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Breaking Down Amazon's Smart Home Strategy

Mike Wolf Amazon Amazon Echo Smart Home

If you were hoping for a straightforward, ‘here’s our smart home’ announcement from Amazon, you’re out of luck.

And unlike others in the space, Amazon’s efforts so far can’t really be summed up easily in a sentence or two. Instead, they’ve put together what appears to be a hodgepodge of random efforts that, at first blush, are difficult to distill down into a cohesive strategy.

But once you start looking more closely and begin to connect dots, a potentially interesting plan begins to emerge, one completely different than any of the company’s peers.

To understand what this strategy looks like, you first need to be familiar with the different pieces:

Amazon Home Automation Store. The company’s first tangible step into the space was the launch of their home automation store. This move was a boon for smart home startups who were brought into Amazon’s curated storefront, and it many ways it began to validate some of the smart home categories like thermostats and locks.

Amazon Echo. The next big move was the release of the Amazon Echo, While at first the company wasn’t talking smart home, I speculated that they’d head this direction and just a few weeks ago Amazon showed I was right. The Echo is a connected speaker, but it’s so much more than that, acting as a control interface for the smart home.

Dash Button and Dash Replenishment Services. Amazon rolled out the Amazon Dash a while ago, but just in the last month the company rolled out the Dash Button and Dash Replenishment Services. In short, the Dash Button is an Amazon order engine distilled to a single-action physical interface and Dash Replenishment Services is an API-driven commerce platform for connected devices – that’s all connected devices, not just Amazon’s – in the home.

Amazon Home Services. This is Amazon’s effort to deliver a marketplace for local home service providers like plumbers, builders, lawn and garden specialists and more. It’s not specifically smart home, but the company will be pairing device installation services (think a Nest thermostat install for $99) with hardware purchases. In other words, they’re going to be the first one to make money off of installing your smart home device once you buy it.


Bezos wants into your home.

Forget Hubs – Let’s Make Money

One thing Amazon is notably not doing is creating a separate piece of purpose built smart home hardware to connect a bunch of smart home devices and radios.

In other words, they’re not doing a hub.

Instead, they’ve opted to focus on creating a control layer for your smart home in the Echo that gives them the ability to innocuously gather usage data about your smart home. They’ve already announced the Echo can now control Belkin WeMo and Philips Hue devices, with more products on the way. This is smart because A) smart home hubs are difficult sells to consumers who question their value and B) owning the control layer means Amazon simply needs to integrate with other smart home systems, not force consumers to buy into their system.

But perhaps the most interesting prong of Amazon’s smart home strategy is Dash Replenishment Service (DRS). While most of the press focused, rightly so, on the simplicity and brilliance of creating a single-action purchase button that consumers can then put all around their homes in the Dash button, the bigger vision here is Amazon’s created an entire product replenishment system that will integrate with many third party connected devices.

Think of it this way: The Dash button itself is a retrofit option, one which is good considering the hundreds of millions of non-connected devices already in consumer homes. But as you buy new appliances for your home, there’s a good chance that Whirlpool WHR -0.45% washer or Brother printer will have buy button directly integrated into the device.

Lastly, when you decide to buy a smart home product, Amazon is there to help you find one through their automation store and then they’ll also help you find someone to install it with Amazon home services.

In summary, what the company has put together is a cradle to grave smart home strategy where they’ll help you find and install you connected devices, understand how you use them, and connect them directly to your Amazon account to buy the products they use.

It’s sounds like a plan coming together.

(This post appeared first in Forbes).

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  • Mark M. on

    Pretty spot on. Amazon sees real potential, but knows the $ isn’t in the plumbing. They’re using the train tracks laid by the pick and shovel guys.


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