The news outlets have been abuzz this week with Amazon ’s decision to cancel its recently announced plans to build a new headquarters in New York City. Relatively little coverage was given to the e-commerce behemoth’s announcement earlier in the week that it was acquiring Eero, a startup specializing in mesh networking solutions for the home. While acquisitions like this are always a surprise, Amazon certainly has good reasons to make the move. Its Alexa-enabled speakers have been a massive success, and the company’s stated goal is to have Alexa-based solutions (Amazon-branded and third party) throughout the home—even in remote crevices of the home that may have difficulty accessing a reliable Wi-Fi signal. The connected home is so completely dependent on robust and dependable Wi-Fi that it’s honestly a bit of a surprise that Amazon didn’t move on this type of acquisition sooner.
Mesh networking comes of age in the connected home
At a technology level, the Eero acquisition validates the mesh networking topology that has been rapidly gaining popularity with consumers for the past several years. Mesh networking-enabled router solutions, especially those from Netgear and D-Link, have become more prominent in U.S. retail stores. Qualcomm was one of the early champions of mesh technology, with specific chipset designs. The momentum of mesh networking will get another powerful boost with the introduction of Wi-Fi 6 (also known as the 802.11ax spec). The next-generation wireless standard promises to be faster than the current 802.11ac, and provide better performance in congested areas, from stadiums to homes full of connected devices.
It’s all about smart optimization and the cloud
Even with the benefits of mesh networking and more robust wireless speeds, all this connected home “goodness” gets diluted if it isn’t optimized properly. Since optimization effectiveness and efficiency is most often a function of scale, my view is that companies like Plume, which offers its own intelligent “adaptive” mesh networking scheme, may have a leg up.
Plume has long recognized that the consumer experience in the connected home is maximized only if your home network is “smart” and understands how you use Wi-Fi in your home. This allows it to distribute more capacity to the devices that require it the most. All consumers are not the same and have different usage models. At the end of the day, the potential of mesh networking can only be realized if the learnings of millions of users (the very definition of scale) can be interpolated in cloud-based fashion and applied to home users’ networks to provide the best possible performance. Plume’s relationships with large ISPs like Comcast, Bell Canada, and Liberty Global (just to name a few) provide Plume with multi-million user scale. This provides not only enormous analytical insight into how consumers are using their connected devices, but real-time data that facilitates continual performance usage model improvements in the home.
Another reason I believe Plume is in the mesh networking pole position is the visionary OpenSync initiative the company spearheaded last October. OpenSync is an open source software capability designed to enhance the delivery and management of emerging residential services, which offers numerous time-to-market and development benefits to chipset vendors, system integrators, and ISPs. There is simply nothing like this in the existing Eero playbook.
Where is all of this going?
All of this is not to say that the Eero acquisition by Amazon is doomed for failure. Amazon certainly understands the scale arguments and no company on the planet drives scale better than Amazon. Eero will certainly benefit from the scale benefits that Amazon provides, with aggressive pricing and bundle offers for its plethora of Alexa-enable devices. The acquisition also represents a tangential hedge bet in anticipation of the forthcoming rollout of 5G. Promising landline-like Internet performance and more, the new standard will benefit from mesh networking to intelligently distribute the capabilities throughout the home. All these data points validate the logic of the Eero acquisition.
Having said of all of this, I’m not sure that even Amazon’s size will guarantee the success of the Eero purchase. Many technology acquisitions, for a variety of different reasons, fail once the smaller company is absorbed. Even if this acquisition is properly executed, Plume may prove to be a worthy competitor in the intelligent mesh networking space and may not be out-scaled due to its existing relationships with several large ISPs. Only time will tell.