Why Amazon and Best Buy Are Teaming Up to Sell Smart TVs

In this segment from MarketFoolery, host Chris Hill and Motley Fool Asset Management's Bill Barker weigh in on the news that Amazon (AMZN -1.64%) and Best Buy (BBY -0.81%) will join forces in an attempt to sell more smart TVs. If you're wondering why the brick-and-mortar chain would want to get into bed with the company most responsible for the retail apocalypse, or what the online titan needs from an old-school partner, well, the guys are happy to explain how both sides will benefit -- and which companies will lose.

A full transcript follows the video.

Bill Barker is an employee of Motley Fool Asset Management, a separate, sister company of The Motley Fool, LLC. The views of Bill Barker and Motley Fool Asset Management are not the views of The Motley Fool, LLC and should not be taken as such.

This video was recorded on April 18, 2018.

Chris Hill: Amazon is teaming up with Best Buy to sell smart TVs, specifically the Amazon Fire TV. There was a nice photo on Twitter today of Jeff Bezos and Hubert Joly, the CEO of Best Buy, together. This seems like a smart move for both of these companies, because I think, and there's no reason in the world for Jeff Bezos ever to say this out loud, but my hunch is, at least part of this partnership is a recognition on Amazon's part that when people are making a big ticket item purchase like a smart TV, it helps if you can actually stand in front of that TV and look at it and compare them side-by-side.

Bill Barker: Yeah. Well, the first thing that came to mind when I heard this is, keep your friends close and your enemies closer.

Hill: [laughs] There's that as well.

Barker: And I don't know that anybody on either side of this equation would say that they are enemies, but the potential exists. Certainly, if you go back five or six years, I think Best Buy was kind of given up for dead --

Hill: Absolutely, and people were saying, "Amazon's going to put them out of business."

Barker: Right. And that didn't happen. So, Best Buy sells some Amazon products, the Fire, Kindle; and Amazon is now going to have Best Buy sell some of these things through the Best Buy channel on Amazon, so there is a working relationship on a number of levels. Today, the victim of that stock-wise seems to be Roku (NASDAQ: ROKU), which was making the operating system for the smart TVs for Best Buy's Insignia brand. Now, it's going to be Amazon.

Hill: Matty Argersinger and I talked about this yesterday. Roku shares were up double-digits yesterday, and it was on the announcement that they were partnering with Disney on the ESPN+ streaming app. It was one of those things that seems like a little bit of a no-brainer, seems like a small win for Roku, it didn't seem like a double-digit stock move win. So, I'm sure at least a little bit of the gains that Roku is giving up today is some recognition of people saying, "Yeah, wait, what were we thinking yesterday?"

Barker: Do you watch John Oliver at all?

Hill: Not really, no. It's late on a Sunday night. Sometimes I'll watch it on YouTube or that sort of thing.

Barker: A couple of weeks ago he went after the NRATV. I think one of the quotes in it was that NRATV was on big tech platforms, including Roku, and John Oliver went off on Roku, how delighted they must be to be included in a list of big tech companies. [laughs]

Hill: [laughs] Along with Amazon and Google --

Barker: Along with Amazon and Apple and their platforms for TV. Yeah, it's a reminder that Roku is out there. It's not one of the biggest in a lot of ways, but, well, a deal like today, and as you say, maybe it's just feeding off having moved up a little bit too much yesterday, but, that seems to be having some effect on Roku. But, I like the idea of this new Amazon Fire TV.

Hill: Before we stick with that, I just want to mention, one of our longtime listeners hit me up on Twitter in the wake of yesterday's episode and talked about his experience as a Roku consumer. And it did remind me of the fact that the interface of Roku is a good one. This isn't a perfect analogy by any stretch, but you and I are old enough to remember America Online, when it was the dominant platform back in the 1990's, and it was criticized toward the end of that decade for being so simple and so basic. But, for people who were just figuring out what the internet was, that was all they needed, just the basic interface of AOL and basic email and all that. They didn't need all the bells and whistles. Roku reminds me a little bit of that. For people who are just figuring out smart TVs and how to use this type of device, the interface is very smooth. But it's probably got a window that's closing.

Barker: So, the interface, and the comments from Bezos today on this new partnership and what this TV is going to look like is that it can sync it up to Alexa. So, that's one of the great attractions, you can just tell your TV, "Show Disney channel," or whatever. And if it's effective in routinely doing that, that will be a useful thing, given the number of times that, in my experience, I have to look for the remote, given that the children seem to move it around, or the dog seems to eat it, things like that. It takes up a certain amount of time, and now, just to now change channels physically on the TV set without the remote involves a PhD.

Hill: [laughs] That's true. Yeah. You don't have a dedicated space in your TV room where it's like, "This is where the remote goes."

Barker: The dog hangs out there.

Hill: Oh, well, that's ...

Barker: [laughs] The rules have been explained to everybody but Winnie. Well, they've been explained to Winnie, she's just incorrigible.

Hill: Well, I can't think of a better way for this episode to peter out than --

Barker: [laughs] Shout-out to Winnie.

Hill: -- a shout-out to your dog who's eating your remote control.

Barker: She's so good.

Hill: Except when she's eating the remote control.

Barker: Yeah, and other things.