Rivals Amazon.com Inc. and Best Buy Co.
are joining forces to sell television sets powered by Amazon’s Fire TV
operating system. Jeff Bezos and Best Buy CEO Hubert Joly revealed the partnership on Tuesday
at a Best Buy store in Bellevue, Wash.
The companies will sell 11 models,
starting this summer with TVs by Toshiba and Best Buy house brand
Insignia. Best Buy will feature the Amazon-powered TVs in its stores and on its
website and become the exclusive merchant of these TVs on Amazon.com.
“What we’re doing is so deeply integrated,” Mr. Bezos said, acknowledging
the fact that his company and Best Buy are often considered rivals. “It’s only
possible because we trust each other.”
The two companies say they have been partners for years, and Amazon products
such as Kindle e-readers have long been sold in Best Buy stores. But the new
partnership brings potential benefits for both companies as sales of so-called
smart TVs continue to climb.
It provides Best Buy
with access to Amazon’s online customers for the first time, while broadening
Amazon’s potential audience for products that feature its Alexa voice
assistant. Amazon, which has been expanding its physical footprint through its
own stores, has deepened its reach into consumers’ homes in recent years,
starting with Kindles and more recently with its line of Echo home speakers,
which star Alexa.
new in this partnership is the depths of the physical integration between the
software and the hardware,” Mr. Joly said. “The two companies are retailers but
they’re also product companies.”
declined to comment on whether Best Buy would pay a standard commission as an
Amazon merchant, or whether they negotiated a different deal. They didn’t
disclose prices for the TV sets, which will be branded as Fire TV Edition.
The partnership means that Best Buy’s house
brand Insignia will no longer produce sets powered by Roku Inc.’s operating
system. The retailer, however, will continue to sell Roku-powered TVs from
“Roku TVs are
available at Best Buy and across all the other major retailers, making it easy
for consumers to choose from dozens of Roku TV models,” said Tricia Mifsud,
Roku’s vice president of communications.
Roku’s smart-TV operating system ranked
second in North America in 2017 behind Samsung Electronics Co.’s Tizen,
according to research firm IHS Markit .While
Amazon’s Fire TV streaming devices have sold well, its smart-TV operating
system wasn’t ranked.
Roku shares were
down 8.6% at $32.90 in afternoon trading on Wednesday.
Best Buy, which was left for dead six years
ago, has bucked the retail shakeout by ramping up its e-commerce efforts,
promising to match Amazon on price and taking market share from competitors. It continues to operate about 1,000 big-box stores in
the U.S., where it leases out floor space to brands like Samsung and
uses store inventory to fulfill online orders.
“In the electronics
and appliance space, our combined market share is about 25%. They’re gaining,
we’re gaining, too,” Mr. Joly said in an interview last month, referring to his
company and Amazon. “It’s not a zero-sum game.”
By selling the Fire TV models on Amazon’s
site, Best Buy risks pulling sales away from its own website and its physical stores.
Most traditional retailers such asWalmart Inc. compete
to attract shoppers to their own e-commerce sites, although Amazon did strike a
deal with Sears Holdings Corp. last
year to start selling Kenmore appliances through
Best Buy said it
plans to sell only the Fire TV models on Amazon’s site and no other products.
The setup appears to embrace so-called
showrooming, a smartphone-era trend where customers browse items in a store and
then buy them online. Best Buy’s sales and service staff can help explain how
Alexa and Fire TV products work in store—and potentially sell shoppers other
devices in the same ecosystem. If the shopper decides to buy the set online,
Best Buy still makes a sale.
With the Fire TV
Edition sets, users can ask Alexa to turn the TV on and find shows to watch,
among other commands. Each TV will come with a voice-capable remote and can
also be controlled through an Echo device in the home. Mr. Bezos acknowledged
that not all people would want to control their TV with their voice, but said
the capability makes TVs simpler to use.
Like other smart-TV platforms, Fire TV
integrates apps, even those from Amazon’s video-streaming competitors such as
HBO and Netflix . But Amazon
relies on outside developers to integrate these apps with the Fire TV’s search
and discovery tools. Without the integration, someone commanding, “Alexa, watch
‘Westworld’” might not get the desired result. Mr. Bezos said some 190
providers are already integrated with the Fire TV’s universal search, including
Netflix, Hulu and Showtime.
In 2017, Amazon began selling a Fire TV Edition line from the lesser-known
brand Element at deeply discounted prices. The new TVs from Insignia and
Toshiba—and possibly other brands to be named later—are likely to cost more,
and will vary in size and price. Amazon said the Element TVs are sold out and
won’t be restocked.
Amazon may be hoping
to follow the lead of Roku, which began licensing its own smart-TV software to
manufacturers in 2014 and currently has upward of 150 models across 10 brands.
Its biggest U.S. partner, TCL, exclusively uses Roku for its smart TVs. By the
end of 2017, Roku said one in five smart TVs sold in the U.S. ran its software.
The company plans to release its own voice assistant.
here for the original article from The Wall Street Journal.