February 28, 2018
What does the Ring acquisition mean for the smart home market?
So, Amazon has acquired smart home security company Ring for a rumoured $1.1bn. This is a big deal for a smart home device company and is a very clear message from Amazon that they see security and safety as a very important part of their business going forward.
In their Consumer Internet of Things Survey last year, analyst firm IDC found that consumers favoured home applications that focus on peace of mind, rather than control and that security and safety were the top reasons for consumers adopting smart home devices. This is supported by other research from the likes of Ovum.
Amazon had already invested in Ring via their Alexa Fund and now it looks like Ring will be wholly owned by Amazon, although it will maintain its brand identity.
This acquisition is interesting for lots of reasons:
Consumers find ecosystems comforting
The smart home market is made up of many players, each approaching the market in different ways. You have the companies like Nest and Vivint with multiple products and in 2017 we saw Google and Amazon increase the size of their product portfolios. You also have major brands like Comcast who come at the smart home from an entertainment and connectivity perspective with their Xfinity packages and even Vodafone announced that it was getting into the smart home with Samsung under the ‘V-home from Vodafone’ brand.
Consumers often buy into ecosystems because it gives them a nice warm feeling when it comes to integration and adding new products, they don’t have to worry about how it all works, it just does it out of the box. This matters as products move out of the early adopter phase to mass market adoption.
To date, Amazon has focused on entertainment and communication through their Echo devices. However, with the launch of Cloud Cam and now the Ring acquisition they are making a bigger play in the security segment, which has also been a clear target for Nest since they announced their alarm system products last year.
Interestingly, Amazon is also an investor in ecobee via their Alexa fund. Ecobee has a smart thermostat and their close relationship may offer Amazon an opportunity to further add to its portfolio, although I’m not sure I see a strong need for Amazon to own outright a company focused on energy management.
As a consumer I will be able to select a central smart home spine – Google, Amazon, Comcast, Hive, V-Home, Vivint, Apple, etc and then I can connect other peripheral devices into that network where interoperability allows. Whether or not these ecosystems start to become walled gardens will be interesting to see. I hope not.
From click to cupboard
Amazon announced their Cloud Cam and Key service last year, offering consumers the ability to let delivery drivers into their home while they are away. The Ring acquisition could enhance this further, enabling consumers to let people into their home and supposedly let them place their purchase inside or even directly in the kitchen (Amazon also own Whole Foods remember).
The delivery aspect of ecommerce has always been a lot of hassle since we started buying stuff online. Now I can come home and find my purchases inside, sheltered from the rain.
Whether it sits under their Prime service or Key service, I’m not sure. And Amazon also has a job to do in convincing people to let delivery drivers in their home, but that is not insurmountable.
Smart neighbourhood watch is a thing
At CES both Ring and Vivint announced the same product concept (although Vivint did a slightly better job on presentation). They want to allow consumers to share camera feeds and information with their neighbours. Almost like a social network for security conscious suburbanites. I liked it, a lot. From a marketing point of view, it drives referrals and locks whole communities into brands. Genius.
Amazon could help Ring to expand this.
Making doorbells more helpful to people
Forrester Research’s James McQuivey told the New York Times that “he believed that Amazon had bought Ring so it could add more intelligent capabilities to its doorbells and cameras.”
Amazon is a major force in AI right now, so there is probably lots of stuff that Amazon could integrate directly into Ring’s products that they couldn’t do at arm’s length.
We’ve said it (a lot) but the smart home needs to move from a ‘connected home’ to an ‘intelligent home’ if we are going to see mass market adoption among consumers. Personal assistants and voice activation are important components of that AI piece, as is computer vision (image and motion recognition). But there are more human-like senses that we can enable.
Francisco Jeronimo at IDC said: “…the ability to recognize sounds is an essential feature of any connected device, particularly in a world where AI is becoming the core engine.” You can read more in IDC’s special report here.
So, lots of possibilities for Amazon and Ring. Lots of compelling propositions for consumers. Lots of speculation about what it all means.
And lots of sleepless nights for the other smart home brands. Where do they fit? How can they defend their markets? How can they make sure their products come out on top with consumers?
This industry continues to be really exciting to be part of.
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Audio Analytic is the pioneer of AI sound recognition software. The company is on a mission to map the world of sounds, offering our sense of hearing to consumer technology. By transferring our sense of hearing to consumer products and digital personal assistants we give them the ability to react to the world around us, helping satisfy our entertainment, safety, security, wellbeing and communication needs.
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