It’s no secret that Amazon.com (NASDAQ: AMZN) is the biggest player in e-commerce, accounting for nearly half of all digital sales in the Unites States. To help maintain that lead, Amazon also invested heavily in the smart speaker market with it Echo family of products to make ordering products easier.
Amazon has been steadily adding to a growing list of products to service the smart home market. It has also been working to integrate Alexa, its voice-controlled digital assistant, into a growing number of these products (there are currently 28,000 Alexa-compatible smart home devices across more than 4,500 brands).
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On Monday, Amazon acquired home Wi-Fi system specialist eero to ensure all these devices are able to seemlessly connect to each other.
What is eero?
In case you’re not familiar with the company or its products, eero created a home mesh Wi-Fi system (retailing for $359) that can be customized to any home — regardless of shape or size. eero uses multiple gadgets strategically placed in different rooms to blanket the house with high-performing, reliable, Wi-Fi network that “eliminates dead zones, ensuring perfect streaming video in every room, and delivering the bandwidth all connected devices need.”
In its announcement of the startup purchase Amazon said the eero app was easy-to-use. It allows customers to set up the system in less than 10 minutes, share the network, program parental controls, and run speed tests on demand. The eero system automatically communicates with the cloud, allowing it to receive instructions and updates. “This means eero systems are self-updating, self-fixing, and self-improving all the time,” according to the press release. Terms of the eero acquisition were not disclosed.
“We are incredibly impressed with the eero team and how quickly they invented a Wi-Fi solution that makes connected devices just work,” said Dave Limp, SVP of Amazon Devices and Services. “We have a shared vision that the smart home experience can get even easier, and we’re committed to continue innovating on behalf of customers.”
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Amazon pointed out that eero is already a hit with its customers, as evidenced by the 4.6-star product rating on the Amazon website.
Amazon wants to control your living room — and the rest of your house
This acquisition adds to Amazon’s growing portfolio of products directly tied to the smart home.
The Amazon Echo was the first of its kind, actually creating a new category of products — the smart speaker. This gave Amazon a commanding lead in the space. According to some accounts, the company controls about 70% of the smart speaker market.
The product has become a perennial favorite on Amazon’s e-commerce site, and the Echo Dot was the No. 1 selling product on Amazon globally, from any manufacturer, in any category during the recent holiday season. Alexa can now respond to over 80,000 commands, called “skills.”
Early last year, Amazon acquired Ring in a deal valued at more than $1 billion. The maker of video-enabled doorbells and home security cameras was a perfect fit, as a number of Ring’s products were already compatible with Alexa.
The eero acquisition could also be seen as a defensive move for Amazon. Currently, the best-selling mesh Wifi router system on Amazon’s online store is a product being built by Alphabet (NASDAQ: GOOG, NASDAQ: GOOGL), a big competitor in the smart home space.
A growing presence in your home
The common thread in all this is Amazon’s efforts to establish a solid foothold in the homes of customers that use home smart devices. Once the ecosystem is established, consumers will find it much harder to switch. If you own Echo smart speakers, Ring video doorbells and security cameras, and eero networking devices, it wouldn’t make a lot of sense to buy any products that aren’t compatible with the existing setup. That makes solid business sense for Amazon.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Danny Vena owns shares of Alphabet (A shares) and Amazon. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Amazon. The Motley Fool has a disclosure policy.
