Amazon Enters Semiconductor Business To Get Deeper Into The Smart Home

annapurna

A year ago, in January of 2015, Amazon bought chipmaker Annapurna Labs for around $350 to $370 million.

Some people back then thought (understandably so) that it was a move to bolster Amazon Web Services. Amazon might start going deeper into building its own servers. (Similar to Facebook.)
​But instead Annapurna Labs introduced chips for connected devices a few days ago. (press release)

The Wall Street Journal (paywall):

Annapurna Labs, an Israeli company purchased by Amazon last year that is now based in Silicon Valley, said it is targeting customers designing home equipment like Wi-Fi routers, data storage gear and media-streaming devices.

Annapurna said it was trying to address the issue that many home devices are severely limited in computing and networking power. Its Alpine chips, the company said, pack up to four processors and multiple kinds of networking technology to boost the performance of its customers’ products.

Like the chips in smartphones, the alpine chip is based on ARM. This makes sense as ARM chips can be very energy efficient (and therefore were the first choice for smartphones) and because of the smartphone supply chain all components needed for any connected device are already ready for the taking. ​Geekwire:

However, don’t expect “Amazon Inside” stickers to start showing up on your computers in the same way Intel has marketed its devices. Annapurna’s chips are more suited for networking and storage tasks, which may not benefit from Amazon’s name on the package as much. Manufacturers are the target audience instead, as they’ll be able to turn to Amazon for the parts they need to build their smart devices.

NAS manufacturers like Synology, QNAP or Netgear, for example, are already using Annapurna chips to handle multicore processing.

Of course, plans for the chips go further, and, at least at the moment, it looks like a realistic scenario that Amazon might become a serious player in the chip business in the near future. International Business Times:

Another big name with plans to work with Amazon is hardware manufacturer Asus. The company describes Annapurna as having “one of the most advanced and flexible silicon solutions in the marketplace,” highlighting the growing need for increased flexibility and computing power as consumers demand more from home Wi-Fi routers.

Beyond collaboration with hardware partners, Annapurna plans to release a hardware development kit so manufacturers can craft their own designs based on the Alpine platform.

Amazon is adamant to become a key player in the smart home sector. For this to happen Amazon is working at several fronts at not only pushing its products (Echo/Alexa, Dash button, Dash) but also to be a partner for startups and other companies. There is AWS (now with dedicated IoT-APIs), the Alexa fund for investing in smart home companies and Launchpad, a portal to help startups sell their gadgets. Amazon is working hard to be there if a startup needs distribution and more.

Why not throw dedicated chips into the mix, maybe even optimized to Alexa’s voice interface in the future?

We talked about Amazon increasing its options here a while back and why what is a smart strategy for a world of connected devices, the “Internet of Things”:

 In a consumer technology world that is rapidly changing a retailer better has good partnerships with the up-and-coming brands. Increasingly, comparatively smaller niche technology brands will matter. (Smaller in contrast to the giants of the 20th century.)

Launchpad could also in some sense be a preliminary stage to aquisitions by Amazon. How better to see what kind of the new consumer technology works in the market than to be one of the strongest distribution channels for it?

Given the coming convergence of e-commerce and newly connected product categories to new kinds of services (and the potential for Amazon by being vertically integrated just like with EchoFire TV or Dash Replenishment Service), Amazon is cleverly keeping all (hardware) options open with Launchpad as with the IoT button.

Also, don’t be surprised to see the next generations of Fire tablets and Fire TVs to come with Annapurna’s chips. Amazon might, in the end, have learned a valuable lesson from Apple’s successful vertical integration of software and hardware design right down to inhouse chip design.

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