Amazon & Microsoft – One-way street

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Amazon gets the best of it for now.

• Amazon looks to be the main beneficiary of the co-operation between Amazon and Microsoft which will see Alexa offer access to Cortana and vice-a-versa.
• Amazon and Microsoft are working on a co-operation where Windows 10 users will be able to get Cortana to open Alexa and perform its range of functions.
• Users of Amazon Echo products will also be able to ask Alexa to open Cortana and ask it to perform its various actions.
• The idea is that users get another easy conduit from which to access Alexa while Cortana is provided with a badly needed escape from the PC where it has been stuck since the collapse of Windows Phone.
• Cortana was originally designed to operate on a mobile device and consequently was taught how to work in a range of domains that are used on mobile.
• The problem is that most of these domains are irrelevant on a PC and as a result, Cortana is fairly useless where it is predominantly present today.
• This is exacerbated by the fact that Cortana has not really been taught how to work with the Office applications making the user experience for its main use case on a PC pretty poor.
• For example, asking Cortana to read my email results in a Bing search for “read my email” and it is quicker and easier to open documents in Office with a mouse than to ask Cortana to do it.
• I think that Microsoft’s artificial intelligence is actually better than Amazon’s as a result of the data it has been crunching via Bing but very little of this has found its way into Cortana.
• Consequently, Amazon has come up with a better product that is far more useful in the environment where it is present (speakers in kitchens and living rooms).
• Hence, I don’t see much of a use case for Alexa users to begin asking Cortana to do things but having access to Alexa via a PC could prove to be quite useful.
• This is particularly the case as Alexa is very good at shopping and controlling the smart home potentially making device control remotely from the office much easier.
• As a result, I think that Amazon is the main beneficiary of this collaboration in the first instance.
• However, if Microsoft’s AI continues to be better than Alexa’s then there is scope for a much deeper collaboration where Microsoft’s AI could be used to power some of Amazon’s services.
• The only problem here is that this could result in cross over between Microsoft and Amazon Web Services who are fierce competitors in the cloud.
• Hence, a deepening of this collaboration looks unlikely at the moment but may become a reality if Amazon’s AI continues to languish.
• Although Amazon appears to have gotten the better of this deal, I still cannot stomach the valuation leaving me with a strong preference for Microsoft’s shares.