Amazon – Brawn over brains

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Google could do a better Echo if it so desired.

  • Amazon’s latest experiment is showing signs of success but to really hit the big time, Alexa needs to get much smarter.
  • The Amazon Echo has been around for just over a year and the fact that Amazon has launched two companion products along the same lines is a sign that at last it has a hit on its hands.
  • The Amazon Echo is a physical embodiment of Amazon’s personal assistant called Alexa that sits inside the home and is voice controlled.
  • Alexa is capable of answering questions, playing music through its built in high quality speaker, order goods from Amazon, read the news, control smart devices in the home and so on.
  • I think that a key element in its success has been Amazon’s open approach where third parties have found it reasonably easy to access the device and to put their apps and services on it.
  • There are now 300 third party functions that can run upon the Echo and Amazon is also happy for the AI that powers Alexa to be implemented into third party devices.
  • The problem is that these third party functions are stand-alone apps that are merely using the microphone and speech recognition to interact with the user.
  • For example the user can’t just say “Alexa, I am cold” and have Nest turn the thermostat up.
  • Instead he has to tell Alexa to open the Nest app first, tell it what he wants, and then close it again.
  • For this to become a vibrant smart home ecosystem, Amazon will have to figure out how to get all of these functions working seamlessly together (RFM’s Laws of Robotics 5 and 6).
  • I think that the Echo has been successful because it is a good speaker at a reasonable price and because the quality of its voice recognition is superb.
  • However, what holds Alexa back is the fact that in the grand scheme of things, it is pretty dumb.
  • Alexa has a funny habit of simply falling silent when it does not know the answer to a certain enquiry and its hit rate when it does answer is way below what Google Now can produce.
  • The other problem with Alexa is that it is listening all the time.
  • That means that anyone that hacks the device will have managed to install a very high quality, always on microphone inside the user’s house.
  • Furthermore, the user can never really be certain who is listening as disconnecting the microphone obviates the point of having the device in the first place.
  • The bottom line is that Google Now in a similar piece of hardware is likely to produce a far better experience as I think that Google’s AI is by far the best in the market today.
  • This combined with Google’s understanding of what is needed in terms of service and data integration would also allow 3rd party services to work together and greatly enhance the overall experience.
  • However, there is no sign of a similar product coming from Google as Nest remains focused on single use products relying on a smartphone to stitch them all together.
  • Given the popularity of Echo, perhaps it should think again.

RICHARD WINDSOR

Richard is founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his 11 year tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector.