Amazon will new Ring and Alexa-powered products that will undoubtedly bring new levels of convenience into users’ homes. What may be more remarkable than the products, however, is the resilience of Amazon’s device sales given its struggling reputation among corporate and tech watchdogs.
The company’s security cameras, made under the Ring brand name, have raised a host of privacy and security concerns. To address the issues, Amazon has folded in features that protect users’ home cameras from hackers, encrypt data going over Amazon’s servers so the company doesn’t have access to it and add transparency about how it partners with police departments.
Alexa-powered smart speakers have also raised privacy concerns. Always ready to listen, the speakers have prompted questions about who monitors voice recordings and how thoroughly records of your chats with Alexa are purged from Amazon’s systems after you delete them. More recently, the company raised security concerns with its Wi-Fi-sharing Sidewalk feature, which is on by default. More generally, the devices have spurred privacy experts to warn that they could violate child privacy laws and that parents should think carefully before introducing new levels of surveillance to children’s homes.
None of those concerns, however, appears to affect the popularity of Amazon’s Ring and Echo lines, as well as its Halo fitness trackers and Fire TV streamers. The e-tailer doesn’t break out sales from products in its earnings, but it commands towering positions in some smart home product categories. The Echo line essentially created smart speakers and held more than 28% of the global market in 2020, followed by Google’s devices, and 70% of the US market as of 2019. Ring security cameras top the market, followed by Arlo products. Amazon’s Fire TV is the most popular media streaming stick, with more than 12% of the competitive market.
Part of the appeal is price. Amazon offers convenient, functional products without the premium Apple charges. Like Apple’s products, Amazon’s products — whether made in house or by manufacturing partners — integrate nicely with each other. They also take advantage of the huge and loyal customer base of Prime memberships, which together with other subscription services earned Amazon nearly $8 billion in revenues in the second quarter of 2021.
The combination is hard to beat, regardless of whether you’re another tech company or a privacy advocate warning consumers to be careful.
“It’s easy to sell people new stuff when they already buy regularly and when you have their email information and shipping history,” said Michael Pachter, an analyst with WedBush.
Amazon’s devices aren’t its sole cause of controversy. The company has also come under scrutiny from labor advocates and antitrust regulators for its domination of the US e-commerce and cloud sectors and for its treatment of front-line workers, who fulfill orders from Amazon’s website. Corporate employees have alleged racial and gender discrimination in the workplace, in addition to organizing a walkout over Amazon’s impact on the environment.
The public is conflicted about the company, according to sentiment polling. Amazon is liked by 68% of US survey respondents, according to YouGov, and disliked by 15%. But more than half of Americans polled by the Pew Research Center recently said major tech companies should face more regulation, and 68% of respondents said tech titans have too much “power and influence in today’s economy.” A 2019 poll by CNBC found a majority of US respondents said Amazon is bad for small businesses.
A lack of love for Amazon might not trump pocketbook decisions, particularly when it comes to smart home products or its marketplace. Despite Amazon’s self-declared “obsession” with customer experience and the feel-good vibes evoked by the company’s smile logo, people respond to price and convenience, said Brendan Witcher, an analyst with Forrester.
The background-level convenience and ease of use are part of the reason why Amazon owns the smart speaker market in particular. “It’s like a member of the family,” Witcher said.