The hidden player spurring a wave of cheap consumer devices: Amazon

Farhad Manjoo, New York Times:

On the surface, the camera doesn’t sound special. Like home internet cameras made by Nest or Netgear, the Wyze device can monitor an area for motion or sound. When it spots something, it begins recording a short clip that it stores online, for access on your phone or your computer.

But the WyzeCam has one groundbreaking feature that no rival can match. It is being sold for such an unbelievably low price — $20 — that it sent me tunneling into the global gadget industry to figure out how Wyze had done it. That, in turn, led to a revelation about the future of all kinds of products, from cameras to clothes.

And:

Nest’s and Netgear’s comparable indoor cameras sell for around $200 each, while Wyze’s device goes for $20 plus shipping if you buy directly from the company’s website.

And, most importantly:

Wyze did not create a home internet camera for a tenth of the price of rivals by skimping on quality. Though the camera comes in extremely spare packaging, it otherwise offers many features you would expect in big-brand devices, including tough security.

This is a remarkable story, with Amazon leading a wave of coming disruption, allowing incredibly inexpensive Internet-of-things gadgets to skip the traditional retail stepping stones and markups, ship directly to you at just about cost (plus Amazon’s markup, of course).

Reminds me of big-box disruption, where a seller would bring a parade of cheaply made goods into their offices, pick one that combined “good enough” quality with the lowest possible price, then buy at huge volumes to stock their stores.

Very interesting read.



  • Alex Hon

    Clearly people still care deeply about quality and experience, otherwise premium brands like Apple wouldn’t exist. But does this mean every new entrant has to compete on price to survive?

    • Mo

      When human labor is commoditized, fewer people can afford anything more than commodity goods.

    • rick gregory

      If a company wants to charge me $200 for a camera instead of $20 it’s going to need to deliver a significant upgrade in capabilities, quality or both.

      Apple 1) isn’t several times the price of comparable competition and 2) is significantly better than the truly cheap commodity stuff.

      • Alex Hon

        Comparable is the key. An iPhone isn’t really intended to just make phone calls, otherwise the Nokia 3310 that came out earlier this year would be the perfect phone!

        • rick gregory

          Precisely. But an iPhone is in the same general range as a Samsung S8/Note 8, the high end LGs, the Pixel 2, etc. So I’m not really paying much more for Apple if any more.

          IN contrast, this camera does HD, gives you online recording and generally seems comparable to a Nest or Ring… at 1/10th the price. It doesn’t have automation integration (no Alexa, etc) but if they add that and don’t jump the price drastically, I’m getting the same thing for a fraction of the money. Is It as pretty as the Nest? Well… no. But it’s a camera.

          • Alex Hon

            Too bad we can only go by the specs we know so far. Hopefully someone will pit it against other pricier 1080p cameras and share the findings. I would assume some (maybe not all) of them will have better components (like camera lens and sensors) that allows them to take higher quality videos.

          • rick gregory

            Maybe but there’s also the purpose of the video. I don’t care about color accuracy (past the basics) etc. It’s a home security cam, not a video camera that’s used to make movies.

  • rick gregory

    two thoughts…

    One, this has no home automation integrations so it’s not quite there unless someone wants a standalone camera. However they actually have a ‘vote for what we should add’ section on their amazon page with home automation choices which is kind of cool.

    Second, this is what IoT stuff needs to do if it’s ever to take off in earnest. Right now, all of the players I’ve seen want $50+ for most things and what I say + it’s usually closer to $100 per device. That’s fine for dabbling with a couple of devices but it’s not going to work for the middle class person who’s curious, would like a camera and maybe a couple of other things but doesn’t want to spend $500 just for a small sampling of devices.

    “Hey, this home automation stuff is cool! What did it cost to do all of this?”

    ” Oh, just a bit over $2000…”

    “…”

    • Alex Hon

      This was exactly the reason I passed up on making my whole home “smart” when I was doing a gut-renovation last year.

      Not sure if I would do anything differently given another chance today.

  • GS

    That device seems to have disappeared from Amazon after this story.

  • Dawn Alva

    I am a US company that spent the last 5 years building my brand around a niche apparel (US patented) product for new moms. I have employees and happily pay US taxes payroll taxes (very little federal taxes since we are not “very” profitable, and city business taxes, warehouse rental, operation expenses, all in the US. What these and other articles do NOT address is that what this means to US economics.

    In the past, product price went like this :

    25% manufacturing cost of good produced/sold – Mostly Oversees 50% to retailer – brick/mortar, employees expenses, etc. – US 25% to the brand owner/company for all the operating costs, etc. in the US

    The beginning of the year before Amazon made its changes.

    25% – 40% manufacturing – Still oversees. 15% – 30% to Amazon (depending on retailer services/fees) – in US 60% – 30% to brand owner (we had to lower prices to get “visibility” on Amazon pages – still in US

    NOW the math is this for those international Chinese (and India) companies that directly compete with our US companies for our US dollar

    25% – manufacturing – still oversees 15% – 30% to Amazon (depending on retailer services/fees) – in US 60% to 30% GOES OUTSIDE the US for these “cheaper” products

    My business has seen our sales cut in half in 3 months time. I have had to lay off employees, and Christmas is very frugal (I have a 5 year and 10 year old). It isn’t that they “ripped” off my patented product.

    They FLOODED the category with the same product over and over at half the cost of ALL the US products/brands. Which means you can not find any of my products or my US competitors since we get pushed to page 5, 8 10, etc.

    Let’s add that there is no $ expense to enter the product into US. So their prices are reflective of their labor cost, cost of living, and Chinese taxes (do they have them in a communist system?) I tried to enter the Canadian market and my customs tariff taxes went from $28 dollars a product to adding $10 for each. Now that is a protection of their countries brands.

    I wonder how long our US economy can keep moving forward if all the small/medium companies and its innovations that come from us are eliminated by Amazon and Walmart.

    • GlennC777

      Thanks for sharing your story in some detail. It’s not surprising but is sobering and is worth everybody’s serious thought. There are enormous web-enabled changes going on in international commerce (and finance!) and no one person can possibly understand most of it, never mind all of it.

      • Dawn Alva

        I really appreciate it. My goal is to try to make people aware that “more”and “inexpensive products” have a huge cost. Consumption in our country is epic and we have not changed our systems in the US to support this export of capital and labor.

        Also, I didn’t mention what this means to our cities. I sit on the Econ Dev council for my city and part of the city council meetings. Many cities have a huge shortfall of $ due to the online sellers do not pay taxes the way we “used” to in our cities when we went to the store and purchased something. This means less money to support our firefighters, police, roads, etc. Our city can’t pay anymore – we are close to bankruptcy and we are not alone.

        I wish more people would realize that each $ transaction has a economic, political, and social ramification. It is not just about “cheap” – ayayayyyay!

        • Alex Hon

          Apparel is tough in the US. As people spend more and more on electronics these days (iPhone upgrades, 4K TV’s, etc.), they have even less discretionary income to spend on clothes than before.

          For smaller brands that don’t have 100+ retail store fleets all over the country, there is still opportunities outside of Amazon/Walmart. For example people don’t always like to shop online due to uncertainty of fit and costly returns. To address that market, there are subscription-based startups that let your clients pay an annual fee (e.g. $100/yr.) to receive your products to try a few days for free then return, or pay to keep.

          So even if your clients don’t end up keeping a single item they still gave you the $100 to split with the startups who may be much better and quicker at receiving and putting the returned items back into circulation than your current e-comm fulfillment center(s).