How far ahead is Amazon in the smart home race?

Written by on September 26, 2016 in Guest Blog with 0 Comments
Africa Studio/Shutterstock

Africa Studio/Shutterstock

Among the biggest consumer tech brands, Amazon appears to be some way out in front when it comes to smart home progress. With new models and new partner integrations, Amazon seems to be taking the lead on Apple and Google – after stumbling onto the increasingly successful Echo, which is now being launched in the UK and Germany.

After the debacle that was the Fire Phone, Amazon was essentially left with an AI-powered digital assistant called Alexa that it had developed to rival Apple’s Siri and Google Now. Somewhere inside Amazon’s Lab126 skunkworks, an engineer decided to chuck Alexa inside a device shaped like a Pringle’s can, and the rest is history. Amazon had almost accidentally tapped into a market that hadn’t been addressed yet, and thanks to its hefty Prime membership discounts, the Echo has been selling like hotcakes.

With a new version of the $50 Echo Dot, a smaller version that eschews the integrated speaker in favor of plugging into an existing speaker system, Amazon is building out its range of devices – and rapidly expanding the other brands and platforms that Alexa can control inside a smart home.

With the full-fat Echo, the portable Amazon Tap, and the adapter-esque Echo Dot, Amazon currently offers its buyers the ability to control devices from the likes of ecobee, Nest, Honeywell, Philips Hue, SmartThings, Insteon, Wink, Wemo, Caseta, LIFX, Haiku, TP-Link, Schlage, Leviton, – the list goes on, and it is a very expansive list for consumers to exploit. This week, Amazon announced that it is integrating Alex and Echo with both Control4 and LG’s SmartThinQ platforms.

A big focus for Amazon is using Echo and Alexa to drive increased sales through its core retail business – making shopping easier. For Echo adopters, there are going to be many opportunities to sell extra smart home devices to these consumers, as well as the usual plethora of media, durables, and groceries that Amazon already sells through its Prime channel.

But in terms of brand power and consumer retention, if Alexa becomes a focal point of all connected actions in the home, Amazon might be able to make itself inextricable from the experience – a big boost to its retail ambitions, and also a source of rather valuable data that it can market to other interested parties.

Sure, Apple’s new iOS 10 now prominently features the Home app that links HomeKit-compatible devices to the iPhone, but it’s still not a platform that is going to drive much in the way of new growth. Smart home adopters using iPhones might appreciate the gesture, but Apple isn’t going to be a smart home leader until it starts selling Apple branded devices – which it may well do. As such, it remains an ecosystem partner, but one that has the potential for great things.

Google, or rather Alphabet, looked like it was on the verge of launching a serious smart home offering around two years ago (as did Apple), on the back of Nest and Android. Since then, Nest has fallen apart, and while Google has experimented with its own smart home devices, there’s still no clear product or market strategy for Alphabet to leverage Android with.

Microsoft lurks in the background, and Samsung’s SmartThings brand seems to have stuttered in terms of headlines, and both Apple and Alphabet sit poised to utilize their massive smartphone platforms to drive their own smart home plans.

iOf course, operator smart-home-as-a-service plans are likely to be the driving element for smart homes, due to the (still) high upfront costs of a comprehensive smart home bought off-the-shelf – still a $5,000 to $9,000 depending on how big your house is. If you want your house to look like the adverts, it’s going to cost a lot – and will stay that way for the next few years at least.

If pay TV, ISP, MNO, or even insurance or utility firms can exploit existing consumer relationships, then selling a bundled package of smart home services to consumers will lay the groundwork for an explosion in smart home shipments – assuming that those SHaaS ecosystems remain open to third-party additions.

It’s a strategy that is becoming increasingly popular among pay TV and ISPs (which increasingly have TV/video offerings), but one that seems to be two to three years away from being commonplace in the market. Once the service providers sort their plans out, the smart home as a market will take off properly.

In the meantime, the consumer-oriented offerings have a lot of room to grow. While the hype that surrounded Nest’s entry into the market seems to have dramatically cooled, in consumer minds, the smart home is a viable market in which to spend their cash – with some looking to splash out, and others looking for small incremental upgrades.

But we’re of the opinion that once it becomes somewhat commonplace to find a piece of CPE (consumer premises equipment) that is smart-home capable inside a decent amount of pay TV households, then shipments of additional peripheral smart home devices will rocket – assuming they are at the price-point where they can be added to the cart at the end of a trip to the supermarket. That’s where the device-volume hockey-stick graph takes off.

Written by Alex Davies | First published  at ReTHINK IoT

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