It's a reflection of the sheer power that Amazon is starting to wield in the nascent smart home market, as a growing number of people come to rely on their Echo devices to run their homes and to automate their lives. The market for the Echo is still small compared to smartphones, but it's growing fast.
Google already has the Google Home, its own voice-enabled speaker, designed to compete with the Amazon Echo. Microsoft partnered with Harmon to bring its Cortana virtual assistant to a smart speaker. Even Apple is rumored to be working on a dedicated Siri speaker.
But so far Amazon is the smart speaker to beat, with an early start and plenty of buzz.
Amazon Echo
(Left to right: The Amazon Echo Dot, Echo Tap, and Echo devices all make Alexa available via voice commands.Business Insider)
More importantly though, the rise of the Echo heralds a changing tech landscape that could spell big trouble for Google. No matter how many Google Home devices the search giant sells, Google will be playing on a field that's tilted in Amazon's favor.
The rise of Alexa
A big part of Amazon's early success with Alexa is due to the fact that the company didn't oversell it. After years of iPhone users getting let down by Siri, the first truly mainstream voice agent, Amazon billed the Echo as a speaker that, by the way, has a few smart voice commands built in.
Then, just as people got accustomed to the idea of talking to Alexa, and positive word of mouth spread, Amazon added more capabilities. Alexa now boasts thousands of "skills" that allow it to connect with apps like Uber, Twitter, and Bloomberg news.
That's helped Alexa and the Echo speaker earn a position as the central hub in so-called smart homes. Alexa's voice-first interface is the perfect way to manage internet-connected lights, door locks, and thermostats — it's way more intuitive than having to pull out a tablet or phone every two seconds.
Echo
(BI Intelligence)
But here's the crucial part. The Echo also makes it super-easy to buy stuff, specifically stuff from Amazon.
Alexa can play music from streaming services like Spotify, but it defaults to using Amazon's own Prime Music, which is a pretty key feature for a smart speaker. It's yet another reason for consumers to get a $99/year Amazon Prime subscription...which also gets you free shipping from Amazon, which encourages you to buy more from Amazon.
In other words, whatever else it does, the Amazon Echo is designed to make it easier for you to give more of your money to Amazon. And that slick voice interface for "skills" and for controlling all of your smart home gear ensures that you're always using the Echo and Alexa.
It's pretty genius, in a diabolical way.
Versus Google
This is where things get bad for Google.
The more Alexa devices that Amazon and its partners sell, the better Amazon does at its core retail business. Every Echo is a customer who is more likely to spend more on books, groceries, music, and movies.
Consider Google's position, though. It can sell as many Google Home devices as it wants. And it's true that Google is better at search than Amazon, by a country mile. But Google is a search advertising company, not a retail company, and those Google Home devices aren't delivering ads.
(Can you imagine if they did? "OK Google, open the garage door." "Okay, Matt, but listen to this ad for Mailchimp first.")
Google Home
(Google HomeGoogle)
Sure Google can use all the data it collects through its Google Home speaker to refine the ads people see on its search engine. But the point is that consumers will be spending less time in front of screens and looking at Google's search ads. No matter how good Google's search ads are, it doesn't matter if people aren't seeing them.
But the direction in which computing is moving is clear, and as things stand now, Google's weakness looks like Amazon's strength. And with Alexa on the rise, the clock is ticking for Google.
