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Why Amazon Acquired Ring

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Mar. 5 2018, Updated 3:10 p.m. ET

Amazon is acquiring Ring for over $1 billion

Technology behemoth Amazon (AMZN) is acquiring Ring, the video doorbell maker, for over $1 billion, making it Amazon’s second-largest acquisition ever. Amazon’s acquisition of Whole Foods for $13.5 billion last year remains by far its biggest acquisition to date. The acquisition has already caused ripples in the grocery segment.

The deal, which was first reported by GeekWire, gives Amazon a foothold in the home security business. Amazon acquired Blink, which makes wireless home-security cameras, in December 2017.

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The rationale behind Amazon’s acquisition of Ring

Ring produces not only smart video doorbells but also solar security cameras, in-home alert systems, and floodlight cameras. Amazon is going big on home automation with its line of Echo devices. It’s powered by its voice assistant, Alexa, the leader in the smart speaker market.

The acquisition is a threat to Alphabet’s (GOOG) Nest Labs, the Internet giant’s home automation segment. Alphabet purchased Nest Labs for $3.2 billion four years ago.

The deal is an addition to a number of acquisitions Amazon has made as it continues to disrupt several industries at a staggering pace. The company’s acquisition of Whole Foods seems to have already rewarded it, with the grocer representing $4.5 billion of Amazon’s total revenue of $60.5 billion in 4Q17.

The string of acquisitions and announcements Amazon has made so far this year, including plans to enter the logistic and healthcare sectors, has helped propel the company’s stock price up 27.2% YTD.

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