Cortana comes to Xbox One but Microsoft Needs a Bigger Trojan Horse for the Home

on June 8, 2016
Reading Time: 3 minutes

As widely reported in the press on Monday, Microsoft released an update for its preview members which included access to Cortana. Cortana will be on the Xbox One dashboard and users will be able to access her via the Kinect sensor or a headset. Initially, Cortana’s abilities will be limited to basic tasks such as seeing which friends are playing and launching a party.

We have been talking a lot about digital assistants in the past few weeks. Microsoft positions Cortana as “your new clever personal assistant.” The Windows website goes on to say, “Cortana will help you find things on your PC, manage your calendar, track your packages, find files, chat with you and tell you jokes. The more you use Cortana, the more personalized your experience will be.” This all sounds good but Microsoft started with the disadvantage of not having its own army of smartphones to show off Cortana so it made it available on both iOS and Android. User reviews are generally positive but point to the fact the experience is more limited than on a Windows device. From looking at the review pages and the number of reviews, it seems Android users are embracing Cortana more than iOS users which means Microsoft is missing out on a very valuable part of the consumer base.

IMG_3155 (1)IMG_3154

Cortana is, of course, also available on the Microsoft Band and works with Windows and Android phones in the US but, due to the limited uptake of Band thus far, this does not extend Cortana’s addressable market by much.

PCs are not the ideal partner for a digital assistant

While Cortana is present on PCs running Windows 10, usage remains limited. While Microsoft helps consumers find Cortana, in our recent consumer study we ran in the US, a whopping 77% of the panel said they never used Cortana.

Even though consumers have started to use Cortana on a more regular basis on their PCs, I believe the relationship will feel more transactional and usage will be limited in scope — mainly around calendaring and search. This is because Cortana will only be “alive” when the PC is on, which is certainly not all the time the same way a phone or a dedicated device like the Amazon Echo or Google Home. While notebooks have replaced many desktops, they still tend to remain relegated to the home office or the bedroom rather than accompany us around the house. Also, many users, especially those who use their PC mainly for work, have a tendency to mute their sound and microphone. This would considerably limit the depth of interaction and therefore, the depth of the user’s relationship with Cortana.

Xbox One brings Cortana to the center of family life but not for many

Xbox One currently has around nice percent of the game console installed base in the US. A rough estimation puts that at less than one percent total household penetration. If you compare this to Amazon’s Echo, it is not a bad position to be but, while almost double the current number of US-based owners are interested in purchasing an Xbox One, the potential will likely never be as big as that of a music speaker while the price is remains 50% higher. For most consumers, Xbox is either in the family or living room which offers Cortana a better opportunity to be more at the center of family life but still does not allow for Cortana’s full potential.

Will an army of bots come to Cortana’s rescue?

It is clear to me it would be a mistake to think relying on Windows 10 PC will give Microsoft enough ammunition to win the battle against Alexa, Siri and Google assistant. More devices are needed in and outside the home that connect to Cortana.

In the smartphone market, Microsoft had been struggling to engage developers with their platform. When it comes to digital agents, it is obvious Microsoft wants to lead, not catch up. At Build, Microsoft’s developer conference that took place in San Francisco at the end of April, Microsoft introduced the new concept of “conversation as a platform.” CEO Satay Nadella outlined his vision of computing that relied on users, a digital assistant, and bots. He then went on to describe bots as “applications you can converse with.” Microsoft’s end game is to have these bots interact with Cortana to benefit the user. Creating a platform with Cognitive Services and Bot framework APIs to enable this, so early on in the game, might see Microsoft fight a different kind of battle than the one they fought and lost in the smartphone market.

Ultimately, bots can help Cortana get much smarter without dedicated devices. What remains to be seen is whether users will still want a Cortana that not only has brains but a body too.