Amazon invests in Labs126 to help build hardware for the Internet of Things

No longer content merely to sell gadgets that make your home smarter, global shopping giant Amazon is reportedly expanding its internal hardware design team in an effort to make a name for itself in the burgeoning market for Internet-connected home appliances.

According to Reuters, Amazon is investing $55 million in Lab126, the division of the company that designed the Kindle, in the hopes that it can also develop an array of devices that use the Internet to do their jobs better.

“The Lab126 division,” Reuters reporters, “plans to boost its full-time payroll to at least 3,757 people by 2019, according to the agreement reached with California in June that would give Amazon $1.2 million in tax breaks.”

A document found on the website of the Governor of California detailed an agreement that Amazon reached with the state government to add the new jobs in exchange for tax breaks worth around $1.2 million.

One of the devices that Lab126 is reportedly testing is a small device with a button for one-touch purchases of household products. People familiar with the tests described it to Reuters as an easy way to restock common supplies like detergent.

Another source said that Lab126’s plans include wearable devices, meaning that Amazon may intend to compete directly with companies like LG, Samsung, and, now, Apple, in the smartwatch market.

The overall market for in-home connected systems is surging, and investors are bullish on its short-term prospects.

The growth of the market in the coming years is expected to be remarkable, with the revenue growth estimated to reach $51.77 billion by 2020,” according to a MarketsandMarkets analysis of global smart-home sales.

In the United States alone, these sales were expected to reach $18 billion by the end of 2014, according to the firm Strategy Analytics. The group also said that U.S. connected-device sales could reach nearly $40 billion by 2019, the same year that Amazon plans to complete its hiring boost at Lab126.

“With Lab126’s experiments,” Reuters says, citing a source, “Amazon envisions homes decked out with Internet-connected sensors that would allow it to tell customers ahead of time when they need to replace air conditioner filters or service their washing machines.”

A spokeswoman for Amazon would only tell Reuters that Lab126 was “growing very quickly” and that Amazon “will continue to invent and create new features, services and products, and to support this innovation.”

H/T Reuters Photo via CODE_n/Flickr (CC BY 2.0)

Eric Geller

Eric Geller

Eric Geller is a politics reporter who focuses on cybersecurity, surveillance, encryption, and privacy. A former staff writer at the Daily Dot, Geller joined Politico in June 2016, where he's focused on policymaking at the White House, the Justice Department, the State Department, and the Commerce Department.