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Amazon is hurtling head-first into yet another industry

Amazon is hurtling head-first into yet another industry
Stock Market3 min read

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  • Amazon and homebuilder Lennar announced Wednesday that they're collaborating on a series of model homes that will be fully technology-enabled.
  • The houses will make heavy use of Amazon's Alexa technology, which residents will be able to use to control the television, lights, thermostat, and shades, among other things.
  • While Amazon's entry into other industries has wiped out billions of dollars of competitor market value, homebuilders are remaining relatively unperturbed.

Amazon is leaving no stone unturned in its quest for global domination.

The company's latest foray into uncharted territory occurred Wednesday, when it announced a collaboration with homebuilder Lennar. The two firms are joining forces to create so-called smart homes enabled by Alexa, Amazon's wildly popular voice-activated digital assistant.

They're launching a chain of showrooms called Amazon Experience Centers, which are designed to showcase the usefulness of Amazon's various technologies in a residential setting. Such advancements include voice assistants, auto-deliveries of household products, and entertainment like Prime Video and Music, according to a press release.

Curious consumers can stroll into one of the model homes - which are now open in Atlanta, Dallas, Los Angeles, Miami, Orlando, San Francisco, Seattle, and Washington DC - and learn exactly what it would be like to have a completely Alexa-powered residence. That includes using the technology to control the television, lights, thermostat, and shades, among other things.

And while the collaboration may seem unusual upon first glance, it's not that surprising when you consider Amazon's aggressive pushes into a wide range of industries.

In February, Amazon said it would launch its own package-delivery service to compete with the likes of UPS and FedEx. A month earlier, Amazon announced a collaboration with JPMorgan and Berkshire Hathaway to reduce healthcare costs for US workers. And in June 2017, the company said it would buy Whole Foods for $13.7 billion.

And that's just scratching the surface.

So what do all of those announcements have in common? Stock prices in the affected industries immediately tumbled afterward, destroying billions of dollars of value in the process.

However, homebuilders were fortunate to avoid such drastic weakness in the wake of Wednesday's announcement.

Yes, shares of big industry players like DR Horton, Toll Brothers, and PulteGroup are seeing losses exceeding 3% on Wednesday. But Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird, says this has more to do with historically high lumber costs and rising interest rates than any fear of Amazon's Alexa-driven initiative.

In the longer run, he sees Lennar benefiting from its team-up with Amazon.

"It's almost certainly an advantage," Antonelli told Business Insider by phone. "Millennials are the new generation of home-buyers, and if you show them a home fully wired with Alexa and other gadgets, they're going to go nuts for it."

Amazon, which has climbed 36% in 2018, rose 0.5% in regular trading.