Amazon just acquired Eero because Wi-Fi is key to the smart home

Amazon will acquire mesh Wi-Fi maker Eero for an undisclosed sum, as the retailer continues making investments in the smart home. Eero formed in 2014 and built a product that quickly made the concept of mesh Wi-Fi a household name. Mesh Wi-Fi uses several access points in the home to provide better coverage. While, not the first to offer the service, Eero quickly gained adoption, even as most consumers in the U.S. still relied on their ISP for a Wi-Fi router.

Eero influenced other Wi-Fi vendors to launch their own mesh-like products, and even Comcast, the nation’s largest ISP, has been won over by the concept of mesh Wi-Fi. So why does Amazon care? First off, because good Wi-Fi is essential to a good smart home ecosystem. If you can’t get devices online, you can’t use Alexa to control them. A better question might be, why Eero?

It’s certainly not the only mesh Wi-Fi provider out there, not even the only startup providing mesh Wi-Fi. But Amazon has an advantage when it comes to making acquisitions in consumer products, namely that it can see what consumers buy. This information is invaluable to Amazon as it chooses which companies to buy and even which to invest in. Its decision to purchase Ring over some of the other smart doorbell players was likely guided in part by this information as well.

In the release announcing the deal, Amazon even references Eero’s 4.6-star product rating on Amazon.com. This is a similar strategy that Amazon has with its cloud services business, where it can see exactly which products are gaining ground among developers thanks to their API calls and in many cases, based on the traffic companies get as they are hosted on AWS servers. Amazon can use this information to select which features to invest in and which companies it may need to acquire.

Many companies talk theoretically about the future where access to information becomes a competitive differentiator providing transparency into other businesses by virtue of data analysis. Amazon is already living in this future and acting on it. It will also add to that storehouse of data.

So with Eero, Amazon gains control of one of the thornier issues plaguing the smart home — good Wi-Fi coverage — while also gaining the ability to see what devices I actually have on my network. Eero can determine many of the 30-something Wi-Fi devices on my network and knows how much traffic they are sending. Sometimes this is a good indicator of use, and sometimes, it’s just an indicator that the device is inefficient.

Amazon also has the potential to build out a business around another hot topic in today’s internet of things — security. Eero offers security and parental control services as part of Eero Plus that sells for about $10 a month. Customers get a password management program, access to a VPN service, regular scans for malicious traffic, notifications for devices joining the network and an ad blocker.

Eero isn’t alone in offering this type of service. At CES, Comcast rolled out something similar, and several companies such as Bitdefender, Cujo, and Norton have boxes that sit on a consumer’s network and provide a security service for a fee.  Now Amazon can too, only it can link it deeply into Alexa letting a customer have peace of mind for the physical home security and their cybersecurity. Or it can push Eero gear on Prime customers and then offer them the service for free. With that data, which basically covers everywhere I go on the web, Amazon would be unstoppable.

Finally, I would be remiss if I didn’t say that Amazon can also use Eero’s tech to turn Alexa into a mesh Wi-Fi router should Amazon deep that the way to go. I’m sure we’ll talk more about this on the podcast this week when more information becomes available.