Amazon’s Alexa fund recently led a $62 million Series C funding round into 11-year-old smart home device manufacturer Ecobee, according to CNBC.
The Toronto-based company primarily makes smart thermostats, but also sells smart security sensor packages, and recently announced it will soon sell smart light switches. The Alexa fund, which Amazon launched back in late 2015, invests in third-party hardware companies and help them make their devices compatible with Alexa, or, in some cases, embed Alexa into their devices.
The Alexa fund also led the Series B round Ecobee completed back in 2016, and last year the device maker introduced a new thermostat that has Alexa embedded in it. This latest funding round brings the Ecobee’s total funding to $146 million. Energy Impact Partners, Thomvest, and Relay Ventures, three US-based venture firms, joined Amazon in the investment.
Amazon’s investment comes shortly after it purchased video doorbell makers Ring and Blink, and considered buying smart lock maker August. The e-commerce titan is clearly interested in broadening its footprint in the smart home market, and likely hopes to leverage the immense popularity of its Echo smart speakers to get its users to purchase devices from companies it has acquired or invested in.
Its ongoing support of Ecobee suggests that the company is at least exploring the idea of adding smart thermostats, sensors, and light switches to its own product suite, which would allow it to build a more complete smart home ecosystem around the Echo products.
Ecobee’s primary competitor in the smart thermostat space is Alphabet-owned Nest, and given that Amazon decided to stop selling Nest products through its marketplace last week, it will likely target Ecobee’s devices at customers on its e-commerce site who otherwise might have purchased Nest products. Amazon may eventually look to purchase Ecobee outright the way it did with Blink and Ring, though it’s unclear whether the younger firm is looking to sell.
Amazon, however, still faces an uphill battle in a fragmented market long plagued by slow growth. The company likely hopes that it can convince its loyalists and other mass-market consumers to buy smart home devices, ultimately growing the overall market. But the consumer IoT space has seen slow adoption, and many companies are struggling to turn a profit.
Meanwhile, Amazon will need to confront a fragmented market with legacy home device makers like GE and Honeywell, as well as Nest, which now has its own long line of smart home devices along with its flagship thermostats.
Amazon may struggle to turn a profit in this difficult market, but the company takes heavy losses in many other business segments, and likely finds the data it could collect on consumers’ habits through its smart home devices an enticing incentive to compete. That data could be valuable for its core e-commerce business, as well as new initiatives like its recently reported package delivery service.
The US smart home market has still yet to meet the expectations many observers had in the early part of this decade.
The same issues BI Intelligence first identified back in 2015 still plague the space — persistently high prices, technological fragmentation, and consumers’ lack of a perceived benefit from the devices.
But the newfound popularity of smart home voice control has revolutionized smart home ecosystems across the country, and convinces more consumers to equip their homes with smart devices on a daily basis. The Amazon Echo, released in 2014, has become immensely popular and capable, awakening users to the utility of both voice control and smart home devices. This has prompted companies to rush to release competing devices and integrate voice control into their smart home ecosystems.
- Analyzes current consumer demand for smart home devices based off results from BI Intelligence’s proprietary survey.
- Forecasts future growth in the number of smart home devices installed in American homes.
- Analyzes the factors influencing the proliferation of voice control devices in the homes.
- Identifies and analyzes the market strategies of various companies that have integrated voice control into their smart home ecosystems.