Amazon’s Blink buy sums up the smart home in 2017 … and 2018

Amazon has acquired the company that makes the Blink line of cameras and a newly launched $99 doorbell. The deal itself doesn’t come as a surprise since Immedia Semiconductor, the Boston-based company that makes Blink, has been on the market for months.

Amazon likely scored a relative bargain, much like Ooma did with camera maker Butterfleye (see the news section below). Smart device startups seeking an exit is one huge theme from 2017, as is a focus on security. Looking ahead to 2018, it’s worth noting that Blink’s planned $99 doorbell and existing $99 wireless cameras put price pressure on competitors in the the market.

If I were picking a macro trend for the smart home device space, I would bet on next year being the year of pricing pressure for devices. For example, one of the most compelling devices I’ve seen this year is the $20 Wyze camera that is built to modern hardware specs like a Nest Cam or Arlo, but costs so much less. The Wyze co-founders were former Amazon alumni and the company’s goal is to sell a bunch of cameras on razor-thin margins to command the market.

With Blink, Amazon gets a cheaper device, but it also gets some serious technical know-how. The Blink camera business was actually born out of a chip company that decided it needed a new and more lucrative market for an image processing chip it had developed.

Immedia Semiconductor made a chip that sold for a few bucks to DVD and Blu-Ray player companies, but after looking at the margins, CEO Peter Besen decided to build a product that showcased the chip’s battery-sipping image processing technology. The result was a wireless camera that launched on Kickstarter in 2014.

Amazon now has the cameras and future doorbell. It also now has its own image processing chip technology. As companies like Google and Apple build dedicated silicon for their mass-market devices, that could become an advantage. Even if it doesn’t Amazon now has another advantage in the smart home — a security offering.

As I’ve written in the past, home security is a gateway drug for home automation. Companies ranging from Nest to Comcast are trying to build compelling security offerings to entice consumers to adopt their platform and buy their devices and services. Meanwhile, security firms like ADT are pushing into the home automation market and trying to stop rivals from encroaching on its turf. For example, ADT is suing Ring to stop the sale of Ring’s security system.

In short, for what is likely a relatively decent price, Amazon now has a dedicated low-power image processing chip, a security offering and a leg up on the coming price war in connected devices. Meanwhile, Blink device owners will get continued support for the time being.