Amazon wants Echos throughout your home (AMZN)

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Amazon is increasingly positioning its popular Echo product line to be utilized throughout the home, rather than simply in one central location.

Two recent moves reinforce this market strategy by the online retail giant:

• The Echo Dot is now available in a three-pack bundle, giving buyers a $20 discount off the retail price. Upon releasing the revamped Echo Dot earlier this year, the company announced the Dot would be available in six- and twelve-pack bundles for slight discounts, so this falls in line with these earlier offerings.
• The company will be discounting the original Echo and the Dot as a centerpiece of its Black Friday sales, according to Mashable. The original device will have its price lowered from $179.99 to $139.99, while the Dot will be priced at $39.99 for the day, down from $49.99. The discount of the Echos will begin November 20, several days before Black Friday. The company likely hopes to allow consumers to use their newly purchased Echo devices to increase their spending in the holiday season.

Amazon is lowering the price of these products in part to incentivize consumers to place Echos around their home. When Amazon first released the Echo in 2014, the company positioned it as a portable device that could be transported throughout the home. Without a built-in battery, however, it seems consumers haven't adapted to this usage model. Now, though, it appears that the company is trying to leverage the revamped Dot to encourage Echo users to integrate the Alexa voice assistant that powers the devices throughout the home.

The retail giant is counting on its Echo Spatial Perception (ESP) to allow these duplicate devices to coexist. The ESP system allows multiple Echo devices to be in contact with one another, so that when a user starts talking to the device, the nearest Echo unit activates and responds, rather than multiple units reacting simultaneously. With this technology in place, Amazon can move to take advantage of it through Echo Dot multipacks.

BI Intelligence expects that companies will follow Amazon’s lead, eventually offering voice control as a platform within the smart home space. The popularity of the Echo prompted Alphabet to release the Google Home earlier this year, while Samsung and Apple are also reportedly working on competing devices. Apple, through its recent revamp of HomeKit, already offers voice control throughout the home, though it's through its mobile devices rather than through a speaker. While voice control throughout the home will not likely represent a huge monetization opportunity for Amazon in itself, it gives the company a way to enhance its existing revenue streams, namely selling goods.

The U.S. smart home market has yet to truly take off. At its current state, we believe the smart home market is stuck in the 'chasm' of the technology adoption curve, in which it is struggling to surpass the early-adopter phase and move to the mass-market phase of adoption.

There are many barriers preventing mass-market smart home adoption: high device prices, limited consumer demand and long device replacement cycles. However, the largest barrier is the technological fragmentation of the smart home ecosystem, in which consumers need multiple networking devices, apps and more to build and run their smart home.

John Greenough, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on the U.S. smart home market that analyzes current consumer demand for the smart home and barriers to widespread adoption. It also analyzes and determines areas of growth and ways to overcome barriers.

Here are some key takeaways from the report:

• Smart home devices are becoming more prevalent throughout the US. We define a smart home device as any stand-alone object found in the home that is connected to the internet, can be either monitored or controlled from a remote location, and has a noncomputing primary function. Multiple smart home devices within a single home form the basis of a smart home ecosystem.
• Currently, the US smart home market as a whole is in the "chasm" of the tech adoption curve. The chasm is the crucial stage between the early-adopter phase and the mass-market phase, in which manufacturers need to prove a need for their devices.
• High prices, coupled with limited consumer demand and long device replacement cycles, are three of the four top barriers preventing the smart home market from moving from the early-adopter stage to the mass-market stage. For example, mass-market consumers will likely wait until their device is broken to replace it. Then they will compare a nonconnected and connected product to see if the benefits make up for the price differential.
• The largest barrier is technological fragmentation within the connected home ecosystem. Currently, there are many networks, standards, and devices being used to connect the smart home, creating interoperability problems and making it confusing for the consumer to set up and control multiple devices. Until interoperability is solved, consumers will have difficulty choosing smart home devices and systems.
• "Closed ecosystems" are the short-term solution to technological fragmentation. Closed ecosystems are composed of devices that are compatible with each other and which can be controlled through a single point.

In full, the report:

• Analyzes the demand of US consumers, based off of survey results
• Forecasts out smart home device growth until 2020
• Determines the current leaders in the market
• Explains how the connected home ecosystem works
• Examines how Apple and Google will play a major role in the development of the smart home
• Some of the companies mentioned in this report include Apple, Google, Nest, August, ADT, Comcast, AT&T, Time Warner Cable, Lowe's, and Honeywell.

To get your copy of this invaluable guide, choose one of these options:

1. Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
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The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the smart home market.