Amazon’s $1 billion purchase of Ring, California-based maker of a popular video home security system, looks like a big step up in the world, for a team of locally based home-automation engineers at Ring Solutions in Malvern, and their previous employer, the former home technology developer Zonoff.
It’s a happy reversal from last year, when their future was left in question due to business and investor decisions far beyond their local offices.
Amazon already owned a piece of Ring through its Alexa Fund. Amazon watchers expect the company will use Ring’s doorbell cameras and other home automation to improve its Amazon Key delivery-access program, protecting deliveries of Amazon goods from thieves and delays. It could even help grocery deliveries, given Amazon’s $14 billion Whole Foods acquisition last year. Amazon also bought Ring rival Blink last year.
Ring fits with Amazon’s plans to play a larger role in smartphone-era homes and businesses through its Amazon Echo smart speakers, which respond to the name Alexa.
“Alexa can be the brains on the inside, with Ring as the eyes on the outside,” writes Internet of Things watcher Stacey Higginbotham on her Texas-based site, StaceyOnIT.com.
Higginbotham expects that Amazon will operate Ring as a separate vision, as it does “with Audible and Zappos.” Or like Amazon Woot!, the “wild outpost on the fringe” of Amazon’s retail business, which opened a clothes-printing plant and distribution center last fall in East Norriton, Montgomery County.
Pennsylvania is one of Amazon’s main warehouse centers; Philadelphia and Pittsburgh are among 20 communities that the company is considering for a second headquarters and about 50,000 jobs.
Here’s the Malvern angle: Zonoff was a 70-employee Internet of Things home-automation firm founded by onetime DivX general manager Mike Harris and backed by nearly $40 million from investors including Valhalla Partners, Grotech Ventures, and alarm giant ADT.
From its 2011 founding until its abrupt shutdown last winter, Zonoff was one of the most promising Internet of Things tech developers, supplying systems to Staples and other big retailers. State-backed Ben Franklin Technology Partners invested $200,000 in the firm (which Zonoff paid back, with interest), and U.S. Rep. Ryan Costello, a Chester County Republican, attended the company’s 2015 office expansion.
But ADT’s sale to billionaire Sixers owner Josh Harris’ Apollo Global Management changed the payroll company’s focus and the goals for its Zonoff investment. Zonoff’s likely buyers were now ADT’s competitors, as ADT mobilized to compete with Philadelphia-based Comcast and other companies adding home security systems.
ADT and Apollo hatched a plan to sell Zonoff to Honeywell Inc. for just $40 million, which would barely have repaid the outside investors. When the Honeywell deal fell apart, ADT cut off funds, according to court documents.
But Mike Harris didn’t walk away: He led his team of 70 Zonoff professionals to join Ring, a prosperous, acquisitive company backed by Goldman Sachs, Qualcomm and Virgin Cos.’ Richard Branson, among others. Ring named Mike Harris president of its new Ring Solutions automation unit, found him new offices in the quarry-turned-lakeside Atwater business park, and told him to hire more engineers.
Harris and Ring were promptly sued by ADT, which said they had walked off with Zonoff instead of supporting its sale. A Delaware chancellor initially sided with ADT, but the suit was settled last month for a reported $25 million Ring payment to ADT.
That eased the way for the Amazon deal and fueled expansive hopes for the former Zonoff engineers’ future, under a very well-funded new owner.