22 July 2018

Rivals Amazon And Best Buy Team Up To Sell Smart TVs

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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.

“What’s 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.”

The 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 other brands.

“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 its marketplace.

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.

Click here for the original article from The Wall Street Journal.  
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