Amazon throws the gauntlet at these 5 companies


Amazon (NASDAQ: AMZN) just unveiled a wide range of new products at its annual hardware event on September 28. Gadgets fall mainly into three categories: smart home devices, video chat tools, and connected fitness products. Let’s take a look at these new devices and see how they could help Amazon challenge five very different companies.

Staying one step ahead of Google in the smart home market

Amazon and Alphabet‘s (NASDAQ: GOOG) (NASDAQ: GOOGL) Google is currently the leader in the US smart speaker market. Amazon’s Echo devices controlled 69% of the market in June, according to CIRP, while Google’s Home devices claimed 25% of the market.

To maintain this lead, Amazon has further expanded its Echo line with the Echo Show 15, a 15.6-inch smart display that can be mounted on a wall like a digital photo frame or small TV.

Image source: Amazon.

Amazon launched its first Echo Show device in 2017. Google launched its similar Nest Hub device in 2018. Both devices connect to Amazon and other Google smart home products and cloud-based services.

Amazon has unveiled other smart home devices to showcase this expansion. It introduced a new Alexa-powered smart thermostat to challenge Google’s Nest Thermostat. Its Ring subsidiary launched a new Wi-Fi security system, the Ring Alarm Pro, and began accepting registrations to test its Always Home Cam autonomous security drone. Its subsidiary Blink also unveiled a new video doorbell.

Amazon has even introduced a new Alexa-powered home robot, Astro, which can provide home security, check on family members and pets, and provide the same services as its Echo devices on the go.

All of these devices, along with Amazon’s existing base of other Kindle, Fire TV, and Echo devices, give it a solid footing in the expanding smart home market, which Markets and Markets expects to grow at a growing rate. compound annual (CAGR) of 10.4% between 2021 and 2026. But more importantly, these devices will tie even more consumers to its e-commerce marketplace and digital services.

Challenge Facebook and Zoom in video calls

Amazon’s Echo Show devices are already competing with Facebook‘s (NASDAQ: FB) Portal devices and Focus on video communications (NASDAQ: ZM) for video calling, but Amazon’s introduction of Glow, a conferencing device for children, caters to a market neither company has yet directly targeted.

Amazon Glow has a vertical screen and projects a 19-inch touchscreen play area onto a table. This projection can be used to play games at a distance with the other person, or used to read books together or participate in other educational activities.

The Glow is still in the experimental stage, but it could give Amazon a foothold in the crowded video conferencing marketplace, something its corporate video platform, Chime, has failed to do until here.

Confront Fitbit, Apple and Peloton in connected fitness

Finally, Amazon has updated its line of Halo fitness tracking devices and apps that launched last year. It introduced a new Halo View strip, which adds an AMOLED color display while removing the microphone that caused privacy concerns in the first version. Like Google’s Fitbit devices and the Apple (NASDAQ: AAPL) Look, the Halo View tracks a user’s heart rate, skin temperature, steps, and other data.

Amazon also rolled out two new subscription health services, Halo Fitness and Halo Nutrition, which will join Fitbit Premium, Apple’s Fitness + and platoon‘s (NASDAQ: PTON) All-Access plan in the crowded connected fitness marketplace. Peloton shares, which had already fallen more than 40% this year amid competition concerns and post-pandemic sales slowdown, continued to decline after Amazon’s announcement.

Will any of these devices increase Amazon sales?

Amazon generates most of its revenue from its retail business and most of its profits from its cloud platform, Amazon Web Services (AWS). Amazon doesn’t disclose its hardware sales separately, and its new hardware peripherals are unlikely to significantly increase revenue on their own.

However, Amazon’s hardware business is still increasing revenue indirectly by locking more buyers into its Prime ecosystem, which surpassed 200 million global subscribers earlier this year. Amazon can also afford to continue selling more hardware devices at low margins (or even at losses) as AWS generates much higher margin revenue than its retail business.

When Amazon connects its hardware devices to its virtual assistant Alexa, its growing presence in smart homes, its huge online marketplace, and its sticky Prime ecosystem, they become crucial cogs within the Amazon machine that crushes small retailers and technology companies.

Amazon’s latest hardware efforts probably aren’t going to crush Google, Facebook, Zoom, Apple, and Peloton anytime soon, but they could disrupt their plans – or at least expand its sprawling Alexa ecosystem into the burgeoning smart home, video conferencing and more. connected fitness markets.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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