Homebuilders Are Choosing Amazon Alexa over Apple Siri
The Information has a scoop (N.B. Paywall) that builds on some previous Voicebot reporting about smart home features and new home construction. In addition to the deal that Lennar Homes has to include Echo products in new homes, the article reports that Shea Homes is building some retirement communities in California with Echo Dot smart speakers installed “directly into ceilings.” But, the more intriguing reporting is about how Apple is falling behind:
“Apple also has been targeting home builders. It struck a partnership with Lennar much earlier than Amazon, in mid-2016, to install Apple-powered smart home devices in Lennar homes. But within 18 months, Lennar pivoted to work with Amazon instead. Apple’s HomeKit, the system Apple uses for connected home gadgets, requires most device makers to install a specific authentication chip to work with Apple, and that has significantly limited the number of new devices getting to market.”
Apple has only 62 HomeKit products listed on its website. By contrast, Jeff Bezos stated in his annual shareholder letter earlier this month that Amazon Alexa now integrates with over “4,000 smart home devices from 1,200 unique brands.”
Choosing Alexa Over Siri
Apple has had some success with homebuilders. Trivselhus recently built a small community new homes in the UK and each unit was outfitted with WiFi, Apple HomeKit and HomePod smart speakers. The Information article points out that other builders such as Brookfield Home and KB Homes have also implemented HomeKit products in new construction, “but none of these can match Lennar’s scale. And other builders, such as Arizona-based Meritage Homes and Shea Homes, also say they considered Apple and opted for Amazon.” Meritage Homes vice president CR Herro commented:
Apple is closed source about what will talk to their system, so we shied away from it. I don’t want to restrict what I think the future could be because I have no idea what it will be.
Mr. Herro also told The Information that “Google, like Apple, ‘wasn’t ready for prime time,’” and that he plans a “substantial relationship with Amazon.” Home builders make decisions based on what will help them sell new units. If a feature does not increase sales or selling price, it is eliminated from future construction. So, the rapid growth of built-in smart home features suggests that U.S. homebuyers are expressing interest. And, with Amazon’s current smart speaker market share exceeding 70% in the U.S., home builders are simply playing the odds that new home buyers may already have a preference for Alexa-based products. This situation shows how the advantages of early market share leadership can lead to addition gains over time. In addition, you can see how Amazon’s broad product line with a variety of price points, will be increasingly more attractive to both home builders and home buyers over time.
The Rapid Rise of Smart Homes
Amazon has made a big bet on the home. The company sells products to consumers that are largely delivered to their home. It provides smart speakers, smart displays and other consumer devices that are optimized for in-home use. And, OC&C Strategy estimates that household smart speaker adoption will grow more than four times between 2017 and 2022. Amazon’s home builder strategy is well aligned with overall business strategy and it appears to be paying off right now at the expense of Apple which has been slow to expand its market offering.