Amazon’s acquisition of Ring points to smart home security focus
03 Mar 2018
Amazon has agreed to purchase Ring, the Santa Monica-based video doorbell manufacturer, according to GeekWire.
Neither company confirmed the final acquisition price, though Recode reports the e-commerce titan paid somewhere between $1.2 billion and $1.8 billion.
That would make it Amazon’s second-largest acquisition ever, behind only its $14 billion deal for Whole Foods last summer. It’s still unknown when the companies expect to finalize the acquisition.
The deal comes only two months after Amazon bought smart camera and doorbell manufacturer Blink, and it reportedly expressed interest in smart lock maker August, indicating that the e-commerce titan’s honed in on the smart home security market. Blink and Ring together give the company a portfolio of internet-connected indoor and outdoor cameras, video doorbells, and battery-powered smart security cameras that it can sell through its e-commerce marketplace.
This product lineup doesn’t currently include smart window and other security sensors, but Amazon could certainly leverage the technical expertise of Blink and Ring to develop these devices for part of a future home security system bundle, which would presumably have an Echo smart speaker as the hub at its center. However, Amazon will likely face challenges in the home security market, as the consumer IoT has seen slow adoption, and many companies are struggling to achieve meaningful profits.
There are two strong market strategies for Amazon could use to find success via this space:
- It could try to undercut companies like Google and ADT to expand the smart home security market. High prices plague adoption of these security stacks, as the ADT and Google-owned Nest bundles cost $500 and $550, respectively. Given its long history in undercutting competitors in many of the markets it operates in, Amazon could certainly look to price a potential new home security bundle below these competing offerings. It could then leverage its vast reach through its e-commerce platform to spur adoption of these security systems and expand the market for these solutions in the coming years.
- It may also use its smart home footprint to collect even more data on its customers. The company’s popular Echo smart speakers already collect considerable data on users’ interactions in their houses. Any potential home security system that includes cameras and sensors could certainly gather more data on users’ activities in the home. It could then leverage this data for marketing purposes for its core e-commerce business, or use it to time deliveries for when it expects its customers are home, potentially helping mitigate delivery issues, such as the millions of dollars it loses every year in lost packages.
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Source: Business Insider