Amazon Billion+ Dollar Acquisition - RingBy: John Honovich, Published on Feb 27, 2018
The world's largest online retailer, Amazon, is now on a fast track to become the Western world's largest residential video surveillance manufacturer. After Amazon bought wireless video surveillance specialist Blink in December 2017, Amazon has now bought Ring (most well known for their video doorbells and Shaq commercials) for over $1 billion, in their second most expensive acquisition ever.
Revenue Estimate $200+ Million
IPVM estimates Ring's 2017 revenue to be $200+ million, based on Ring's previous public 2015 revenue statement of $100+ million and the strong growth rate in video doorbells / residential video surveillance in the past few years.
A year ago, Ring raised $109 million and had been evaluating further investment when they made this deal with Amazon.
Comparison With Arlo
The other big name in residential video surveillance making news recently is Netgear's Arlo, another very fast growing offering. Arlo is planning an IPO and is expecting a valuation of 2x that of Ring. Arlo, on the product side, is focused on wire-free video surveillance and is a direct competitor against Amazon's Blink.
Everyone Competing Against Amazon
However, increasingly every residential video surveillance manufacturer will be competing with Amazon. With Blink and Ring combined, they have leading products in wirefree video surveillance as well as doorbells. Moreover, Ring also has security cameras and a security system, but those are newer and less proven than Ring's doorbells.
Traditional Kits vs Amazon
What Amazon does not own is a provider of traditional 4 / 8 / 16 camera kits. However, that is less important strategically and going forward than wire-free and doorbells because residences value the convenience of having not to run new cabling, something that can be achieved with doorbell and wire-free cameras. Indeed, the traditional kits are challenged by the growth in the two areas where Amazon has now acquired.
Bad for The Chinese
The Chinese manufacturers have been working hard and spending money trying to break into the Western residential video surveillance market, e.g., Hikvision's Ezviz and Dahua's recent purchase of Lorex from FLIR.
However, given Amazon's already massive size and continued focus on growth, the Chinese manufacturers are going to be at a distinct disadvantage. While Amazon is likely to continue to let Ezviz and other Chinese brands fight for super low cost / low margin business, it is hard to imagine that Amazon will not favor in their marketing and positioning the two high-end product offerings they now own.
Ring Fits With Amazon Key / More?
The most obvious application where Ring fits is with Amazon Key, the new service that lets delivery people put packages inside one's house. Ring's doorbells are likely to be integrated and perhaps software upgraded to fit with this service, which helps solve the 'porch pirate', package theft issue.
How much more Amazon does with Blink and Ring is unclear now but it is fairly easy to imagine them packaging those two and other Amazon devices as 'end to end solution' for residential video surveillance and more that would be hard for most conventional video surveillance manufacturers to match.
Vote / Poll
Fairness / Anti-Trust Concerns
There are certainly fairness issues raised. Amazon is fundamentally a re-seller / distributor but now one who owns 2 of the fastest growing residential video surveillance products in the world. How do they treat their other vendors fairly given this position?
Now, owning 2 residential video surveillance manufacturers alone will not cause any anti-trust issues. However, Amazon overall, in the past year, has faced increasing criticism of anti-trust / anti-competitiveness behavior, e.g.:
- Bloomberg: Amazon Antitrust Concerns Emerge in Washington and Wall Street
- Slate: Crack Down on Amazon - An antitrust case against the retail behemoth isn’t likely or obvious. But it is possible—and necessary.
- New Republic: Amazon Must Be Stopped It's too big. It's cannibalizing the economy. It's time for a radical plan.
- WSJ: The Antitrust Case Against Facebook, Google and Amazon
That noted, if anything is likely to occur, nothing is likely to be done soon.
Ironically, the CEO of Ring just 6 months ago observed the power and danger of Amazon:
Now, at least, Ring's CEO is getting the benefits. Every other residential manufacturer is more likely to get the radiation.
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