Why Did Amazon Buy Eero? Wi-Fi Users Covet Simplicity, Security

Xconomy Seattle — 

Being able to call on Alexa, the voice of Amazon’s Echo virtual assistants, to play a song or read a weather forecast requires a working Internet connection, of course. Amazon has now opened new avenues to put its own stamp on Wi-Fi routers and other home networking equipment, following the company’s purchase of San Francisco-based Eero, which Amazon announced Monday.

Amazon did not say how much it’s paying to acquire Eero, which sells standalone Wi-Fi routers, as well as multi-packs designed to let consumers set up mesh wireless networks that beam Internet signal to all rooms in their homes. (Eero was founded in 2014 and raised at least $90 million in venture funding, according to regulatory filings and media reports.)

The deal is the latest sign that Amazon will be one of the key players as more consumers transform their residences into smart homes. The connected home is one byproduct of the Internet of Things, whereby users can control everything from the thermostat to kitchen appliances remotely using computers and mobile devices.

More households are also opting to “cut the cord,” using the money they previously spent on their monthly cable television bill to pay for streaming television and movie services like Netflix (NASDAQ: NFLX) and Hulu.

In many cases this saves people money, but it can also put a bigger strain on their home Internet networks, says Jeremy Hitchcock. He’s the CEO of Minim, a Manchester, NH-based developer of software for managing home Wi-Fi equipment and network security.

“People are installing many, many devices,” Hitchcock says. Research suggests that in five years, an average home will have 20 to 50 devices hooked up to the Internet, he says.

The selling points of Eero’s home Wi-Fi systems include their sleek design and ability to reliably emit a strong signal. Another aspect of the devices that have made them appealing to consumers is that it’s relatively easy to set them up and tweak their security settings using Eero’s mobile app, Hitchcock says.

Those features may help explain how Eero has been able to charge $199 for one of its routers, when models sold by competitors like TP-Link cost half that amount. (A three-pack of Eero routers retails for $499.)

Security and privacy are becoming bigger concerns, even among non-techies, as news of the latest hack or data breach becomes a more regular occurrence. One of Amazon’s other smart-home holdings, connected doorbell maker Ring, made headlines last month after some Amazon employees were allegedly given improper access to video footage captured by Ring cameras.

Hitchcock points out the average homeowner is not a technology or Internet-security guru, so tools like Eero’s app that simplify management of device-control permissions, for example, can help it and other router manufacturers compete with lower-cost alternatives.

It has become increasingly clear that Amazon envisions its Alexa-voiced devices as the hub, or brain, of its customers’ connected home. But Hitchcock says he doesn’t think it’s likely Amazon will develop a new Echo device that also functions as a Wi-Fi router—something that might to be easier for the company to pull off now that it’s acquiring Eero.

“I don’t think it’s going to be the same box,” he says.

Meanwhile, the other companies competing with Eero to sell high-end, elegantly designed routers include independents Starry and Luma, as well as the Orbi and Velop product lines sold by Netgear and Linksys, respectively.