Eero Gives Amazon Stronger Position in the Smart Home
On Monday, Amazon announced that it has agreed to acquire Eero, one of the leading innovators in the market for home mesh Wi-Fi router systems. The deal is expected to bolster Amazon’s position in the smart home and could put the company in the pivotal position of becoming a gateway into millions of homes.
San Francisco-based Eero was founded in 2015 and for several quarters dominated the market for home mesh router systems. Mesh networking systems consist of a main router that connects directly to an Internet modem, and a series of nodes placed around the home that seamlessly amplify Wi-Fi coverage by chaining together the wireless network across the nodes, all of which share the same SSID and password.
Given the proliferation of devices enabled with Wi-Fi in homes, reliable network coverage has become more important for consumers. Quick to spot an opportunity, competitors started appearing in the market for mesh routers including the likes of Netgear, Linksys, TP-Link, Samsung as well as Google.
Amazon itself is behind a growing range of home electronics that have allowed it to become a dominant player in the smart home arena. Its Echo devices lead the market for smart speakers, and in 2018 Amazon bought Ring, a start-up that provides home security products and that essentially made the market for smart doorbells (see Belle of the Ball). This wasn’t Amazon’s only acquisition in this space: in 2017 it made a move for security camera and video doorbell start-up Blink.
Amazon’s acquisition of Eero stresses that the new ecosystem battle is for the home and, as a part of this, for artificial assistants that will control devices in and outside the home.
However, there’s still a major flaw that badly compromises the smart home vision, and neither Amazon’s Alexa assistant nor previous acquisitions address this. Home Wi-Fi infrastructure often lacks the robustness to cope with a growing range of connected devices. Poor performance and poor coverage create a frustrating user experience for certain devices and services, but they become completely unacceptable for critical elements such as thermostats and door locks. Although Alexa has helped stir up interest in the smart home, it also exposed a roadblock that the entire industry is struggling with.
We expect smart speakers will routinely become part of the networking infrastructure in homes, and on the other side of the coin, routers will become smart speakers. These two product categories will begin to overlap and we believe Amazon will move in this direction.
Furthermore, routers act as a gateway into home, with data travelling up and downstream. With its own line of routers, Amazon could have a tighter end-to-end strategy, connecting Echo speakers, Fire TVs and Ring devices as well as services including content and home security monitoring.
There’s a ring to the combination of Echo and Eero.
CCS Insight clients can access more detailed analysis of Amazon’s acquisition of Eero here.
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