retail news in context, analysis with attitude

by Kevin Coupe

The Chicago Tribune is reporting that Amazon plans to "boost staffing at its secretive Silicon Valley-based hardware unit by at least 27 percent over the next five years as it tests Internet-connected smart home gadgets such as a one-button device to order supplies." The move, the story says, represents a decision by Amazon founder/CEO Jeff Bezos "to double down on the No. 1 U.S. online retailer's hardware strategy. This is despite the lukewarm reception of Amazon's new Fire smartphone and some investors' criticism of its heavy spending on highly experimental projects."

The strategy, the Tribune reports, is "detailed in a little-known government document and by people familiar with the matter."

The story goes on to say that Amazon's Lab126 division, "which developed Amazon's Kindle and other consumer electronics devices, plans to boost its full-time payroll to at least 3,757 people by 2019, according to the agreement reached with California in June that would give Amazon $1.2 million in tax breaks. Amazon will invest $55 million in Lab126's California operations in Sunnyvale and Cupertino."

The dream, as the story describes it, is of "Internet-connected dishwashers, thermostats and other household devices that can 'talk' to one another as ways to fuel demand for products and services. But skeptics say many of these devices cost too much for most consumers and could take years to go mainstream."

Now, I have misgiving, and have expressed them here from time to time, about some of Amazon's recent strategic moves when it comes to hardware. As I've said before, this is a company that always has said that rather than selling stuff, it just wants to make it easier for people to buy stuff. I'm not sure how, but things like the Fire phone have struck me as crossing the line, as being too focused on aligning users with the Amazon shopping experience. It just seems craven.

That said, I have absolutely no doubt that the connected household is in our future. It'll probably happen faster than anyone expects. And I think that it makes sense for companies like Amazon and Apple and Google to be actively figuring out how to offer an ecosystem that will make it more attractive to users.

As for costing too much…did you see where Apple sold 10 million new iPhones last week? Make the offering attractive and compelling enough, and people find a way.

It's an Eye-Opener.
KC's View: