Explain It in 30 Seconds
Echo / Alexa
→ voice + smart-home interface
Ring
→ cameras + doorbells + security
combined ecosystem
→ see / hear / control / automate home devicesRing therefore fits Amazon's ambient-computing strategy more naturally than its retail business.
The Deal
Amazon and Ring announced completion of the acquisition in April 2018. [S37]
Amazon's FY2018 annual report recorded cash consideration of approximately $839 million net of cash acquired. [S38]
Why Amazon Wanted Ring
Alexa was becoming a smart-home control interface.
Ring supplied an important device category:
- video doorbells;
- cameras;
- home-security products;
- monitoring / subscription services.
The two systems could reinforce each other.
Ring + Alexa
The relationship predates the acquisition.
Amazon's Alexa Fund had invested in Ring before Amazon bought the company, and Ring had developed Alexa integrations. [S37]
After acquisition, smart displays and voice interfaces could become more useful with camera and doorbell data.
Ring detects event
↓
Alexa device surfaces information
↓
user respondsRing + Alexa+
Generative AI creates additional ways to summarize, interpret and act on smart-home information.
Alexa+ can therefore increase the value of connected security devices if it helps users understand events and automate tasks.
The exact feature set evolves quickly.
The durable subject is the structural relationship rather than a temporary feature list.
Subscription Economics
Home-security devices can create recurring service relationships.
That makes Ring strategically different from a device business that ends after hardware purchase.
hardware sale
+
ongoing service / subscription
+
Alexa ecosystem engagementWhy It Matters to Amazon
Ring gives Amazon a stronger position in the physical home.
Amazon's consumer ecosystem can then span:
shopping
entertainment
voice / AI
smart home
home securityThis broadens the number of daily interactions the company can support.
What Most People Misunderstand
“Ring is an Amazon-branded Echo product.”
No.
Ring remains a distinct brand and product family.
“Amazon acquired Ring only to sell doorbells.”
The strategic value includes smart-home integration and recurring services.
“The announced media estimate of the purchase price is the same as Amazon's accounting value.”
Use Amazon's own FY2018 disclosure when publishing a number: approximately $839M net of cash acquired. [S38]