Amazon is changing the way gadgets are conceived

Most of us consider knockoff electronics, like those you might find on Aliexpress, to be a waste of time, but Amazon's dominance is making massive changes to how the business economics of hardware works.

This compelling story in The New York Times today assesses the impact of "high volume, low margin," a core Amazon philosophy, on the industry and how one company called Wyze used that to create a $20 camera on par with the Nest Cam. 

Companies are choosing almost exclusively to rely on Amazon, with Anker being an excellent example of this type of brand, and betting that they can survive on razor-thin margins but huge volumes -- and it's shaking up the entire industry.

If you can get a camera that's as good as the $200 Nest version for just $20, and it's positively reviewed on both Amazon and websites like The Wirecutter, you'll almost certainly spring for the cheaper version every time.

The economics of this will change the way companies try to create hardware, mainly because it's now a race to the bottom and well-designed software is always the best measure of success in this business. You can have a beautifully designed device, but if the software's a disaster the hardware doesn't even matter. 

The New York Times also points to how Amazon's algorithms are changing the way hardware is built in the first place. When Nest conceived the smart thermostat, I doubt Tony Fadell woke up and assessed the most popular trends online to decide what to build -- but that's precisely what these new startups are doing. 

They look at popular categories dominated by products with high prices, then try to create cheaper versions that work just as well. It's an unusual tactic that works so well because the companies that are incumbent frequently just don't know what happened to them: suddenly there's something that's a quarter of the price which works just as well as anything else. Case in point, Sonos' surprise when Google and Amazon pushed into dirt-cheap multi-room audio systems.

All of these changes make me wonder what the future holds for 'luxury' hardware brands like Nest, Apple, and others: will they need to race to the bottom too? Or will consumers value their devices even as the competition reveals the dirty secrets of their profit margins?

Oracle's dirty politics

This report from Recode is damning: Oracle has spent millions of dollars over the last year on an aggressive disinformation campaign against Google, trying to make the company appear negatively in the press regularly and seeding stories it knows will hurt.

Remember that Quartz article that discussed Google's accidental location tracking? That was sourced, investigated and uncovered by Oracle, and handed to Quartz on a platter. Sure, the story was accurate and the practice was stopped -- but the source of the story is concerning.

These types of campaigns aren't all that uncommon, but how secretive this is has turned out to be quite unique. So, why's this happening?

Well, Oracle wanted $9 billion in damages over Google's use of the Java API in Android and has repeatedly lost in court. It hasn't given up yet, and plans to revive the case again soon, but it's escalating the battle to new domains in an attempt to rile up consumers' feelings about Android and hurt the company in different ways. 

If anything, this seems like a grudge. Oracle has lost over and over, but can't let this go. It's not the first time it happened, last time it was Microsoft vs Google, but it's amazing how much of this goes on behind the scenes and how the press just ate it up.

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