Remember when Amazon (NASDAQ: AMZN) just sold books?
That almost seems like a lifetime ago — so much has changed since then.
As the ever-evolving mega-titan of e-commerce, logistics, and more, Amazon downright owns our doorsteps. And it’s no secret that the company is known for dabbling in other industries, too…
And it looks like its latest target, Ring, wants to secure the insides of our homes, as well.
If the consumer-goods giant succeeds in turning its Alexa technology into the brains of modern smart homes, then Ring’s video doorbell systems will provide the eyes…
A Rough Start
For Jamie Siminoff, Ring’s CEO and founder, achieving success wasn’t easy.
In fact, there was a time when he couldn’t even get a life-saving investment on ABC’s Shark Tank. A failure that he thought might have marked the end of his little company.
In 2013, Siminoff starred on the reality show and pitched his business, which back then had been called Doorbot. It sold Wi-Fi-enabled doorbells that allow users to see a live video of people and talk to them as they arrive at the front door.
Aside from Kevin O’Leary, all of the other investors passed on Doorbot. And O’Leary made what Siminoff considered to be an unacceptable offer. Doorbot didn’t make the deal and ended up leaving the show broke and empty-handed.
“I remember after that ‘Shark Tank’ episode literally being in tears,” Siminoff said. “I needed the money, we were out of money at the time.”
Siminoff had sunk $10,000 into building props for the big pitch, and the company’s staff of (at the time) eight had spent countless hours preparing for the show.
After leaving without an investor, it seemed like the expensive effort was all for nothing. But after its episode aired, the business actually began seeing immense growth.
“It has now been four years since ‘Shark Tank,’ and the business is now valued at $1 billion,” Siminoff said on an update for the show that aired in the fall of 2017. “Today we’re over 1,300 people with 10 core products, [sold in] 16,000 stores.”
Ring even landed Virgin Group billionaire Richard Branson as an investor after he saw one of the company’s products.
However, Branson declined to comment on the news of Ring’s latest deal with Amazon.
But the list of financial backers doesn’t stop there…
Other Ring investors include Science Inc. President Peter Pham, Kleiner Perkins, DFJ Growth, Goldman Sachs, Qualcomm Ventures, and even Amazon’s venture capital arm, the Alexa Fund…
The Home Security Partnership
Amazon announced last Tuesday that it would be buying Ring — a move that will further solidify its presence in the home technology and delivery market.
It was probably just a matter of time, too, because Ring has something like 70% of the U.S. smart doorbell market.
This acquisition will pair nicely with Amazon Key — a smart door lock and security camera service that allows Amazon delivery people to drop packages inside customers’ homes, thwarting package theft.
Amazon Key works in tandem with the security cameras to record every in-home delivery. Ring offers similar services: recording live videos of customers’ doorsteps and homes and also sending those videos directly to the homeowners’ smartphones.
But Amazon Key isn’t just for delivering packages. It can also be used by homeowners for letting in regular visitors like cleaners and dog walkers.
And adding Ring’s facial-recognition service to Amazon Key could make it easier and faster to give those visitors access.
This isn’t Amazon’s first foray into the home security sector either. Back in December 2017, the company purchased Blink — a wireless security camera startup.
The move also gives Amazon another point of contention with its most heated rival, Google. The search engine giant’s Nest unit, which makes popular smart home thermostats, is expanding into the video doorbell sector. And its products will be outfitted with facial recognition, as well.
Google and Amazon have been at odds over a variety of issues. Google recently yanked its YouTube unit off the Amazon Fire TV-streaming player, complaining that Amazon wouldn’t sell Google products like the Nest and others on its online marketplace.
Other companies making similar voice-activated locks, like Schlage and August, are known for their products being difficult to install, which is often the case for smart home products.
But the Amazon Key comes with a professional installation.
Ring’s pitch since day one has been its five-minute self-installation process. Siminoff had even told television viewers that if they ever had trouble installing his product, he’d come over to install it for them himself.
This is all of great benefit to Amazon, which has obviously revolutionized the ways in which people shop and goods are delivered. But as I mentioned earlier, there’s more to this acquisition than just protected packages.
For some time now, Amazon has been quietly acquiring technology to bolster its smart home and home security capabilities.
In 2015, the company acquired Rachio, — a smart lawn sprinkler company. The same year, it also purchased Scout Alarm —a home security company. And now, it’s purchased Ring.
The e-commerce titan has focused extensively on its Alexa unit — the popular home speaker that doubles as an artificial intelligence (AI) device, which can answer questions and make Amazon purchases for you.
Amazon is now envisioning Alexa as your all-in-one personal assistant, butler, hired help, security system, and who knows what else.
“Amazon’s really watering the grass, so to speak, to grow into our homes and become more integrated in our lives in ways we haven’t even fathomed yet,” said Matt Schreiber, president and chief investment strategist at WBI. “This isn’t just about Ring’s doorbell technology… It ties into all the acquisitions they’ve quietly made over the years.”
With investments in so many industries — retail, grocery, hardware, AI — it’s not a stretch to imagine a future where someone could tell Alexa to buy groceries online, a delivery worker would then pick them up from Amazon-owned Whole Foods, and all while the customer monitored the doorstep delivery via Ring and Amazon Key.
Ring will provide hesitant shoppers with some reassurance when it comes to letting strangers open their doors. And not just the doors to their homes but also the one to a new era of Amazon-related home services and experiences…
The Bottom Line
Amazon’s acquisition of Ring will make it harder for other companies to compete in the ecosystem of smart home direct-to-consumer security.
A company spokesman said Amazon purchased Ring to help its customers in keeping their homes “safe and secure.”
Amazon stock price exceeded $1,500 after the announcement last Tuesday, already surging nearly 30% in 2018. The company’s market value is more than $700 billion.
The biggest losers in this game will be the old-school security companies, such as ADT and Alarm.com.
That’s all for now.
Until next time,
John Peterson
Pro Trader Today