Amazon buys startup Ring in $1B deal to run your home security

Amazon.com Inc has agreed to buyvideo doorbell maker Ring, the companies said on Tuesday, inwhat analysts see as a growing bet on delivering packages insideof shoppers' homes and on home security.

The deal valued Ring at more than $1 billion US, a sourcefamiliar with the matter told Reuters. Amazon declined todiscuss the terms.

Ring is set to be one of Amazon's most expensive takeovers,after its $13.7-billion deal last year for Whole Foods Market.

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The world's largest online retailer believes that sellinginternet-connected gadgets from Kindle e-readers to its newCloud Cam will spark more shopping on Amazon.com. Ring offersthe company a popular consumer electronics brand that it mightnot have replicated internally.

More importantly, Ring's security devices could work wellwith Amazon Key, a smart lock and camera system that letsdelivery personnel put packages inside a home to avoid theft or,in the case of fresh food, spoiling.

Enhancing company's food delivery

"As Amazon moves more aggressively into the grocery deliveryspace... we believe smart security devices will be an importantfactor in driving user adoption," Baird Equity Research analystColin Sebastian said in a note.

Amazon's Alexa Fund, which offers venture capital tocompanies working on voice technology, invested in the SantaMonica, California-based Ring.

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Currently, Ring devices can integrate with Amazon'svoice-controlled assistant Alexa. Users of Amazon's Echo Showdevice can say, "Alexa, show my front door" to receive a livefeed of activity around their home via Ring cameras.

The deal creates potential for much more, analysts said.

"Amazon more than Ring can revolutionize home security,"Wedbush Securities analyst Michael Pachter said.

Competition for security firms

U.S. security and alarm company ADT could be the biggestloser, he added. Ring's "camera technology is far superior tophysical security ... With Amazon having roughly 100 millionPrime members, that's a big addressable market for them to startselling this into."

Shares of ADT Inc fell more than 2 per cent after thenews to close at $11.60 US. Amazon stock closed down 0.7 per cent.

Amazon was working on a competing smart lock with cameraprior to the deal, according to a separate person familiar withthe matter. Its decision to buy Ring underscores the taskstartups have trying to win in the home security space.

"For consumer businesses, it's going to be challenging tocompete with folks like Google and Amazon," said LukeSchoenfelder, chief executive of Latch, which sells smart locksystems to apartment building owners.

Amazon acquired the maker of Blink home security cameras forabout $90 millionUS late last year, Reuters reported.