Amazon, Dish, and a Bold New Vision for the Internet of Things

The Internet of Things – once just an abstract concept to describe how Internet-connected objects might talk to each other one day – is now very much a reality. Some of the world's biggest tech companies are now staking their future on the Internet of Things. The list of tech companies creating a bold new vision for the Internet of Things now includes Amazon and Dish.

AMAZON AND DISH NETWORK UNVEIL A NEW PLAN FOR THE INTERNET OF THINGS

In early July 2017, rumors began to leak out that Amazon and Dish Network were working on a concept for a new wireless network that would primarily connect objects rather than communication or computing devices. Thus, while your smartphone would still run on a network like AT&T, Sprint or Verizon, your Internet-connected appliances or other Internet-connected objects would run on a completely different network created by Amazon and Dish Network.

If you consider that there are already 8 billion objects connected to the Internet right now, it would make sense that eventually someone would have to build a new network to account for all that new Internet traffic. Until July 2017, the conventional wisdom was that the big cable companies would build out 5G networks capable of supporting these objects. But now it looks like the vision is something much grander: an entirely new wireless network dedicated to the Internet of Things.

WHY AMAZON MIGHT WANT TO CREATE AN INTERNET OF THINGS NETWORK

At this point, you're probably asking yourself: “OK, sounds good, but why would Amazon possibly want to build an entirely new network from scratch?” In many ways, it would be equivalent to a company like Tesla Motors deciding that, hey, wouldn't it be cool to build an entirely new interstate highway system just for electric-powered cars!

So there has to be a very good business model behind such a network for the Internet of Things, and both Dish and Amazon need to come up with business scenarios that could really leverage this new network.

For example, consider how Amazon is now experimenting with delivery drones for its e-commerce business. Wouldn't it be cool if those drones could “talk” to each other while they were out making deliveries? And wouldn't it be cooler still if they could talk with the Amazon Echo device already in your home to coordinate specific deliveries?

Right now, if those delivery drones wanted to communicate with each other, with the home Amazon warehouse, or with customers, they'd have to “borrow” bandwidth from the likes of AT&T. These drones would have to run on a network that's already been created, and that would immediately create problems for Amazon. It might be far easier just to build a network entirely from scratch that would be optimized for these drones.

AMAZON, E-COMMERCE AND THE INTERNET OF THINGS

So, here's how a hypothetical e-commerce example might work involving Amazon, Dish Network and the Internet of Things. A customer sitting at home on the couch could decide to order a few books from Amazon. He or she could give a voice command to Alexa (the AI assistant powering the Amazon Echo), along the lines of, “Alexa, order me the top 5 bestselling fiction books on Amazon right now.”

Alexa could then place the order for you on Amazon, which would trigger a whole series of actions: an Internet-controlled forklift in the Internet-equipped Amazon warehouse would pick out the items for you from the warehouse shelves and then bundle those books for delivery in an Internet-enable Amazon drone. That drone would then communicate with your Amazon Echo at home, letting you know exactly when the delivery was ready to pick from your front porch.

AMAZON, SUPERMARKETS AND THE INTERNET OF THINGS

Admittedly, that's still a bit futuristic, but there are still plenty of scenarios where the Internet of Things could be pretty amazing if Amazon and Dish Network are willing to think really big. For example, consider supermarket deliveries. Ever since the early days of the Internet, companies like Fresh Direct have been working on creating the perfect warehouse-to-home supermarket delivery system.

And now, guess what? Amazon recently announced a deal to buy Whole Foods Market. Not only that, but Amazon has also been testing out revolutionary new supermarkets (so far only in areas like Seattle) that don't have any human cashiers and that are completely cashless. So you can see the inevitable next step – an entire supermarket delivery chain that's completely powered by the Internet of Things.

In fact, Amazon might even go one step further than that: imagine a total farm-to-table system in which you could order fresh organic produce either directly from your local farmer or indirectly from Whole Foods Market. Yes, Amazon might be able to revolutionize the entire food chain if it ever creates a true Internet of Things network.

AMAZON PRIME AND THE INTERNET OF THINGS

Just imagine what Amazon might be able to offer its Prime customers. For example, what if Amazon began to offer free Whole Foods Market deliveries to all Prime customers? You could bet that a lot of people would start signing up to become Prime members.

Some business analysts have even suggested that Amazon might start offering wireless packages to their customers. Instead of signing up for a 12-month wireless contract with the likes of AT&T or Sprint or T-Mobile, you'd sign up for a 12-month wireless contract with Amazon Wireless. If you use a lot of data with your Amazon Fire tablet, that might be a way to avoid the data caps from the big wireless companies. And Amazon would surely want to promote the fact that its Amazon Prime Now movies now ran on a super-fast network, right?

DISH NETWORK AND THE INTERNET OF THINGS

Ok, so we've covered the business case for Amazon, but what about Dish Network? The case for Dish Network is much simpler: the market for satellite TV is shrinking, and the company needs to diversify its revenue stream. If you take a broader look at the satellite TV market, it's clear that the business model is at least somewhat broken. That's the reason why a Dish Network competitor – DIRECTV – decided to hook up with AT&T rather than go it alone.

So, in May 2017, Dish Network and Amazon partnered on a unique deal. Dish Network made it possible for its users to control their set-top boxes with the Amazon Echo, and Amazon made Dish streaming TV apps available on Amazon Fire devices. That's a preview of what may be coming next. It's proof that Amazon devices can work on Dish networks, and it's proof that Dish Network services can work on Amazon devices.

For Dish Network, Amazon would make a great initial launch partner. First of all, Amazon has deep pockets, thanks to all the money it's making via e-commerce. If you're going to build an entirely new network for the Internet of Things, it's going to be expensive, and it's nice to have a partner like Amazon to absorb some (or most) of the costs.

Secondly, Amazon is very willing to push forward with innovative test projects that other companies would dismiss after 15 minutes. (Even today, people think that Amazon is just “punking” us with its strategy for delivery drones!)

Thirdly, Amazon offers a huge, built-in customer base for the Internet of Things. If you add up all the company's e-commerce customers, all the Amazon Prime Now customers, all the Amazon Echo customers, and all the Whole Foods Market customers, you're talking about a lot of people!

Finally, Dish Network CEO Charlie Ergen and Amazon CEO Jeff Bezos seem to have developed a personal relationship as well as a business relationship. They both share a love of rocket science and have been attending some of the same events together (including an invite-only event that Bezos hosts). In the jargon of business analysts, there's a good “cultural fit” between the two companies.

SO WHAT COMES NEXT FOR AMAZON, DISH, AND THE INTERNET OF THINGS?

If you think about the strategy of tech companies like Amazon, you can reduce it to the following: get inside the customer's home. That's it. Once you're inside the customer's home, you have a way of deepening your relationship with that customer.

Take the example of the , for example. For some, it's still just a toy. Sure, it's fun asking Alexa questions or having her find movies for you, but consider this: when you have an Amazon Echo device resting on your living room table or in your kitchen, you have a way to sell (and up-sell) the customer. It makes it much easier to order groceries, for example, if you can use the Amazon Echo. It makes it much easier to order entertainment if you can use the Amazon Echo.

In much the same way, the humble set-top box is how cable companies and satellite TV companies like Dish Network entered the home. Once they were inside your home, they could start to offer all kinds of digital extras – phone service, Internet service, TV service, pay-per-view (PPV) services, you name it.

That, ultimately, is why Amazon and Dish Network might collaborate on the Internet of Things. They both have a way into your home now. And now they are about to use that fact to sell you not only digital products (movies, films, PPV specials), but also physical products.

Remember how we had to jump in the car and drive to the nearest Blockbuster Video to rent a movie for the night? Those days are a distant memory. And so, in the near future, it might also seem quaint and archaic that people once jumped in the car to buy a gallon of milk. It would be so much easier if we could just ask Alexa to arrange for an Amazon delivery drone to bring it to our doorstep.