Amazon Research Facility Investment Could Stoke New IoT Business For Channel

Amazon's substantial investment in its secretive Silicon Valley hardware research facility will not only speed development of automated home security systems and appliances, but should also create new lines of business for IT resellers and system integrators.

Reuters News Service reported Wednesday that Amazon will pour an additional $55 million into funding and staffing its Lab126 division in Silicon Valley, the R&D facility behind consumer devices like the Kindle, Fire TV and the recently released Fire smartphone.

Amazon's investment aims to accelerate development of home-automation technologies, according to Reuters, another indicator that the Internet of Things is soon to become a reality.

[Related: Internet of Things: Ready For Mainstream?]

The Internet of Things holds the potential for introducing interconnected, Internet-enabled household devices capable of ordering goods and services, tracking everything from water usage to refrigerator contents to trash disposal, and managing access to entry points and alarms.

Eric Rockwell, president and CIO of San Diego-based managed services provider CentrexIT, sees the wave of home automation products just over the horizon -- technologies that will be spurred by Amazon's increased funding to Lab126 -- creating business opportunities for the channel in two phases.

First, resellers will get involved in distribution, especially companies that currently sell home alarm-monitoring and access-control services.

CentrexIT already has one client, a residential access-control vendor in business for some 50 years, transitioning to remote management of "smart" home alarm systems.

"They're switching the business model through a spinoff company that will remotely manage any alarm system for one management price. This particular company is a great example, and new companies are going to start up and try to do this, just like what happened with MSPs," Rockwell told CRN.

Those kinds of companies "are slowly going to transition to being managed service providers for the Internet of Things. All these devices get hooked up to the home network, and these companies are going to start managing it," Rockwell said.

It won't be long, maybe a couple years, after large numbers of homeowners start purchasing appliances that can be remotely managed over the Internet before the first news-grabbing attacks are launched targeting those devices. Those attacks might look like lists of addresses and alarm codes published on the Internet, or doors remotely opened and alarms disabled to facilitate burglaries.

That's when a new breed of vendors and solution providers will emerge who specialize in protecting home automation networks, Rockwell told CRN.

By 2019, Amazon will employ 3,757 full-time workers at the Lab126 facilities in Sunnyvale and Cupertino, a 27 percent increase in payroll, Reuters reported, obtaining much of the information from documents filed with the state of California that reveal Amazon will get $1.2 million in tax breaks as part of its agreement with the state.

Michael Oh, President and founder of Boston-based consulting firm and Apple reseller Tech Superpowers, views Amazon's Internet of Things gambit as a move in search of a new arena in which to compete against Apple and Google.

"Amazon comes from a very different world from Apple and a very different world from Google. But they are all converging into a particular space, developing devices that are hardware and software integrated," Oh told CRN.

Home automation will be a tough market to crack, with many different standards and vendors doing different things, and no dominant front-runner having yet emerged to drive consumer preferences.

"In that kind of ecosystem, you have to have many manufacturers jump on board to even get enough devices out there that people are interested in. It's a really tough market to claw your way up in," Oh said.

But Amazon has "to look at higher hanging fruit" because its rivals are already dominating the markets for smartphones, tablets, even watches and other wearables, and game-changing devices are not abundant.

While Apple has a slight advantage thanks to the ubiquity of its devices, "Amazon is viewing it as an open field right now and wants to just get a little ahead of the game," Oh told CRN.

NEXT: Channel Opportunities

John Hill, president and CEO of San Antonio-based solution provider Tech Sage, told CRN that "ipv6 will soon be on toasters, washers and dryers."

"Some of it is good, some of it is a little scary from the privacy aspect," Hill told CRN.

But those technologies will create opportunities for solution providers, especially once they are adopted by businesses that want to better control their facilities, including access onto their premises and environmental controls.

"I definitely think there's a play in it for solution providers such as us. We're there to support the business with whatever technology is going to benefit them," Hill told CRN.

Technologies like those to be developed at Amazon's research facility will drive everything from integrated consoles to the need for greater bandwidth to accommodate all the devices that will be communicating over home and office networks.

"They'll definitely need someone to integrate all of it. No matter how easy these companies make it to use, it's going to be very complex," Hill told CRN.

"Who knows what this Lab126 is working on," Oh said.

But whatever those projects entail, Amazon is going to try to establish itself as a leader in Internet of Things technologies before Google and Apple have entrenched themselves in those markets.

"And that window of opportunity is shrinking quickly," Oh told CRN.

PUBLISHED SEPT. 25, 2014