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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.
Amazon has made their first significant acquisition in the connected home space, buying wire-free camera manufacturer Blink.
We examine Amazon’s acquisition of Blink and what this means for the consumer video segment, as well as traditional surveillance manufacturers competing in this space, such as FLIR and Hikvision.
3 Dimensions of Differentiation
Within consumer video surveillance, there are 3 major dimensions of differentiation amongst competitors:
In addition, a 4th dimension is rapidly forming, which is integration with other smart home products and controls, such as Amazon Alexa, Google Home, IFTTT, etc.
Blink Strong On Ease Of Install
Based on our tests as well as user reviews, Blink is simple for inexperienced users to set up, requiring them to scan a QR code and push a button to pair cameras.
Blink Strong On Motion Accuracy, But Dumb
Additionally, Blink’s motion alerts have generally been accurate in our tests due to its use of a PIR for motion detection, which worked accurately at up to 50′ range in our tests. Using a PIR ignores many sources of video-based false motion alerts such as leaves, debris, etc.
For integrations, Blink lists Amazon Alexa and IFTTT, though some degree of functionality with Google Home can be achieved via the IFTTT integration. This makes their smart home integration support average, though at this point it is unlikely a direct Google Home integration will be added.
Totally Wire Free Market Segment
Wire free cameras, those using both batteries and wireless networking, are a strong draw for consumers. The problem with WiFi cameras is they typically depend on local power (either low voltage, or a local power outlet), requiring a cable run to each camera location. For homeowners, this can significantly increase cost, present barriers for those who do not know how to properly run cabling and cause aesthetic concerns (wiring running all over the place).
The totally wire free segment of video surveillance relies on built-in batteries and proprietary wireless video streaming to reduce energy consumption and minimize the frequency of changing batteries. Some systems employ a solar panel to keep batteries charged, however the solar panels add additional costs, and can be relatively large and unsightly.
Many consumers do not need high quality video nor intelligence in their systems. They simply want basic video that is easy to get set up. This is what manufacturers like Blink in the totally wire free market segment deliver.
Blink’s strongest positive is how established it is in this segment, being one of the first to launch, and producing a product that generally delivered acceptable performance within its price range and target market.
The challenge for Blink is that competitors realize the benefit of this offering and are rapidly going into the market. For example, FLIR’s Lorex consumer division recently launched a wire-free surveillance system, and consumer networking giant Netgear offers the Arlo wire-free camera. Major chipset makers have also recognized the potential market for these products, video chipset manufacturer Ambarella has a low-power chipset specifically geared to this application, making it easy for startups to build a software offering with reduced hardware R&D requirements.
Amazon Expansion Into Home Video Surveillance
This acquisition adds to Amazon’s existing 2 IP cameras (Amazon Cloud Cam Tested, Amazon Echo Look Fashion Camera Tested) and their installation service (Amazon Techs Installing IP Cameras Tested). These combinations show Amazon’s seriousness of being a major player in home video surveillance, and indicate the company is likely to continue to expand its offerings here, either through organic development or additional acquisitions.
This is bad news for major incumbents in the space, such as FLIR/Lorex, Hikvision/Ezviz, etc. Amazon is not only a major outlet for smart home products, they are also rapidly becoming known as a smart home base platform, via Alexa-enabled devices. Additionally, Amazon is not afraid of going to war with companies it deems competitors/threats, such as their ongoing spat with Google, much of which centers around Google’s consumer-oriented smart home products under the Nest brand, and Google Home device.
These factors make it challenging for traditional security manufacturers to create competitive offerings and establish a market that is large enough to be worthwhile, without becoming so large as to be a potential threat to Amazon, risking being ejected from Amazon’s website.