Patents, Business strategy and clever Marketing Played a Key role
One of my business partners yesterday asked me the question:
What is your perspective about the recent news about Ring.com acquisition by Amazon?
My answer was clear:
This is one of the smartest moves of the company in 2018.
We discussed and talked for almost two hours about the opportunities that Ring and its products could give to Amazon. And then, he told me that I should write about this, using data to cement our arguments.
With this post, I will try to answer that.
Key Stat: Global Home Security Market to Be Worth $47.5B by 2020
According to a detailed research report by Markets and Markets, the global home security solutions market was valued at $28.3 Billion in 2014, and they published its forecast to $47.5 Billion by 2020, with a projected CAGR rate of 8.7% from 2015 to 2020.
But there is another interesting statistic to share:
In terms of geography, the Americas accounted for the largest market share of ~61% in 2014, followed by Asia and Pacific (APAC) with ~21%. The key driving factors behind the growth of the Americas region are the major key players located in the region and the growing concern toward security in various industry verticals, such as public places and residential areas, according to the report.
You will read later why this matters for Ring.
Ring: An incredible success story from directly from Los Angeles
The first time I heard about Ring was reading a very interesting post from Mark Suster, General Partner at Upfront Ventures on his “Both Sides of the Table” blog:
This Goliath imposed fight by ADT is particularly annoying for me because Ring is literally my family’s single favorite tech innovation of the past several years. It is a security doorbell (and now floodlight!) where for just $3 / month you can watch all video footage of people who come to the outside of your house including delivery people, solicitors or people in the neighborhood who perhaps shouldn’t be there.
Just how threatened in ADT? Ring is now arguably the fastest growing consumer product in the country and is now in a staggering 1 million homes in America and growing at an unbelievable clip. It is a product that you can purchase an entry-level camera for under $200 and pay just $3 / month in video fees in a security industry that was previously only accessible to wealthy families who could afford expensive protection.
This particular part of the post has a lot of insights. It was written by Mark in May, 17th, 2017 and in that time, he wrote that Ring was already in 1 Million homes in United States.
That’s a huge number in any possible measure, and if you analyze not only the product sales by themselves but the recurring revenue of the subscriptions, that’s a lot of generated capital every year.
First thing: Ring.com patents
From my perspective, this was the key reason why Amazon was able to pay between $1.2 and $1.8 Billion for the company.
Why? Because they not just registered its patents in U.S, but in Europe, Republic of Korea, China, U.K, Japan, Canada and Australia:
In accordance with Section 287(a) of Title 35 of the United States Code, the following list hereby places the public on notice of Ring Inc.’s (DBA: Ring®) (Previously: Bot Home Automation, Inc.) rights in United States Patents associated with the following products. The following list further places the public on notice of Ring Inc.’s rights in the listed patents and designs in various other jurisdictions, including Europe, Canada, Republic of Korea, Japan, Australia, and China.
This could be the perfect timing for Ring and Amazon, specially with the products and patents related to clean energy and related technologies.
Why? Because China is working hard to fight pollution in the country. So, this type of products could be the key for Amazon to enter in the challenging Chinese smart home market.
Second thing: Amazon has more data about Ring than us
Amazon invested in the company through its Alexa Fund, and that enable to the company to build the Alexa skills for selected products.
In the official blog of the company, they wrote about the new possibilities that Alexa could bring to Ring’s products:
We’ve listened to all your requests, and we’re happy to announce that select Ring Video Doorbells and Security Cameras now work with Amazon Alexa!If you have an Amazon Echo Show or Fire TV, you can now instantly access your Ring device by simply using your voice! The Ring Skill works with all Echo Shows, all generations of Fire TV, the second-generation Fire TV Stick and all Fire TV Edition Smart TVs.
The Ring Skill connects your Ring Video Doorbell 2, Video Doorbell Elite, Video Doorbell Pro and Floodlight Cam to your Echo Show and Fire TV. The original Ring Video Doorbell and Stick Up Cam are not fully supported at this time, but we’re currently working on adding full support for all Ring devices, so stay tuned for updates!
You can use Alexa to view activity and listen to audio from your Ring Video Doorbell or Security Camera, but at this time, you cannot speak to people through your Echo Show or Fire TV.
Alexa also works with Shared Users, so anyone connected to your Ring can also use Alexa to view activity.
Using Alexa to access your Ring is simple. By saying “Alexa, show my front door,” you’ll instantly get a live video feed of activity at your home. To stop viewing the feed, simply say “Alexa, hide my front door.” Note that “front door” is used here as an example, and this should be replaced with whatever name you used to label your Ring device (e.g. “backyard,” “side door,” “garage,” etc.).
You can watch here how Ring’s products works with Alexa:
Third Thing: Ring is already selling its products on Amazon
This is another critical piece of information about why Amazon bought the company.
We don’t know for sure about how this channel is performing for Ring, but Amazon does know this.
In the recent Fast Company’s article putting the company like one of the Most Innovative Companies in 2018, they wrote the following:
In 2013, Jamie Siminoff appeared on ABC’s Shark Tank to seek funding for a smart doorbell he called DoorBot. He went away without any money, but the publicity helped him bootstrap his gadget and the startup behind it. Under the name Ring, that doorbell — which lets you conduct video calls with people at your doorstep even when you’re not at home — has become a smart-home hit: In November 2017, the company, now valued at over $1 billion, sold $22.5 million of them in just one day on QVC.
$22,5 Million in one day? That’s a big number.
But there is another article from L.A Times which provides even more interesting numbers:
- $160 million: 2016 sales estimate
- 1 million: lifetime customers
- 3 billion: motion alerts or doorbell rings
- 1 million: video doorbells sold globally last year (referring to 2016), with Ring being about 80%
- 0: law enforcement requests for video fulfilled without user consent
Ring subscriptions + Amazon Prime
I want to conclude with a bold idea but so crazy idea. Just think in this possibility:
What if Amazon offers some Ring-related interesting deals its Prime customers?
Ring is offering its subscription with a base price of $3 USD per month or $30 USD per year.
Now, imagine the possibility is after you buy one of its devices, Amazon offers the same subscription for free for its Prime customers with an annual subscription.
This could bring a good network effect for the sales of Ring’s devices and another great reason to become in an Amazon Prime subscriber.
That’s just one possibility.
Ring’s Hardware Design expertise + Amazon Security Engineering expertise = Win Win
Now, the another big thing that Amazon could do for Ring, is to improve dramatically its Security features with the incredible Hardware and Engineering expertise inside Amazon’s HQs.
Updated September 26, 2019
In the last Amazon Hardware-focused event the last Sept,24 they presented a lot of new Echo devices, a new version of the eero device (I wrote about eero here before Amazon acquisition) and a new product called Ring Indoor Cam:
This event proves my points why Amazon made strategic acquisitions with Ring and eero.
Here is the completed list of the presented devices in the event:
- The Echo Dot with Clock
- All-new Echo (3rd Gen) - Smart speaker with Alexa - Twilight Blue
- The Echo Studio - High-fidelity smart speaker with 3D audio and Alexa
- The Echo Show 8 - HD 8" smart display with Alexa - Charcoal
- The Echo Glow
- The new eero mesh WiFi router / extender
- The Echo Flex - Plug-in smart speaker with Alexa
- All-new Ring Stick Up Cam Battery HD security camera with two-way talk
- The Ring Indoor Cam
- The Amazon Smart Oven, a Certified for Humans device - 4-in-1 convection oven, microwave, air fryer, and food warmer
- The Echo Auto
- The Echo Buds – Wireless earbuds with immersive sound, active noise reduction, and Alexa
- The Echo Frames
- The Echo Loop
Amazon’s path to $1 Trillion market cap
With key investments and acquisitions like Ring made by the company, Amazon is adding even more sources of revenue to its massive bank accounts.
Ring is just one of the recent key moves they have made recently to enter in U.S and global home market, and from my perspective, again: It was of the smartest steps they have taken in years.
The numbers and time will tell us when Amazon will reach $1 Trillion, but I strongly believe that this will happen very soon, in the upcoming 3 to 5 years.
If you have any comment, suggestion, you can contact me at Twitter.
Thanks for reading.
