So Ron Knox recently wrote a great piece for the Atlantic: “Amazon’s Dangerous New Acquisition”.
In it he covers Amazon’s planned purchase of iRobot, the maker of Roomba, and talks about how we should be concerned about Amazon’s latest foray:
Owning Roomba would give the world’s most dominant spy-tech maker yet another portal into our homes and lives. It could map where we live, what we own, and what it should be selling to its hundreds of millions of captured customers
The latest Roomba models capture information that Amazon, at the moment, doesn’t have access to. iRobot’s new operating system maps the floor plan and contents of the spaces in which it operates. The vacuums are now equipped with a camera so it can respond to commands like “Clean in front of the couch.” But that means it knows what kind of couch you have—and crib, and dog bed, and so on.
His piece dovetails nicely with my recent post on indoor maps.
Yes, in case you didn’t know iRobot’s latest vacuums automatically create an indoor map of your home. Here’s an image courtesy of iRobot’s website:
So, let’s now put on our super-paranoid hat and riff on this idea a little, but in jest of course…
Let’s say our mission is simple: make as much money as possible so our largest shareholder can hand out even more sub-orbital joy rides to his friends and family.
And let’s take a quick inventory of some of our successes so far:
- Global domination of online retail: Check. Achieved with Amazon.com
- Global domination of product search: Check. Also achieved with Amazon.com
- Global domination of warehousing & logistics: Check. Achieved with Amazon.com infrastructure
- Global domination of delivery: Check. Well on the way.
- Global domination of compute utilities: Check. AWS
So continuing with this Dr. Evil theme, what else could we dominate?
Some of you have opined that Amazon is clearly going after global domination of the home. After all, consider their products and acquisitions so far:
- Amazon Alexa
- Amazon Ring people monitors, err, I mean doorbells
- Amazon Blink security cameras
- Amazon Eero routers
- Amazon Fire TV Sticks
- Amazon Prime Video
- Amazon Music
Now the acquisition of iRobot helps complete the picture, right? Not only do we get Roomba robot vacuums and Brava robot mops but we also get Aeris air purifiers.
But I put it to you that Amazon’s strategy is not about dominating the home. Yes, sure, selling you some more gizmos for your house can help fund more sub-orbital joy rides and perhaps another very expensive yacht that won’t fit under a bridge, but that’s not where the true value is.
The value is in the data — and this value could be substantial.
I believe it was Clive Humby who originally coined the term “Data is the new oil” back in 2006. In 2011 Peter Sondergaard, formally of Gartner, took the concept further: “Information is the oil of the 21st century, and analytics is the combustion engine.” 1
So, now let’s say you’re anointed to be the new product manager in charge of global domination of data. More specifically you’ve been put in charge of a new product called “Complete View” which of course is designed to get a complete view of every consumer on the planet.
So with your company’s existing assets you’ve got some great ingredients. You already know what people are buying, when they are buying it and at what frequency. You know what music they listen to and what TV they watch. And from the home routers you know what people look at online. And you also know when people are at home, when they are away and when someone comes to their front door.2 Pretty cool.
The missing component?
You don’t have a map to stitch it all together and add another dimension to your data.
But if you vacuum up indoor maps via Roombas you can create a much more holistic picture for your Complete View product. From system setup and room designations you can learn which room is which. You can even record who sleeps in each bedroom from the users who want to enable commands like “Alexa, go clean Timmy’s room!” And of course from the camera you can associate objects with rooms as well as their current condition.
So now with the data tied to rooms and potentially also to individuals you can start to analyze this treasure trove to your advantage.
Imagine fast forwarding a few years and experiencing the following scenario: you’re sitting comfortably on your couch and suddenly Alexa perks up and says:
“I just wanted to let you know, your Aeris air purifier noticed a high concentration of ScaryPox-25 in Timmy’s bedroom. Do you want me to get Timmy a doctor’s appointment at Amazon One Medical? I can order an Amazon Zoox to pick Timmy up at 11am and take him to the doctor when you’re back from your errands!”
“I noticed the couch in your living room is looking a bit ratty. I found a great couch sale that’s going on right now. Do you want me to make some recommendations?”
So if Amazon were to create such a data product, what would they do with it? Would they compete with traditional data vendors?
The market for this kind of data is actually very mature and perhaps ripe for disruption. Organizations like Claritas have been in this kind of data business for almost 50 years. They can tell you where people live, their demographics, their psychographics, their lifestyles and their lifestage. And they can tell you about spending patterns and habits. And it’s all tied to location. One of the ways in which they do this is through something they call “segmentation”. Claritas’ segmentation product is called PRIZM and it’s actually rather fun:
If you live in the US (or know somebody that does), enter your ZIP code into Claritas’ web site here. Try it, you’ll enjoy it I promise!
The result you get is a breakdown of the different categories (or ‘segments’) of people that live in that ZIP code. The segment names do a wonderful job of describing what kind of people live where. For example in the infamous Beverly Hills ZIP code, 90210, the dominant segments are ‘Upper Crust’, ‘Movers & Shakers’, ‘Money & Brains’, ‘Gray Power’ and ‘Urban Elders’, whereas in ZIP code 36617, which is in Mobile, Alabama, the dominant segments are ‘Toolbelt Traditionalists’, ‘Bright Lights’, ‘Li’l City’, ‘Lo-Tech Singles’, ‘Struggling Singles’ and “Park Bench Seniors”. Each segment is backed up by details, so for example ‘Toolbelt Traditionalists‘ have the following lifestyle and media traits:
- Owns a Lincoln
- Eats at Long John Silvers
- Shops at Stein Mart
- Attends NASCAR events
- Cruises on Carnival
- Visits AARP
- Listens to Gospel
So what am I saying here? Is Amazon going to go full tilt and swoop in on Claritas’ legacy business? They certainly have the means and the raw data to do it.
But will they?
It seems more likely to me that Amazon would want to keep the data proprietary and for only for themselves.
I think the answer is simple. They don’t have to sell or license the data because they already have a derivative product.
It’s called advertising.
Amazon can use all the data they collect to support their mushrooming ad business3. So if your company wants to reach families who live in 3 bedroom homes, with three kids and a dog, who buy lots of Keurig coffee pods and watch Fleabag then, boy, do we know exactly who those families are! We’ll put up an ad front and center when they search for your product on Amazon. The conversion rate will be amazing — just you wait.
Am I being too paranoid?
Does Amazon’s planned acquisition of iRobot/Roomba mean that Amazon is going to use it to help create a world dominating “Complete View” data product? Or does it simply mean that Amazon is trying to trounce Dyson?
1 The metaphors have been discussed at length by many. I throught Amol Mavuduru’s article on this topic was rather good: “Is Data Really the New Oil in the 21st Century?”
2 Yeah, I know Amazon may not actually do all this snooping, but it’s fun to speculate, right?