What is Amazon’s ultimate Alexa strategy?
At its hardware event in Seattle last week, Amazon.com introduced a whopping 15 new products linked to its Alexa platform with the apparent goal of being a voice-command away from consumers at any time. Not everybody, however, is seeing the commerce connection.
Much speculation ensued on why Amazon launched so many items, including wireless earbuds, smart glasses, a smart ring and a multifunction oven that can double as a microwave and air fryer. Also being increasingly debated is whether Amazon needs to make money directly on Alexa-linked hardware devices and whether the ultimate benefits may extend beyond voice commerce.
In a blog entry following the event, Loup Ventures, a venture capital firm that publishes research on consumer technology, writes that Amazon’s Alexa ecosystem is “a bit of a head-scratcher” because voice shopping hasn’t taken off.
“It makes sense that Apple sells HomePod as part of its hardware + services model, or that Google gathers information from Google Home to sell ads,” Loup Ventures said in the blog entry. “But the buying experience on Alexa remains prohibitively challenging. So, it’s not clear what Amazon is really driving through voice other than low-margin device sales.”
In a note, Macquarie Research’s Ben Schachter wrote that he believes the Echo business model is “still evolving,” and that one way to monetize the platform will be taking a cut from developers of apps or “skills”. Mr. Schachter wrote, “We don’t think Amazon intends to make significant money from hardware sales directly, but rather from increasing touchpoints to the overall ecosystem and app store-like models.”
Daniel Newman, principal analyst at Futurum Research, wrote for MarketWatch, “The expansion of the Amazon line will power the company to another level of customer insights, which will lead to greater spending by you and greater earnings for the e-commerce giant.”
“With an increasing push to get its Alexa voice platform absolutely everywhere,” commented Navneet Alang, technology writer, in a column for The Week, “Amazon’s plans finally seem to be coming into focus: The company believes voice will supplant the smartphone as the next big platform.”
- Amazon Introduces New Line-Up of Echo Devices – Amazon.com
- As Amazon floods the market with Alexa devices, the business model is getting fresh scrutiny – CNBC
- Amazon (AMZN) Pushes the Boundaries on Smart Hardware – SmarterAnalyst
- Amazon Extends Alexa’s Reach Into Wearables – The Wall Street Journal
- Amazon’s dystopian plan to be anywhere and everywhere – The Week
- Opinion: Amazon’s Alexa is about to become even more of a fixture in our lives – MarketWatch
- Amazon hardware event: Meet the new devices and services in Alexa ecosystem – ZDNet
DISCUSSION QUESTIONS: What do you think Amazon’s goal is with the Alexa platform? What do you think it should be?