Zoom Video Communications (NASDAQ: ZM) It recently unveiled its first consumer-facing hardware device, the DTEN ME, a 27-inch smart display with three wide-angle cameras, eight microphones, and a touchscreen. The $ 599 display, developed by Zoom’s hardware partner DTEN, is currently available for pre-order and is scheduled to ship in August to U.S. customers.
Zoom previously collaborated with DTEN to develop the D7, an interactive whiteboard for Zoom Rooms that comes in 55- and 75-inch versions, for business customers two years ago. Those were expensive niche devices, but Zoom and DTEN apparently believe there is enough market demand for a cheaper, consumer-oriented version for home offices.
Zoom became a household name during the COVID-19 pandemic, and you probably think you can take advantage of that influence to sell hardware devices. Unfortunately, DTEN ME could be dead on arrival for three simple reasons.
Image source: DTEN.
1. Zoom already runs on multiple platforms
Zoom serves an audience of more than 300 million daily active meeting participants on multiple platforms, including iOS, Android, Windows, Linux, and macOS.
Most consumers probably won’t spend $ 599 on a dedicated device for an app that already runs on their phones and PCs, especially since the pandemic and other headwinds of the macro reduce the purchasing power of the average consumer. Most remote workers probably also don’t need separate smart displays for their home offices when they have easy access to other displays.
The DTEN ME’s larger screen, additional cameras, and additional microphones could improve a user’s video quality, but those improvements could easily fade with slower Internet connections.
2. There are much cheaper alternatives.
Consumers who want a dedicated smart display for video chats already have many cheaper devices to choose from.
Facebook‘s (NASDAQ: FB) The portal screens, which recently expanded their group calls to 50 people, cost between $ 129 and $ 279. Amazon‘s (NASDAQ: AMZN) The last Echo Show is only $ 180 and Alphabet‘s (NASDAQ: GOOG) (NASDAQ: GOOGL) Google Nest Hub costs $ 130.
Image source: Facebook.
All of these devices offer smaller displays with fewer microphones and cameras like DTEN ME, but they are likely enough for most users. Consumers can also buy a high-end tablet or a mid-range phone or laptop for the same price as the DTEN ME. Those devices offer far more features than a dedicated smart display, which only runs Zoom on DTEN’s proprietary operating system.
3. A weaker supporting ecosystem
Facebook, Amazon and Google launched smart displays as extensions of their expanding technology ecosystems.
Facebook’s family of applications, including its eponymous platform, Messenger, Instagram and WhatsApp, reaches almost 3 billion people per month. Amazon is one of the largest e-commerce companies in the world, with more than 150 million Prime subscribers, and Google processes more than 1 billion searches a year.
Even with the support of those massive ecosystems, the companies only shipped 125 million speakers and smart displays worldwide last year, according to Canalys, compared to 1.37 billion smartphone shipments.
That market is small but saturated. Amazon rules the US smart display and speaker market with a 53% share in early 2020, according to Voicebot.ai. Google ranks second with a 31% share, and the rest of the market is fragmented among smaller players like Apple and Facebook
Zoom has a growing user base, but it is doubtful that it can break this ruthless market flooded with cheaper devices tied to larger ecosystems.
Key points
DTEN ME’s success or failure will probably not affect Zoom financially, as DTEN will likely bear most of its development and marketing expenses. However, it highlights Zoom’s desire to remain competitive against well-funded challengers like Facebook’s Messenger Rooms, CiscoWebex and Google Meet as more people return to work. It also reveals the challenges of expanding a popular software platform on dedicated hardware devices.
