerging ecosystem of smart devices,” said Visiongain in a recent report on the subject.

For operators, the connected home can turn all households into high ARPU households. For content providers the connected home will provide a surge in demand for commercial content. Overall, the connected home's interoperability allows content and services to be delivered to ultimately more end-points, thus increasing revenue opportunities for both content and service providers.

“While the connected home comes in various guises, our research shows that many consumers are already utilizing many smart devices and services for low-level smart home functionality,” Visiongain concluded. “ Building on a foundation of consumer interest, ecosystem members and new market entrants must act swiftly in order to stake a claim.”