This has been a subject I’ve been wanting to tackle since Christmas, but due to the way the blog has progressed (i.e. going well) we only get around to it now! I will be using Alexa to explore how Amazon made it more successful than it’s competitors (mainly Apple’s Siri) and in the broader context of connected homes.
Siri was billed by Apple to be ‘revolutionary’. It was meant to do everything and really transform your life. Apple has generally been successful by following a very simple philosophy – not releasing a product unless it works really, really well. In recent years that approach could be seen as being ‘slow’, but it has also allowed them to be market leaders. So you can imagine the disappointment when Siri was beseeched with problems.
Apple had over hyped the capabilities. It tried to do too much and at the same time failed at also doing the simple things. I’m not sure if Siri (as a brand) has really been able to recover from such a jittery start, though Siri has vastly improved and is now integrated into all Apple products (an important point we’ll come back to).
Hello Alexa, how are you today?
We now have competition from different platforms by Google, Microsoft and Amazon. We focus here on Alexa and start with their most popular product – the Amazon Echo. Despite being much later to market the traction has been much higher. This was because Amazon spent a considerable amount of time ensuring Echo did a few things very well before expanding its capabilities. Amazon had set realistic expectations to consumers and the few things it initially did well were features people wanted. This would have been an approach we’d have expected from Apple….
The result was a hugely successful Christmas period for the product. Slice – an intelligence research outfit show that the product is now mainstream – women account for half the buys, Baby Boomers and Generation X are also larger users. See the chart below:
So good news for Amazon. Alexa is in our homes and not just the early adopters. Alexa and Echo have become trusted brands. And we enter the next phase in how companies will compete to dominate our lives and homes even further. Alexa provides a platform for others to use and the uptake has been big. Check this link for some examples from CES.
How much is this all worth?
In the world of IoT and connected hardware, the actual value from connected homes isn’t that great. McKinsey’s estimated the value of smart homes to be in the $200-350 billion. This is low compared to more industrial applications of smart technology which has a value of $1-3 trillion. This number takes into account energy management, security control and (most useful) the automation of chores. But the value of driving behaviour is a lot more powerful than raw numbers. Targeted marketing and selling opportunities become even more finely honed.
Competition and Privacy
Is having one major winner a good thing? The tech era had a big problem with healthy competition. The strategy seems to be to kill/buy it out as soon as it becomes a threat to a bigger player. We may get some competition here since Google, Microsoft and Apple are big enough to throw money at the problem to get a slice of the action. Fragmentation could opens up issues with privacy and security. Up to now the potential security impacts are quite minimal for the large majority; this will change as we allow more and more devices into our lives. Will we get the assurances that we want or will we even care?
Something to ponder and discuss another time. I’ll close with saying I’ve not (yet) jumped on the smart home bandwagon. But if you have, share your thoughts and any learning you may have for the rest!