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Don't quit your day job to build smart-home applications

Plenty of effort goes into the creation of Alexa skills and Google actions, but the market for those smart-home apps has yet to fully materialize for developers.

Smart-home devices, such as Amazon Echo and Google Home, continue to gain ubiquity in consumer households. But these gadgets themselves aren't intelligent -- that is, not until developers write skills for them.

These "skills" are typically voice-based, smart-home applications. And while it's possible for developers to make money writing these skills, not all smart-home platforms offer the same pay. Google and Amazon aren't the only players in the game, either. Apple has its own smart-home device, HomePod, and other organizations, like Facebook, could also become factors in the market.

So, how can developers cash in? Amazon and Google offer three paths for developers to make money with their smart-home applications.

First, some developers get paid directly for their work. They create applications on a contract basis for Google or Amazon content partners, such as Scripps Networks Interactive or Time Inc. Developers who can build strong Amazon Echo skills can find deals for $100,000 to $200,000 per project from large consumer companies.

Lead generation can also bring in cash. Developers can create Alexa skills -- or "actions," as Google calls them for its smart-home devices -- that enable end users to share their profile, which becomes a sales lead to a consumer company. This might or might not turn into a sale, but the lead generation is still valuable. Google has a program that pays a developer for each lead they generate. But it's a bit tougher for Amazon developers, though, as an end user must get on a smartphone, tablet or laptop to share information with Alexa, which enables you to get paid for the information gathered by your Echo skill.

The third path to payment introduces another gray area: direct rewards for published smart-home applications. Amazon, for instance, doesn't provide an exact set of rules or thresholds by which developers can measure their skill's value. Developers who receive rewards believe the money is tied to the ranking of the skills, similar to chart rankings in the Apple App or Google Play stores. The payout varies from $100 to $5,000, the latter for highly ranked skills.

Developers could become frustrated with an algorithm that determines how they're compensated for smart-home applications. They might want more formal control over the value the market places on those apps. Think about the Apple App Store, which provides the marketplace and verifications but doesn't stand in the way of developers that want to monetize popular applications beyond some understood fees. For example, you pay Apple a fee to be in its App Store.

So, you might be able to make a living as a developer of smart-home applications, but the market is still in its early days. Developers are still determining ways to make their skills and actions popular and profitable, and the ecosystem itself is still working toward sustainability.

This was last published in March 2018

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