Amazon's Hardware-Palooza Underpins Its Smart Home Strategy

Amazon’s Alexa is spreading its wings. The company has sold more than 100 million devices, making it the leading digital assistant for the smart home. By allowing developers to create skills for Alexa and by enabling hardware manufacturers to embed the voice assistant into their products, Amazon has largely pushed Alexa to market.

Amazon Dives Deeper into Hardware

However, at the Amazon Devices Event in September 2019, the company dove deeper into its own hardware solutions with a slew of new consumer gadgets. Devices ranged from updates to the Echo suite of products, including the next generation Echo Dot with a digital clock, a high end Echo Studio speaker, and a new $100 Amazon Echo. Wearables were also featured, and included Echo Frames smart glasses and the Amazon Echo Loop, which puts Alexa on your finger.

Why is Amazon getting more involved in hardware? Amazon does already manufacture its own devices, including the Kindle and Fire range of products. At the company’s Amazon Hardware Event 2018, the company unveiled hardware products, such as an Alexa Microwave and Echo Auto, though word has it the Alexa microwave is nothing to write home about. Consumer Internet of Things technology is a notoriously difficult space to operate in. Hardware sales tend to have a low margin, with reports of Amazon and Google actually losing money in the space. So can Amazon really make a profit manufacturing better ear buds than Apple? Can it fundamentally change the kitchen space with its smart oven?

It’s All About the Data

From my research on the smart home market, these market moves are still all about the data and owning the user experience to drive sales toward traditional business models. Sure, it would be nice if Amazon could make a profit by selling pet owners a dog tracking device. But more importantly, if Amazon owns all of the devices in your home—the ones you accessorize and cook with and attach to your pets—the devices can report data to Amazon’s cloud. Using this data, the company can better understand you as a consumer and fulfill your hopes and desires with its e-commerce platform and advertising bookings.

While the Amazon Devices Event was hardware-centric, ultimately market moves like these underpin a technology company’s larger strategy to use consumer data for bolstering its core businesses. This is something for stakeholders in the smart home to keep in mind as they try to understand the motivation of tech giants and interact with these players.