Why Amazon wants the Internet of Things to deliver

Jeff Bezos Image copyright Getty Images
Image caption Amazon founder Jeff Bezos on a visit to India in November 2014

Amazon is known for wanting to provide everything that you buy and its latest foray aims to do just that.

Amazon Dash are buttons that you stick on household items. And with a click, you can re-order your dishwashing detergent from the e-retailer and it will arrive on your doorstep along with your other purchases.

Connecting things wirelessly to the internet is termed the Internet of Things (IoT). I recently made a programme about what is being hyped as the next big thing in tech. The reason is because of the numbers involved.

Imagine your household gadgets, smart meters, and other objects are all connected to the internet. For instance, wearable technology such as fitness bands that track your daily activities are recorded online (and tell you that you need to sleep more). Driverless cars are another example.

Thinking about how many gadgets there are in the world, it's not surprising that the IoT is being viewed with such excitement. ABI Research estimates that there are already more than 16bn wireless connected devices, an increase of 20% from a year earlier. By 2020, Gartner forecasts that the market will generate incremental revenue of more than $300bn.

No wonder Amazon wants a slice. The company is known for making virtually no profits despite strong revenues and a sizeable market share. For instance, Amazon has a dominant share of the e-book market and is one of the top 10 retailers in the United States, largely due to its low prices and undercutting bricks and mortar competitors.

Last year, Amazon posted a loss of $241m despite revenues of $89bn. For years, its revenues and profits have been headed in opposite directions. From 2007, Amazon's revenues surged from $15bn, but profits steadily fell from $436m to a loss now.

Its share price fell by about 20% last year but has since recovered some ground. However, analysts are wondering how long investors will support a minimally profitable business.

Founder and chief executive Jeff Bezos is an active experimenter, trying everything from drones to make customer deliveries, to gadgets such as the Kindle and Fire smartphone. Some have been successful, but many have not.

Mr Bezos will be banking on IoT being the next big thing and not just hype, and that his foray will pay off.

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