Amazon’s Alexa Land Grab

Without a doubt, in my mind, Amazon’s Alexa has been the star of the tech industry this year. Starting with CES where the banner of “works with Alexa” was first raised with support from nearly all major appliance and smart home brands. The presence of an ambient, always on, smart speaker with digital assistant has been the single greatest catalyst for the smart home I’ve seen since I’ve been studying the smart home from the beginning of the category. From a consumer perspective, the voice interface eliminated a great deal of friction from how we interact with smart home objects. Our continued research on the category keeps confirming those with Amazon Echo’s have more connected smart home products per household than those who do not and those customers rapidly increase their smart home gear after buying and integrating an Amazon Echo into their home.

As I wrote last week, the home has become the latest battleground for every company making consumer electronics, and honestly, at the moment, Amazon is the clear leader. The industry, and many consumer electronics makers seem to be ackowledging Amazon’s lead as integrating Alexa seems to be foremost on the strategy of many companies. Garmin just introduced an interesting product called the Speak which puts an Alexa assistant in your car. Sonos joins the list as well with now over 500 products having support for Alexa skills and a now more than a few dozen with Alexa directly indegrated into their products.

Amazon is doing a great job partnering here and will leverage the ecosystem of support to help them go beyond their own first party hardware to integrate Alexa everwhere. While many may not believe Amazon’s early lead here will be sustainable, I believe it will on the basis of their business model being cloud first and hardware second. Amazon’s cloud strategy means Alexa gets better overtime. So just like how your smartphone or PC/Mac gets new capabilities through software updates so do your smart products connected to Amazon’s cloud. Amazon can rapidly improve the features and intelligence of these products and simultaneously make them all work better together all through their cloud engine. This is a strong and compelling value proposition. Amazon’s early lead and industry support is going to be a challenge for Google and Apple.

For Google, the real challenge is they have lost trust and favor with many in the industry who realized very quickly they were bad partners when it came to Android. Fascinating history repeating itself from the Microsoft era as for decades computer companies only had Microsoft as a platform option, and they got fed up with them, that they desperately wanted an alternative. In walks Google with Android and hardware OEMs now had another option and they took it in mass. Now all hardware OEMS are fed up with Google and want another option for the next platform (which is voice and machine learning/AI) and in walks Amazon with a another option and the industry is taking it in mass.

This is another key reason Amazon’s lead is sustainable. The industry is clearly standardizing on their cloud for machine learning/AI smarts and Alexa as the front end interface to the machine learning/AI platform, and Google will just be relegated to search from an assistant standpoint and not managing your home or your life. While Google remains in the battle, I’m fairly convinced Amazon will win this next platform that hardware companies will use in the wave beyond smartphones. What happened to Microsoft in mobile will happen to Google in the next wave.

So what about Apple? I’ve been worried for Apple for sometime in the home because if Amazon win’s this with a vast hardware supported ecosystem and more consumers come to depend on Alexa as their assitant then Siri could be in trouble. My biggest worry for Apple is that Siri does not get the reach that will be necessary in this next wave which will have a heavy element of machine learning, which leads to AI, and voice assistants as a primary interface. This is not to say the iPhone will become irrelevant, or that much of Apple’s on device machine learning and eventually AI technology won’t be useful, but that I worry Siri will not become the primary agent consumers interact with for their life/home assistant.

The battle for the home will be one where companies have to partner well and Apple has struggled at this given the vertical nature of their business. One could make a strong argument they need to allow Siri to be integrated into third party smart home hardware in order to get the reach Siri needs. You could use CarPlay as an example, but Apple’s challenge with partners is evident with many CarPlay solutions as the experience with CarPlay is inconsistent and we constantly hear from consumers how it doesn’t always work. Apple does not control all the variables like they are used to with auto manufactures and the same problems arise when trying to accomplish reach in the smart home.

I certainly am not counting Apple out the way I am Google at this point, but I do worry that the iPhone/iOS/Siri, etc., become secondary agents and not primary ones in this next wave of computing. Apple still has a lot of work to do here particualrly around cloud and first party cloud services. There is still time but they are not making the same kind of headway Amazon is at the moment. Amazon’s lead is not too great at this point but it can get there quickly. Next years CES will be very telling about how far Amazon’s lead has become and how much farther it can get in 2018.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

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