The Empire Strikes …

Just a quick follow up to the post “Retail Drives Smart Home Innovation”…

One area of search where Google is being robustly challenged is product search. More consumers now initiate their search for products on Amazon than they do with Google. Think about that a minute. In fact, the CEO of WPP, the world’s largest advertising company does. When asked what worries him most when he goes to bed at night, his response was Amazon.

This matters. Retail spending accounts for 22% of the $18 trillion U.S. economy, and is a key reason for Amazon’s efforts to extend their retail ecosystem to the smart home. Combined with consumer electronics and CPG, retail contributes to 35% of Internet advertising revenue.  Which makes it important for Google to counter Amazon’s initiatives. The more entrenched consumers are in the Amazon ecosystem, the more likely they are to make Amazon their shopping destination. And the less likely they are to depend on Google for search.

product search

There are a few key takeaways for the smart home. The first is that the big prize with the smart home is retail. Another is that a device strategy is at the core of many of the companies focused on the smart home. Further, it is devices for entertainment – video, music, gaming – that are a strategic priority. Amazon, Google, Snap, Facebook … the list of superstar companies pushing entertainment devices is staggering. Which makes sense. Entertainment is central to the home. It also represents the most complicated wireless problem to solve given the amount of data that needs to be transmitted, and the need to synchronize the packets of data. So, whichever company can provide a compelling solution for entertainment will probably establish an enduring presence in the smart home and reap the benefits that come with it.

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