Amazon’s Ring deal sounds alarm for connected home rivals

When Jamie Siminoff pitched his start-up DoorBot on Shark Tank, he walked away emptyhanded. The reality television show’s panel of investors were unimpressed by his idea to squeeze a video camera into a doorbell, letting people see who is at their front door from anywhere via their smartphone.

Last week, Mr. Siminoff sold his video-doorbell company — now called Ring — to Amazon for more than $1 billion.

The deal was as much of a shock to the connected home industry as it was to the “sharks” who missed out in 2013.

As recently as last June, even Mr. Siminoff was confident that his company — which had by then grown to more than 1 million customers — could go it alone.

“I do think that the future of Ring is to be a public company,” he told the Financial Times in an interview. “I don’t want to sell it to another company.”

He also admitted that the prospect of competing with the likes of tech giants such as Samsung and Google in consumer electronics was “maybe even impossible,” as consumer expectations for the quality of any new gadget and its accompanying support rose.

Yet just months after that interview, Ring found itself on a collision course with both Google’s smart home unit Nest, which unveiled its own Hello video doorbell, and Amazon, which launched a Cloud Cam security camera as part of Key, its in- home delivery system. Both products were launched last year.

By selling to Amazon, Ring has ensured its survival. But other makers of connected devices for the home are worried that the e-commerce behemoth, once seen as a partner and distributor, is rapidly turning into a competitor.

Thanks to its Echo smart speaker, Amazon has quickly become a dominant player in the smart home market. Echo owners can control a huge variety of lightbulbs, thermostats and security systems, simply by talking to its Alexa virtual assistant.

Many electronics companies, which already rely on Amazon’s online store for distribution, have spent years tying their technology into the Alexa system. A lot of them will be “really uncomfortable” with the idea of Amazon becoming a “smart home” device maker in its own right, says Alex Hawkinson, chief executive of SmartThings, Samsung’s connected- home unit.

For instance, Amazon’s $120 Cloud Cam is priced aggressively to undercut rivals such as Google’s Nest Cam or Netgear’s Arlo. In December, Amazon quietly acquired Blink, which makes battery- powered security cameras and creates custom chips for low-powered, efficient video.

A prime driver for Amazon’s acquisitions is speed to market, says Jason Johnson, chief executive of August, a maker of smart locks that was acquired by ASSA Abloy, parent group of Yale locks, last year. “Right now the smart home is a land grab,” he says.

Acquisitions also buy talent. “These systems are much more complicated than meets the eye,” says Fred Bould, whose Silicon Valley-based design studio has worked on well-known products including Nest’s thermostat and smoke detector. “There is a lot of know-how and expertise that only comes with years of experience, so the acquisition shortcut makes sense if the price is right.”

The price Amazon paid was about three times Ring’s revenues last year of roughly $400 million, according to people familiar with the company’s finances.