E-commerce giant Amazon is reportedly interested in developing new Internet-connected devices for "smart homes" like one-button devices for ordering supplies as well as wearables. Aided by $1.2 million in tax credits from the state of California, Amazon is planning a $55 million expansion of its Sunnyvale and Cupertino innovation laboratories, according to a report in Reuters, citing anonymous sources aware of the plans.
The state-funding agreement, approved by the Governor's Office of Business and Economic Development in June, is with A2Z Development Center, a wholly owned subsidiary of Amazon. A2Z's businesses include Amazon Lab 126, a research and development venture launched in 2004.
Under the terms of the tax credit agreement, A2Z aims to bring the number of its employees to 3,757 -- a 27 percent increase -- over the next five years. The agreement describes the facilities as "lab[s] of innovation, research and development" that produce hardware and software for a variety of consumer devices.
A ‘New Front’ in War with Google, Apple
Amazon Lab126 has helped to develop such devices as the Fire HDX tablet, the Kindle Voyage e-reader, the Amazon Fire TV streaming media player and the Amazon Fire Phone, the company's first smartphone.
Google has been actively acquiring companies that make technologies for the so-called "Internet of Things," which would enable network connections and automation for devices ranging from coffee makers to washing machines to home security systems. This year alone, Google paid $3.2 billion for the smart-thermostat developer Nest Labs and also acquired video monitoring company Dropcam and the artificial intelligence firm DeepMind Technologies, among many other companies.
Meanwhile, in June, Apple unveiled its iOS 8-based framework -- dubbed HomeKit -- for connecting and communicating with household devices.
For Now, ‘Smart’ Means ‘Entertainment’
Many companies are eyeing the potential for, say, smart refrigerators that remind owners that they are running low on milk or smart dryers that notify users of problems that could require maintenance or repairs. However, the greatest near-term potential appears to be in the area of entertainment.
The report from Juniper Research, for instance, found that -- between now and 2018 -- "nearly 80% of total smart home service revenues will come from entertainment services."