Amazon vs. Everyone – Battle for the home pt. V

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Amazon goes better, smaller cheaper.

• Amazon has raised the bar in the digital assistants battle right before Google’s hardware event on 4^th October with an update to the Amazon Echo home speaker and a big upgrade to the user experience.
• Amazon has launched two new speakers to replace the Amazon Echo, one of which is has extra hardware to optimise the smart home experience.
• On top of this Amazon has created an over the top experience that allows the user to tie together a range of Alexa skills that it hopes will make Alexa much more intuitive to use.
• Two new Echos have been released to replace the original.
  • First: The new echo is smaller, has better sound quality,comes in 6 colours and will cost $99 which is half of what the original did at launch.
  • It has a new microphone array that should improve audio performance in terms of noise cancellation and wake word making the overall experience less error prone.
  • Importantly, this is now cheaper than Google Home and looks set to continue what has become a race to the bottom in smart speakers.
  • Second: Amazon Echo Plus has all of the above but also includes a built in home-hub that enables the automatic discovery and set-up of devices that support Zigbee.
  • The device costs $150 but also includes a Phillips Hue smart light bulb to get the user started.
  • This will enhance the smart home functionality but it in no way covers all available devices.
  • Third: Amazon has launched Alexa Routines that allows the user to tie together a series of actions into one command.
  • The user will now be able to say “Alexa, I am going to bed” and the lights will be turned off, doors locked, TV turned off and so on all in one go.
  • It will also be possible to schedule these sorts of actions.
  • This will not work with all of Alexa-enabled devices and skills but I think it represents a further step forward.
• With this update, I think that Amazon has achieved two goals:
  • First: It has put itself ahead of Google in the hardware race with an improved device that is now meaningfully cheaper than Google’s offering.
  • Whatever pricing Google was considering for Google Home 2 may now be quickly re-thought.
  • Second: The horrible user experience using Alexa’s skills may now take a big step forward.
  • A lot depends on how good this experience is and how well it works but if it is good, it will bring Alexa into line with what I consider to be smart home best practice (see here).
• Amazon has had by far the most aggressive roll-out of hardware that supports a digital assistant of any of the major ecosystems.
• There are now a total 8 different types of home device that all carry the Alexa digital assistant with a large number of third party devices in the works.
• This is critical because a large majority of the usage of digital assistants occurs when user’s hands are busy meaning that the smartphone is almost always useless in most use cases.
• This gives and advantage to those that provide a physical device present in the home that use an audio wake word.
• Google has this with the home but there is only one device whereas Amazon now has 8 all which are much better at controlling the smart home than Google is.
• This puts Google on the back foot right ahead of its launch despite the fact that it has a much better product when considering the performance of the assistant and its ability to correctly respond to enquiries.
• Google’s response on 4^th October will be key to its outlook in the smart home and based on its performance to date, I am not optimistic.
• I continue to think that Google is at risk of suffering a VHS vs. Betamax-like defeat in the smart home.
• I don’t like either Amazon or Google on valuation grounds preferring instead Tencent, Baidu and Microsoft.