Amazon Begins to Flex its Smart Home Muscle

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4Q 2018 | IN-5275

On September 20 (2018), Amazon unveiled at least 15 new smart home devices that push the company into kitchen appliances, high-end audio, and automotive. The company also extended the reach and functionality of its Alexa voice control and Artificial Intelligence (AI) platform. The unveiling made apparent Amazon’s growing focus on the smart home, and its plan is to see its services touch as many smart home applications as possible But these announcements also signal a significant transition now underway in the wider smart home market;

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Amazon Unloads 15 New Smart Home Offerings

NEWS


On September 20 (2018), Amazon unveiled at least 15 new smart home devices that push the company into kitchen appliances, high-end audio, and automotive. The company also extended the reach and functionality of its Alexa voice control and Artificial Intelligence (AI) platform. The unveiling made apparent Amazon’s growing focus on the smart home, and its plan is to see its services touch as many smart home applications as possible, but these announcements also signal a significant transition now underway in the wider smart home market.

An Abundance of New Smart Home Devices and an Extension of Functionality

IMPACT


The detail as well as the scale of Amazon’s announcements are worth noting. The new products and functionalities included: 

  • Echo Dot upgraded sound quality and volume
  • Echo Plushas upgraded sound quality and volume, as well as a new temperature sensor. Most crucially, it also has local voice control, so Alexa can be used to control local devices connected via ZigBee or Bluetooth, without Wi-Fi cloud connectivity
  • Echo Show has a larger screen upgraded sound quality and volume, as well as new music, video, live TV, Skype calling, and browser integrations
  • Amazon Basic Microwave: a new smart appliance with embedded Alexa-enabled control
  • Echo Auto, an in-car device that can be leveraged to automate smart home control in relation to vehicle location
  • Smart Plug with Wi-Fi and app control that can be integrated with Alexa voice control through Echo devices
  • Echo Wall Clock, which connects via Bluetooth to Echo devices to provide an analog display for Alexa to set alarms and timers
  • Ring Security cameras with stick-up installation and battery/wired configurations
  • Fire TV Recast to enable streaming over-the-air TV to Echo and other Amazon devices
  • Echo Link Amp, Echo Link, and the Echo Sub to push Amazon into higher-end audio.
  • Alexa Guard,a functionality upgrade, pulls smart home devices together with Alexa to provide an alarm or device setting by voice control. It is integrated with Ring and ADT
  • Plans to add smart doorbell integration to Echo Show and the Echo Spot
  • Doorbell chime announcements on all Echo devices

Amazon’s Smart Home Portfolio Heralds Breadth and Depth

RECOMMENDATIONS


Amazon’s single product launch event stretched from new security partnerships to low-end, low-tech wall clocks, and that breadth is key. Among the new and improved products, Amazon launched its own Smart Plug. These are the unsung, low-cost, and relatively low-tech workhorses of the smart home boom. More than 260 million smart plugs will ship in 2018, making them not just low-cost and low-tech, but a key market for many companies pushing into the smart home space. They represent a significant entry or system expansion point for many new and smaller smart home installations. In addition, Amazon has been a key resource for a host of smart plug Original Equipment Manufacturers (OEMs) to find customers for their devices. A search for smart plugs on Amazon’s key U.S. site brings up 126 pages of smart plug options. Smart Plugs come from long and established players such as Belkin’s WeMo unit, iDevices, and a host of white label OEMs. New entrants to the smart home device market typically include a smart plug within their offerings to quickly gain a consumer user base. In August (2018), when U.S. HDMI cable manufacturer Monoprice launched its smart home entry, Smart Plugs were front and center in its product line.

Amazon’s has already been able to gain an impressive foothold in the market through its savvy product development in pushing Alexa in Echo devices as well as its vast retail power. What also helped propel Echo’s adoption was the ability for Alexa to be integrated with a wide swathe of existing smart home products and applications. In the Executive Foresight, “ Acquisition Spree Highlights the Rush to Single-Brand Smart Home Self-Install Systems,” which was released earlier this year, ABI Research explores the ongoing rush from vendors─especially Amazon─to offer single-vendor smart home self-install systems. To this regard, the further expansion of Amazon’s smart home offerings is part of that ongoing strategy. ABI Research explored its ongoing integration with entertainment and automobile systems in two published reports: Integrating Smart Home and Entertainment Services (AN-2682) and Integrating the Smart Home and the Connected Car (AN-2604).. However, the speed and pace that Amazon has moved ahead of 4Q speaks to the company’s urgency and focus on driving up sales and smart home adoption.. In 2017, 4Q price cutting led by Amazon and matched by its primary smart home voice control competitor led to booming sales and device costs at or below profitable levels. With many of these new devices set for immediate shipping, it is likely that smart home device price cutting will hit in the upcoming quarter, but this time it will affect a far wider range of smart home players.

Alexa devices have proven to be a trojan horse, not just for Amazon in the smart home market, but for smart home adoption itself. For many millions of consumers, these types of devices are a stepping stone to adding other smart home devices and services within the home. This is also why the new local voice capabilities in the new Amazon Echo Plus are also indicative of a maturing smart home market. The ability to offer local voice control without Internet connectivity should not be underestimated. The move pushes Amazon ahead in the functionality of not just Alexa-type devices, but as a smart home gateway device. Amazon has seen competition for smart home platforms grow over the past 12 months, with the introduction of direct platform/speaker competition from Apple’s HomePod, the expansion of Google’s Home line, as well asSamsung’s announced plans for its Bixby Home Speaker. Meanwhile, service providers, such as Comcast, are increasingly adding smart home gateway capabilities within their broadband routers. Some service providers, such as Deutsche Telekom, have pushed both smart home gateway-enabled routers alongside their own voice control platforms and devices.

Finally, just as smart appliances are gaining popularity and support from established vendors, Amazon is making sure it has a foothold in that market, too. From major appliances such as refrigerators down to small countertop appliances including toaster ovens and coffee machines, connectivity and smart home capabilities are becoming more widely available. The launch of Amazon’s own Alexa-enabled, low-end microwave further stamps Amazon’s strategy to be engaged across the smart home market, placing itself at the heart of these emerging in-home systems.

Amazon brings new and stiff competition to the smart appliance and new areas within the smart home device market with these new products.

 In many cases, Amazon will already have been a key partner in helping competitors sell their existing products or even in supporting the introduction of smart home capabilities through the integration of Alexa into their appliances and devices. These players now face greater competition and less ability to differentiate themselves from the online retailer’s products; meanwhile, they still rely on Amazon as a retail partner.

ABI Research has long attested to the smart home land-grab taking place as well-funded competitors look to establish their presence in the emerging market. By building a user base often at the cost of immediate profitability, Amazon’s latest move into new markets could be the first salvo in the move to expand outside and capture rival claims. 

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