Amazon Alexa, what makes you so special?


September 3, 2016 Facebook Twitter LinkedIn Google+ Uncategorized


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Amazon Echo

Jess Groopman analyst

Smart Home Summit speaker and IoT analyst Jess Groopman breaks down the good and bad of Amazon Echo, explaining how these characteristics reflect IoT as a whole.

At first glance, the Amazon Echo looks like many other small music speakers on the market.

But listening to tunes is just the tip of the iceberg. The unassuming, cylindrical speaker isn’t just voice-activated and interactive—a differentiator in and of itself—more than any other in-home device, it has assumed the role of personal assistant and concierge. The device boasts more than a thousand skills and dozens of partnerships and integrations… available right out of the box.

What’s more is that Echo, often called “Alexa” (the name of the software powering its interaction and natural language processing) has sold some four million devices since shipment just 18 months ago. Those who own the device rave about it, doting on its ease-of-use, novel party tricks, kid-friendly interactions, and generally quirky, but nonetheless endearing smart companion features. Those who have yet to purchase one ask, why? What’s so special about it?

As an analyst covering the consumer markets’ adoption of Internet of Things (sensor-enabled) technology, research I have conducted in the space points to three central reasons for Alexa’s success.

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Simultaneously, this research has also surfaced three inherent barriers the device will continue to face. This post provides a brief summary of each, but you can access a deeper analysis of each below.

Amazon Echo strengths

Simple UX and a broad range of use cases

One of the most important, but often botched elements of effective connected product deployments is to build a simple user experience and interface.

The Echo takes a big step towards improving interface by freeing hands and eyes and shifting the mode of interaction from pinching, tapping, and typing on a tiny screen, to simply speaking with the device. Improvements to the mobile phone status quo run deeper; instead of having to switch from app to app to app to accomplish tasks or engage with services, users simply tell Alexa what to do. And she proceeds.

The device offers users dozens and dozens of different use cases—from turning on the lights to calling and Uber to suggesting a recipe for dinner— centralized on one platform, designed to grow more intelligent and personalized over time.

Openness and interoperability

In the Internet of Things, opening products to integrations, interoperability, and the broader ecosystem is far more competitive than keeping a closed, proprietary-only architecture.

Amazon has opened up their Echo product to developers in two essential ways: first, by allowing manufacturers to integrate with it directly, and secondly, by opening up Alexa’s ‘skills’ development to the community. By enabling integration both with other products and other services, the device is more useful to consumers, partners gain share of data, and Amazon places itself more centrally in customers’ lives. To date, the device is interoperable with more than a dozen manufacturers, and offers skills connected with twice as many services.

Service-driven product business model

Successful business models in a connected world are no longer based on product sales, volume, and margin; the true value of connected products lies in the data-driven, service centric business models product data enable.

Understanding this, Amazon has developed the Echo to be a constantly evolving platform for services, not a one-time purchase analog product. The device is literally designed to improve over time in two distinct ways. First, through the Alexa Skills Kit which offers the ability for outside parties to dream up and develop new applications to use Alexa; and second, through Amazon’s extensive machine learning. In effect, Alexa is designed to get better—more efficient, more personalized, more predictive—over time.

Amazon Echo weaknesses

‘Always-on’ privacy concerns

Privacy in an IoT world demands a new way of thinking on both consumer and enterprise parts, because our interactions with Internet-connected devices and infrastructure culminate to become ‘digital twins’ of our physical selves.

That the Amazon Echo is an in-home device means its very utility is based on understanding users’ habits, needs, movements, and patterns in one of our most personal environments. Moreover, Amazon’s greatest business opportunity for the device is pulling in lots of user data and using it to create shared value models with other service providers, despite this being one of consumers’ top concerns when it comes to connected devices in the home.

Alexa of all traders, master on none

While the Echo’s success is predicated on its ‘horizontal’ capabilities—that is, functionalities that support a wide range of use cases a la typical mobile device— it risks failing for lack of focus.

After all, what is the most disruptive service the Echo offers? Ordering products? Turning on the lights? Playing audiobooks? Taken solo, no single capability is all that astonishingly life-improving. Will Google, Apple, Microsoft, or any number of other competitors (small and large) usurp the Echo with a more focused offering? This must become clear and address looming threats from Google in particular—a company with far deeper data across more areas of our lives than shopping and media consumption.

Dependencies and vulnerabilities

In its current form, the Echo relies heavily on cloud processing, wherein data and services are transmitted, analyzed, and serviced in the cloud, rather than on the device. In addition, the more robust the products’ features, functionalities, and services are (see above weakness), often the more robust the technological stack and the longer the list of potential flaws, failures, or security weaknesses.

The Amazon Echo isn’t just an extensive device in its own hardware and software right, it’s everyday function relies on a wide range of infrastructure and partners, all subject to downtime and security risks., That the best IoT technologies inherently involve a full ecosystem creates simultaneous potential for value and vulnerability.

In conclusion

What brands and manufacturers must realize is that Amazon’s success with Alexa has occurred because each of these strengths and weaknesses actually manifest much larger potentials and risks inherent to IoT and connected products. Amazon has built a simple user experience that adds value, not just to Amazon, but to their customers. They have opened up the development of the product to wisdom and collaboration of the ecosystem. Simultaneously, they are creating new data-driven revenue streams from the product, and using that data to enhance existing revenue streams.

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But the Echo faces other challenges around privacy, perceived surveillance, and misuse of sensitive in-home data. Its function and reliability are subject to the precariousness of the Internet, electricity, partner, security, and other ecosystem vulnerabilities. Finally, against a landscape of other vertical successes in consumer IoT (e.g. fitness trackers or thermostats), Amazon is vying for a place in the home with a device that wants to do everything from playing personalized news briefings, searching for nearby movies, to turning on the car in the garage.

[Image: Flickr – Rick Turoczy]

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