06 Jan Feature / Fun / Funding Friday – Amazon moves focus to Alexa over Echo
Since I am just beginning to write on a consistent basis, this might be fluid but at least for awhile my plan on Friday’s is to write briefly on one of a few topics: a product feature I really enjoy or think needs some work, something fun (for those days when I am short on time), or a funding that I find interesting.
One product I’ve been thinking a lot about lately is Amazon Alexa / Echo. Judging by the the reports from CES so is everyone else. Not only are the skills Alexa can do expanding rapidly, now over 7,000, but sales of Echo during the holiday reportedly grew 9x over last year.
Yet, despite all of this growth, I am still not sure that the Echo will gain long-term, broad appeal. The reasoning is simple, and I’ve experienced this first hand, engagement with the device dwindles over time.
The graph above illustrates this point well. Almost everyone “plays” with Alexa when they open it out of the box. But as time goes on and the novelty wears off, Echo begins to be just another household electronic.
While sales are great, and growing, consumers don’t appear to be continuously engaging with Echo. Using myself as a case study, I have Prime, but I also subscribe to Fresh, Kindle Unlimited, and Amazon Music. Despite all of these Amazon products the only things I use Echo for are a timer, changing my thermostat, and music (Pandora). However, I used all of these features less than once a month at best. I don’t even use the features that generate revenue for Amazon, like ordering from a shopping list.
The remedy to this problem could be in the news that Amazon has licensed it to Lenovo. Officially making Alexa an OS for other devices in an effort to become the platform for home devices amongst growing competition from Google Home and, assuming it ever happens, Apple’s smart home platform. It makes perfect sense as the value isn’t in the device itself but in increasing the likelihood you’ll use Amazon’s other services much in the way Android is used to get other Google products into consumers’ hands.
Obviously, Amazon has a great product with Echo and the home is the next great frontier for technology. Much like mobile, a few devices and operating systems will own a significant share of the market and Amazon has a significant lead thus far. While the numbers focus on sales of the device, the real trend to watch will be how often Alexa finds it’s way into homes via other devices. Time will only tell if they can leverage Alexa much in the way Google used Android to gain significant share in mobile.