Amazon is Making Smart Home Bundles Easy

Amazon is Making Smart Home Bundles Easy

Amazon is making smart home bundles easy. In the process, Amazon is becoming a CyberSecurity and Data Privacy leader.

It was Cable and Software bundles in the 1980s, 1990s and 2000s. Today, it’s Smart Home bundles and Amazon is making it easy. For technology vendors it pays to own the “bundle” (a word antitrust regulators aren’t fond of, so refrain from using it in your Board memos). Cable providers famously bundled content. You want ESPN? Take these other 100 channels you don’t want and enjoy them. Software publishers (re: MSFT) would bundle the OS with Applications (themselves bundled) and later Web browsers.

Amazon took a page from history and has assembled the components for what is essentially a turn-key Smart Home platform: smart speakers/ listening devices, indoor/outdoor cameras, doorbell cams, cloud-tethered security cameras, smart door locks, thermostats, lighting, Alexa-controlled microwave ovens and more all tied to Amazon’s cloud with a neat Alexa/AI wrapper. Now, add mesh routers to the mix. Truly one-stop shopping.

A concern with Smart Home technology and the Internet of Things (“IoT”), is that as more devices are added to WiFi networks and more data is stored in the cloud, exposure to nefarious actors increases, not to mention our lives become an open book. Bad actors are constantly working to compromise personal data and each additional node on the network and new application is an access point for bad actors. Amazon’s cloud has cybersecurity baked in. Our view is that AWS will become the cybersecurity leader before long as companies increasingly subscribe to the platform (see our January 2018 post here).

Then there is the Data Privacy issue. The Facebook Cambridge Analytica privacy scandal crystalized the issue for many Americans. Amazon has had insight into our purchase history since the 1990s and today the company has more than insight. Amazon can predict our purchase behavior, knows how many people live in the home and a whole lot more.

Yesterday Amazon took steps to facilitate Smart Home bundle adoption by acquiring Eero (formerly an Amazon partner and now part of the Borg). Terms of the deal were not disclosed. Eero is a mesh WiFi router manufacturer. By controlling the router technology Amazon can make it easier to on-board Alexa compatible devices. The more Alexa devices on the network, the greater the customer switching cost. In addition, Eero promotes the fact that data privacy is a core principle. Time will tell if this principal remains intact. Amazon has a good track record of allowing acquired companies to operate fairly independently.

In summary, Amazon continues to make noise on the DIY Smart Home front.