Amazon buys video doorbell firm
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Amazon has acquired video doorbell and home security camera maker Ring in a deal reportedly worth more than $1bn, as it pushes further into the internet of things and in-home-delivery space.
The deal values Ring, which makes and sells popular video doorbells in the US, UK and Europe, at between $1.2bn (£86.4m) and $1.8bn, according to reports, making it Amazon’s second largest acquisition after Whole Foods Market.
Analysts see the Santa Monica, California-based Ring fitting in with Amazon’s move into the home security market, driven by a bet on delivering packages inside shoppers’ homes to boost sales.
“As Amazon moves more aggressively into the grocery delivery space … we believe smart security devices will be an important factor in driving user adoption,” said Baird Equity Research analyst Colin Sebastian.
Amazon already sells two different camera products: the Echo Look fashion-advice camera and the Amazon Cloud Cam indoor security camera, which forms part of Amazon’s Key service that lets uses a smartlock to allow delivery personnel put packages inside a home to avoid theft or, in the case of fresh food, spoiling.
Amazon’s venture capital for voice technology arm, the Alexa Fund, previously invested in Ring, which first shot to notoriety after founder Jamie Siminoff’s appearance on ABC’s Shark Tank, in which he declined investment from the show’s panel.
“In December, the company acquired smart camera and video doorbell startup Blink for a reported $90m.”
The company’s line of devices, including the Ring Video Doorbell 2, currently integrate with Amazon’s voice-controlled assistant Alexa. Users of Amazon’s Echo Show or Echo Spot devices can say, “Alexa, show my front door” to receive a live feed of activity around their home via Ring cameras.
Ring is not the first home security firm Amazon has bought in the last six months. In December, the company acquired smart camera and video doorbell startup Blink for a reported $90m. While the Blink purchase provided the retailer with access to potentially groundbreaking low-power chips that could extend the life and power-efficiency of Amazon’s cameras, Ring offers Amazon a popular consumer electronics brand that the retailer may not have been able to replicate internally.
For Ring, Amazon provides a scale not possible for a small company. Siminoff said in an interview with the Guardian in November: “We are a lot like Amazon from the side of reinvesting revenues into the business.
“The idea that Amazon goes into things to win, to deliver the best service to the customer, that aligns with what we want to do. We want to deliver the most cost-effective solution to customers at scale. So it is not about maximising the dollar per customer, it is about maximising the overall scale.”
Wedbush Securities analyst Michael Pachter said: “Amazon, more than Ring, can revolutionise home security.”
US security and alarm company ADT could be the biggest loser, Pachter said, adding that Ring’s “camera technology is far superior to physical security. With Amazon having roughly 100 million Prime members, that’s a big addressable market for them to start selling this into.”
Ring, which employs more than 1,500 people with offices in the UK and a European headquarters in Amsterdam, was involved in a legal battle with ADT over intellectual property for a forthcoming integrated alarm system, which was settled in January. Shares of ADT Inc fell more than 2% after the news to close at $11.60. Amazon stock closed down 0.7%.
Questions & Answers
Q.What is the primary reason Amazon acquired Ring?
What is the primary reason Amazon acquired Ring?
Amazon acquired Ring to push further into the internet of things and the in-home-delivery space. Analysts believe it aligns with Amazon's move into home security, betting on delivering packages inside shoppers' homes to boost sales.
Q.How does the Ring acquisition compare to Amazon's other major purchases?
How does the Ring acquisition compare to Amazon's other major purchases?
The Ring deal is reportedly worth between $1.2bn and $1.8bn, making it Amazon’s second largest acquisition after Whole Foods Market. This indicates its significant strategic importance to the company.
Q.What existing Amazon services or products will Ring integrate with?
What existing Amazon services or products will Ring integrate with?
Ring's devices already integrate with Amazon’s voice-controlled assistant Alexa. Users of Amazon’s Echo Show or Echo Spot can use voice commands to view live feeds from Ring cameras.
Q.Which company is considered the biggest loser from this acquisition?
Which company is considered the biggest loser from this acquisition?
US security and alarm company ADT is considered the biggest loser. Its shares fell more than 2% after the news, having previously been in a legal battle with Ring over intellectual property.
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