E-commerce giant Amazon.com (NASDAQ:AMZN) has been aggressively pushing deeper into hardware and had acquired two companies in recent years to accelerate those efforts. The tech titan scooped up Blink in December 2017 and Ring just a couple months later in 2018 -- two companies that were making smart security cameras and doorbell cameras.
Amazon has just announced another hardware-centric acquisition: Eero.
Beefing up the smart home
Amazon says the deal will pave the way for better connections with smart-home devices. "We have a shared vision that the smart home experience can get even easier, and we're committed to continue innovating on behalf of customers," hardware chief Dave Limp said in a statement. No financial terms were disclosed, but Eero had raised a total of $90 million in venture backing during its private life and was most recently valued at approximately $250 million in 2016.
Eero is one of the early pioneers of Wi-Fi mesh technology, which covers large areas better than traditional extenders by using multiple nodes that serve as network access points and blanket a home or office with coverage. Eero had already integrated with Alexa, allowing users to control their routers with voice commands, such as pausing a specific device's connection.
Amazon had previously invested $12.5 million in Luma, a different start-up developing Wi-Fi mesh technology, via its Alexa incubator fund. The market for Wi-Fi mesh routers is expected to reach $4 billion by 2023, according to Market Study Report.
Amazon has established itself as a leader in the broader smart-home tech race, and those gadgets all rely on solid internet connections to function and perform properly. Generally speaking, Wi-Fi standards advance extremely slowly, and mesh networks offer the biggest leap in performance in recent memory.
With router powers combined
There are plenty of ways that the Eero acquisition can accelerate Amazon's smart-home road map. Beyond just deeper integration between routers and other gadgets, there is a nascent category of smart speakers that double as routers. For example, NetGear launched the Orbi Voice late last year, a smart speaker/router combo that connects to the company's Orbi mesh system and also supports Alexa. ASUS announced a $220 Alexa-powered router called the Lyra Voice last month.
Amazon could potentially have similar ideas up its sleeve, turning Echos into mesh network nodes or adding Wi-Fi capabilities to the Echo Plus, which also serves as a smart-home hub. The possibilities are endless.
Google is in, Apple is out
Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) subsidiary Google has been making significant inroads in the smart speaker market, which ties directly into the smart-home space. Google jumped into mesh networking years ago, releasing Google Wifi in 2016. That product followed OnHub, the first router that Google made.
Google represents the largest and most direct competitor to Amazon's dominance of the smart home, so it's little wonder why Amazon feels compelled to get into consumer networking equipment, even as Apple just recently discontinued its line of Airport routers. Apple instead now sells the Linksys Velop mesh system; primary contract manufacturing partner Foxconn owns Linksys.
The Eero acquisition is a no-brainer, one that should reinforce Amazon's lead in smart-home technology.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Amazon and AAPL. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and AAPL. The Motley Fool has the following options: long January 2020 $150 calls on AAPL and short January 2020 $155 calls on AAPL. The Motley Fool has a disclosure policy.