Amazon – Surveillance state.

Amazon experiments with privacy.

  • Amazon released a series of products and services in what looks like an experiment to see how much privacy users are willing to surrender in return for fun and convenience.
  • Amazon only speaks to the market like this once a year meaning that every event is loaded with both hardware and software products, updates, and services.
    • First, Astro: which is a small dog-sized robot on three wheels that carries a display and a periscope camera as well as a series of detectors that can monitor your home.
    • It also has two cupholders on its back for those that are too lazy to carry their own coffee or deliver it to another member of the household.
    • The key to this product will be the intelligence that Amazon has infused into the device.
    • Given Amazon’s history here, I am not optimistic (see Google comments below), but the device will be upgradeable as Amazon improves.
    • No one is really sure what this device is for other than having a dog that doesn’t need to be house trained, which is why it is going out as an invitation-only product at launch.
    • This basically means that Amazon doesn’t know what it is for either, but is hoping that its fan base will figure something out.
    • Second, Echo Show 15: which is an upgrade to the Echo show 10 except that this time, it is designed to be attached to the wall.
    • This adds complications in terms of power and even the demo unit had an ugly wire going down the wall from behind the device.
    • It can do all of the things that the previous Echo Shows can do but I think it is neither fish nor fowl.
    • It is not big enough to be a TV or a picture frame, but probably too big to go the backsplash in the kitchen.
    • Another experiment by Amazon and only time will tell to see if it sticks.
    • Third, Glow: which is aimed at kids and, in addition to its onboard screen and camera, projects a 19-inch display onto the surface with which kids can interact.
    • Distant relatives can also interact with the on-device display while on a video call creating an enclosed system.
    • This will also require an additional subscription from Amazon for the content and apps on the device.
    • Again, this looks like another experiment but it may prove to be a good addition for users with distant relatives and who are already all-in on the Amazon ecosystem.
    • Fourth, Ring: Not to be outdone by 1st party products, Ring also made a number of announcements.
    • The concept home drone camera is back and this time is being made available to the faithful on an invite-only basis presumably for beta testing.
    • Also announced was a Ring Alarm Pro which is an update to its already shipping home security products.
    • This combines the Ring security system with an Eero router gibing internet backup, local processing, and storage for Ring cameras.
    • The base station stitches together the cameras, door locks, bells, motion detectors, smoke alarms, and so on to provide an integrated home security service.
    • This can be upgraded with a $20 subscription that enables cloud back-up but also professional monitoring by humans.
    • This competes directly with the home security services that are currently on offer but with much more machine intelligence as well as more compromises on privacy.
    • The home security market is ripe for disruption but there needs to be a balance between security and privacy.
    • Here, Amazon allows you to tailor this balance to one’s requirements but only time will tell how popular this proves to be.
    • Fifth Processing: Amazon’s efforts in silicon are bearing fruit with a new processor that improves Alexa’s ability to process voice requests locally.
    • Google has been doing this for more than two years which is an indicator that far from being a leader in voice recognition and AI, Amazon is way behind the leaders in terms of ability in this area.
    • However, its retail juggernaut has ensured that it is the market leader in digital assistants in the home.
  • Amazon is following its tried and tested strategy of chucking mud at the wall to see what sticks.
  • As a result, I do not expect to see all of these products still around in a couple of years as those that don’t work will get quickly killed off.
  • These announcements are mainly an experiment to see to what degree Amazon can invade its user’s privacy before they push back.
  • Ring has had problems in this area before and with cameras inside homes relaying video and sound, security becomes a company-breaking issue.
  • It will only take one well publicised and compromising hack to set this initiative back years.
  • This is why I am generally pretty cautious about this experiment in terms of it taking off in a big way for a while.
  • I remain unenthused by Amazon’s share price, as the shares are going broadly sideways as the fundamentals grow much faster and bring the valuation to more reasonable levels.
  • I have no urge to get involved with the shares yet.

RICHARD WINDSOR

Richard is founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his 11 year tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector.