The Battle for the Smart Home Intensifies as Amazon Buys eero

This week Amazon announced it has signed an agreement to acquire home mesh networking company eero. It’s the latest shot fired in the growing battle for dominance in the smart home and represents a savvy move by Amazon to catapult itself into a leadership position in home networking. Some of the company’s biggest competitors in the smart home market including Google and Samsung already have competing products in the space. Meanwhile, Apple recently exited the home networking space, in a move that’s looking more ever-more questionable over time.

Least Sexy; Most Important

Home routers may well be the least exciting piece of hardware anybody buys for home use. However, as the WiFi connection to your home broadband pipe, they perform a critical job that ultimately dictates the quality of experience you receive on every connected device in the house. Moreover, anyone who’s struggled to set up a router knows that it can be a challenging job that forces the consumer to deal with strange naming conventions and esoteric hardware settings.

Eero is a pioneering brand in the mesh network market. Instead of using a single router to cover your entire house, mesh networks use multiple boxes spread out around the house to ensure more robust coverage and faster speeds. In their eero piece on IDC.com, my colleagues Adam Wright and Brandon Butler note that eero owns about 15% of the total mesh WiFi market, which is expected to grow well beyond a billion dollar market in the coming years.

Products like eero not only provide better WiFi coverage inside the home, they also make the setup process dramatically easier than traditional routers using apps that walk you through the process. Perhaps the most interesting piece of this acquisition is the eero services component. Today, the company offers an eeroPlus service that includes a range of security features and add-in apps for an annual fee of $99. I can see Amazon adding more service options and features to this bundle over time, including divergent offering such as its music and video services.

Amazon’s eero Play

Amazon has said it won’t make changes to eero’s branding or operating structure after the acquisition goes through. However, you can be sure of one thing: eero is going to become the top result for all home-networking searches on Amazon.com. You’re also likely to see the company begin to push eero bundles with its long and growing list of smart home products, which includes everything from Echo speakers to smart plugs to connected cameras and Alexa-enabled microwaves. Over time, I would expect to see the eero setup app evolve to make it even easier to add these types of devices to the network. Over time, I think it’s likely will see eero hot spots integrated directly into other Amazon products, including its echo line of smart speakers.

With eero, Amazon will now have access to information about all the devices on a home network. This insight will not only help it drive new experiences on its own-branded connected devices, but it will also give it leverage to ensure a higher quality of service for those devices and the services it offers. It’s this access that has some criticizing this deal, and it will be incumbent upon Amazon to make sure that customer privacy and security remain intact.

It’s a challenge facing the other players in the home networking space, especially those who also have smart home aspirations and network-based services. Google, perhaps Amazon’s strongest competitor in the smart home space to date, has its own mesh networking product called Google WiFi. Samsung, another player in the smart home market, offers a product called SmartThings WiFi. Traditional networking company Netgear also has a very competitive product in the space called Orbi.

Apple’s Missed Opportunity

While it also has smart home aspirations, Apple is notably missing from the home networking category and its hard to see this as anything but a missed opportunity. Especially when you consider that Apple was a player in the router market for years with its AirPort, Airport Extreme, and Time Capsule WiFi routers. The company stopped refreshing its products years ago and officially exited the market as supplies dwindled in 2018. Arguably, a significant part of eero’s success came from offering an easy-to-setup experience that many reviewers said was Apple-like in its simplicity.

In addition to being able to help drive a better home-networking experience, Apple could also drive home its continuing story about privacy and security, offering a clear narrative about what it is and isn’t doing with the data collected from a home network. And this all becomes even more relevant as Apple moves aggressively toward offering more services including the widely expected video service this year.

While Apple sits this market out, Amazon, Google, Samsung and others will continue to press hard into the space, leveraging their early advantage. Expect to see eero prominently featured on Amazon’s search pages, and its services bundle to expand over time. Watch for 2019 to be an exciting year for the world’s least sexy but vitally important device category.