Acquisition Spree Highlights the Rush to Single-Brand Smart Home Self-Install Systems

In a couple of recent acquisitions, Amazon has expanded and strengthened its smart home play by bringing in a host of new devices and planned services. Having acquired Ring in February and Blink in late 2017, Amazon is set to offer its customers a smart home play that extends to self-install security with professional monitoring as an option. The similarity of its acquisitions’ target core products, and that fact that the company acquired both in quick succession speaks to Amazon’s smart home commitment. But the deals, alongside Google’s Nest Secure play, speak to changes taking place within the smart home market. The changes are being driven by a combination of a return to the appeal of vertically integrated vendor offerings and further evidence of the revolutionary effect that voice control has brought to the smart home market. In addition, the changes will impact a wide array of smart home players.

In February, Amazon acquired smart home video doorbell company Ring, reportedly paying more than US$1 billion. The deal followed the December 2017 acquisition of Blink, a smart home security camera and smart doorbell vendor.

Blink gives Amazon a video doorbell and an outdoor camera with night vision capabilities, but it is the acquisition of Ring that brings the greatest expansion of Amazon’s smart home play. Last October, the video doorbell pioneer Ring launched the Ring Alarm System, a self-install smart home security system which pulls together the Ring Video Doorbell, the Ring Floodlight Cam, and the Ring Spotlight Cam, along with smart carbon monoxide detectors, locks, lights, thermostats, sensors, and a new gateway to support connectivity away from its traditional device use of Wi-Fi. Although yet to start shipping, the Ring Alarm System will also offer a professional monitoring add-on and cellular connectivity from its control panel.

Ring’s recent move to expand its business from single devices to a smart home system provision is not unique. Ahead of the launch of the Ring Alarm System, Google’s smart home business Nest also launched a range of smart home security sensors and devices designed to offer consumers a self-install smart home security system, extending the reach of a company that had previously centered its efforts around smart thermostats, smoke detectors, and video cameras. ABI Research examined the details and the impact of that move from Nest in an insight at the time(IN-4755).

Google and Amazon share more in the smart home than just a move to extend into self-install security; both are rapidly gaining smart home footholds and driving smart home awareness in millions of smart homes through their voice control platforms (Alexa and Assistant respectively) and associated devices.

Amazon’s smart home play, besides being the primary sales channel for smart home devices, has been built on its voice control devices and the Alexa platform. Those offerings had effectively placed the company at the center of a smart home ecosystem that not only extended Alexa control to third-party devices, but also provided the ability to pull together disparate smart home devices into a smart home system. For example, even ahead of its recent acquisitions, there were Alexa integrations for both Ring and Blink users. Ring added a skill for Alexa support in June 2017 while Blink users would have to use the third-party integration application IFTTT.

Nest has long worked with Alexa, but Google has taken steps over the past six months to more closely integrate its Assistant platform with Nest products, a transition that influenced the recent move of Nest, which went from being its own unit within the umbrella Alphabet company to being back under Google’s control. 

The new products speak to both Amazon and Google’s clear view of the opportunity afforded by offering self-install security systems. Security remains the key revenue feature for which residents continue to pay a monthly fee. Both Amazon and Google offerings will support monthly subscription options, but they will also extend smart home self-monitoring from their popular voice control front-end devices, in a simpler to purchase and connect fashion than previously possible. In addition, both players are developing pilot projects that will extend their reach, through smart home monitoring systems, to offer customers the ability to monitor home deliveries that leave packages inside the home, not on the doorstep. Amazon’s core business has direct interest in securing deliveries while Google’s efforts are in partnership with Walmart. There are also additional services that can also be layered upon managed smart home access control: Amazon has its nascent home cleaning business while start-ups such as Handy or TaskRabbit (recently acquired by Ikea) could also leverage remote access control for a fee.

Despite its surge in consumer awareness and popularity over the past few years, purchasing a self-install smart home system remains a confusing proposition for most consumers. Although devices increasingly share wireless connectivity options, interoperability and simplicity remain an issue driven by vendor partnerships determining integration capabilities. Even if complexity is not an issue, device design is also important.

Those consumers that are happy to put together their own smart home systems from a range of vendor products, are less likely to want to install smart home devices that are typically on show if they look mismatched and obtrusive. By offering suites of products, both Amazon and Google are looking to simplify the purchase, installation, and control of smart home systems with their vertically integrated offerings. The new lines feature the same branding and design features across a range of devices, which can be expected to increasingly include their popular front-end devices. By leveraging a beachhead of millions of Google Home and Amazon Alexa devices, both companies will bring their heft into competition with a raft of for self-install smart home security monitoring companies such as Abode, SimpliSafe, Scout, iSmartAlarm, and others. By bringing simplicity and professional monitoring as an option, traditional monitored security players are also faced with a new wave of competition.

But the new offerings are more than a shake-up for those already in the smart home security business. The extension of Google and Amazon’s smart home plays are a direct challenge to the smart home strategies of Apple and Samsung. Both Apple and Samsung have pushed third-party integration to the heart of their smart home plays—Apple by bringing third-party devices through its gated HomeKit program, and Samsung with its embrace of a wide array of standards and open integration with its SmartThings business. Should the vertical integration and packages of Amazon and Google make significant ground, these players would be increasingly forced to revisit their current strategies and bring a wide range of additional devices into their research and development (R&D) and sales efforts. Apple already lost ground to Amazon and Google in the increasingly smart home key voice control, and it may yet be forced to do the same with other smart home devices.

The shift to extend product suites in order to ease the appeal and installation of new services is far from new in smart home or technology markets in general. Most markets develop vertically integrated but gain momentum through standards adoption that supports the entry of a far broader range of players. The smart home is no exception. Typically, single vendor installations were the norm, even when a wave of lower-cost devices and systems, with relatively standardized communications, helped draw in a range of new service providers into the market. The popularity of voice control devices and their integration with a host of third-party apps, devices, and platforms, alongside integration apps like IFTT and Samsung’s investment in SmartThings looked to herald a smart home market of increasing interoperability. However, while complexity remains for consumers, integrated devices and service will always have appeal. Both Amazon and Google may have signaled a swing back to single-vendor implementations, and that it is to their advantage as voice-control devices provided the foundations for their emerging place at the heart of the integrated smart home.