Home vs. Echo – Battle of the Home pt. III.

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Google has everything to do.

• Google is great at getting third parties to build hardware that uses its software, but needs to work on developers of smart home devices if it wants to trounce Amazon.
• Following the general availability of the Google Assistant SDK that allows anyone to embed Google Assistant into almost anything, Google has also announced a series of third party devices which will be launched at IFA next month.
• These include the Anker Zolo Mojo, the Panasonic GA10 and the TicHome Mini all of which will go on sale during Q4 17.
• Amazon has followed suit but as of yet, there appears to be less traction with hardware makers.
• Alexa is likely to power the next generation of Sonos speakers and may make an appearance in some VW cars but it looks like Google has more momentum when it comes to hardware.
• This is likely to ensure a race to the bottom in terms of voice enabled smart speakers from which I think Google will be the only likely winner (just like Android).
• It badly needs to close the gap on Amazon which has around 70% of the home speaker market and having a much wider selection of attractively priced products will be of great help.
• What will further help Google is the fact that Google Assistant is a vastly superior product compared to Amazon Alexa.
• This is because the AI that sits behind Google Assistant is the best available, meaning that Alexa answers fewer questions correctly and gets stuck much more often.
• However, where Google comes completely unstuck is in the smart home.
• Amazon has aggressively pursued developers and showered them with love and support meaning that almost every developer of anything that has a Bluetooth or WiFi radio can be controlled with Alexa.
• The same cannot be said for Google Assistant which I think has been caused by Google’s surprising lack of support for developers of this type (see here).
• I think that part of the reason for this is that Google Assistant has been brought to life by one part of Google (hardware) but was created and managed by another.
• Google is addressing this by encouraging developers to write directly to the assistant meaning that any device be it a smartphone, speaker or thermostat can run the smart home but progress to date has been slow.
• Amazon Alexa has over 15,000 skills which don’t work very well but importantly, there are there and do work with a little effort.
• Google Assistant is hopeless by comparison and it is here that it is at real risk of suffering a Betamax-like defeat.
• I think that Google needs to bring all of these devices together such that “OK Google, I am going to bed” results in the whole house shutting down rather than a long series of carefully constructed instructions to each device individually to go into night mode.
• For many of Alexa’s skills, it is simply easier and quicker to perform the operation manually than to ask Alexa to do it.
• Unfortunately, so far there is no sign of smart integration from Google meaning that the advantage remains with Amazon.
• The market remains very lowly penetrated meaning that everything is still to play for but this won’t last forever.
• Valuation keeps me from liking Alphabet and Amazon leaving Microsoft, Tencent and Baidu as my top choices.