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Introduction

Amazon (NASDAQ:AMZN) is attempting to dominate a new market: the smart home market. The definition of a smart home is a home equipped with lighting, heating, and electronic devices that can be controlled remotely by phone or computer. Simply, it is a home that future homeowners and generations will likely live in, and I believe Amazon will be one of the dominant players in this market.

Amazon is known for its e-commerce and cloud services, however, not a lot of investors see Amazon as a player in the smart-home market. After the acquisition of iRobot (IRBT), I strongly believe that Amazon will be a dominant player in this new and fast-growing market. iRobot brings vast household robotics to Amazon’s existing ecosystem of hardware products all connected by an AI assistant, Alexa.

Smart-Home Market

The size and the growth of the smart-home market is expected to be enormous. It is expected to reach a potential market size of $380 billion by 2028 growing at a CAGR of about 21%. Even with the magnitude of Amazon’s market size, profitability, and market capitalization, the potential smart-home services can bring is meaningful.

Amazon’s Position

Amazon already has a suite of products in the smart-home market connecting everything from doorbells, surveillance products, speakers, TVs, lightbulbs, thermometers, and monitors all controlled by Alexa.

Starting with doorbells and surveillance products, Amazon owns Ring. A company that specializes in making smart doorbells and home surveillance products. It allows the homeowners to see when the doorbell was rung, who rang the doorbell, and more while providing an integrated service of security alarms and cameras throughout the house. All of these features can be controlled on an app or through Amazon’s AI assistant Alexa. Further, Alexa can control smart monitors, light bulbs, TVs, thermometers, and speakers. Even products that are not made by Amazon connect to Alexa increasing the value proposition of owning an AI Assistant.

To further strengthen Amazon’s position in the market, the company has announced the acquisition of iRobot, a leader in automatic household cleaning robots. iRobot offers a completely automatic cleaning experience. Its product Roomba not only vacuums the house, it empties the dust and charges on its own. Further, iRobot offers an automatic mopping robot called Bravo. The integration of iRobot into Amazon’s existing smart-home ecosystem will bolster the company’s presence in the market.

Through these vast services, Amazon will be able to sell multiple Alexa devices in a household with an opportunity to cross-sell significant portions of the hardware it wholly owns including Ring. Therefore, Amazon’s presence in the smart-home market is expected to be strengthened upon the acquisition of iRobot. After all, a consumer will likely stick to Amazon’s ecosystem of products once it purchases Alexa.

Future Potential

Beyond the current market opportunity, I believe Amazon can monetize on this trend with the company’s scale through the expansion of available smart home hardware while creating more private label brands in the market.

The potential of smart-home appliances does not end with Ring, iRobot, thermometers, lightbulbs, speakers, monitors, and TVs. Other items such as curtains, smart gardens, refrigerators, washing machines, dryers, etc can be a suite of products that can be interconnected in the Amazon’s ecosystem. Most …….

Source: https://seekingalpha.com/article/4541533-amazon-set-to-dominate-another-huge-market-with-irobot