The Future of Amazon’s Alexa

Last night during the Super Bowl, Amazon aired an ad promoting its home voice assistant, Alexa. This is the fourth consecutive year that Amazon has aired an ad promoting the product during the Big Game. The 90-second commercial reportedly cost Amazon upwards of $15 Million to air, a figure that does not account for the cast, crew, or production costs.

The spot features a comical spin on innovation trials and errors Amazon has faced with Alexa, like installing Alexa in a toothbrush, a dog collar, and a hottub. It was only when I went back to re-watch the commercial today that I began thinking of all of the practical, real-life applications of Alexa.

Virtual Assistants

Virtual Assistants are not uncommon and different versions of this technology have been around since the 1960’s. However, their modern, mass-market appeal was relatively recent, with Apple’s announcement of Siri in 2011. Since Siri’s debut, virtual voice assistants have taken off. Most are activated by the user saying a single word or phrase aloud, such as “Hey Siri” or “Alexa”. At this point, the device listens to the user’s request, processes the request and sends the request into the cloud, bringing back the appropriate response. These activations can satisfy many different requests such as answering questions, playing music, or turning on lights around the house.

Alexa’s Debut

In the fall of 2014, Amazon announced Alexa with the debut of its Echo home wireless speaker and the reactions to the product were mixed. One reporter for Entrepreneur wrote that the product was disappointing and recommended that readers stay away from the device, as its uses were limited and imperfect. In addition, some consumers were initially skeptical that this ‘always on’ device would be recording private conversations and could be used for spying.

I will admit, when I first saw the device in 2014 I was not very impressed. “Why spend nearly $200 on this speaker when I already have a majority of those functions at my disposal 24/7 with Siri in my pocket?” I remember thinking to myself.

However, Amazon’s device sales doubled in the year following the release of the Echo, and they have not seemed to slow down at all since. Adoption of Amazon’s virtual assistant skyrocketed in its first three years, and in the Fall of 2018 it was reported that Alexa-enabled device sales surpassed 100 million units, an impressive milestone.

Alexa’s Success

In a world that is growing reliant on smart devices, there is much competition in this market. More commonly, virtual assistants are delivered to customers as an add-on to an existing piece of hardware, like Apple’s Siri, Microsoft’s Cortana or the Google Assistant. Amazon’s Alexa isn’t an added bonus, it is the main feature.

As Amazon’s Echo took off, rivals Google and Apple took note. In 2016, Google released the Google Home and in 2018, Apple debuted its version, the Apple HomePod. Just this past fall, Facebook followed suit and released ‘Portal’ which is a video-cenric smart-speaker.

Although the competition in the smart speaker market is now greater than ever, a recent report by Strategy Analytics estimates that Amazon still holds 41% of the market. With such a dominate hold on the market, it will be difficult for another product to surpass Alexa, although Google is making a strong effort. Some of this dominance is due to the fact that Amazon was one of the first movers in this market, but Amazon’s ability to cultivate a strong developer ecosystem may have given them the strongest competitive advantage.

Alexa Outside of Amazon

Soon after Alexa’s release, Amazon knew the potential was greater than answering basic questions, playing music, or adding items to your Amazon shopping cart. In the summer of 2015, Amazon announced a software development kit for the technology that would allow developers from across the world re-imagine and reshape the technology to suit their needs.

In addition, Amazon added some fuel to the fire with a $100 million investment fund aimed at startups that would use Alexa’s technologies for their services.

And it worked. Alexa is now available for use in over 20,000 unique devices, from automobiles to other speakers. Amazon regularly hosts competitions with cash prizes for creative implementations and development using Alexa.  But Amazon has not outsourced all of the development for this product. In fact, the company more than doubling the number of employees working on the product to 10,000 at the end of 2018, a move that shows that the company sees a bright future for the technology.

The Future of Alexa

The future of this technology lies more in the software than the hardware. The way I see it is that Alexa id the glue that brings together all smart devices and provides a coherent, user-friendly experience. These use-scenarios are nothing ‘out of left field’ and, in some cases, are already being implemented. Alexa will be the one to connect your stereo, calendar, pantry, garage door, car, security system, lights, doorbell, TV, appliances, thermostat, and cell phone, all in one. All conveniently accessible at your finger tips the tip of your tongue.

7 thoughts on “The Future of Amazon’s Alexa

  1. Interesting blog George. I recently set up Alexa in my room at school and as much as it is true that it seems almost pointless when I have access to nearly everything on my phone, it has definitely been a game changer for getting ready in the morning. I also recently saw an article that was talking about how Nest’s security alarm system can now double as a Google Assistant device. Curious as to the privacy concerns that follow this

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  2. Great post, George! It’s fascinating the phenomenon that Alexa has become–the technology seems to be everywhere, and growing. I remember when my family first got an Alexa, it felt like foreign technology to us, but we use it all the time at home. I’m looking forward to seeing what other (actually) practical applications we’ll be seeing related to this technology.

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  3. Thank you George! It is very informative on how Alexa got to be denominating the market today. Tech firms like Amazon, Google, and, Alibaba are all entering the market of smart home appliances with the introduction of a smart speaker. The commercialization of lighting control, temperature control systems, smart TV’s, smart door locks, and other appliances is just around the corner. Nowadays, a smart lamp (that can be turned off on phone or through smart speakers) has to be designed for multiple platforms just like how mobile games are coded differently for IOS and Android systems. It will be interesting to see which platform will win the market and how will softwares/platforms like Alexa treat privacy issues.

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  4. Amazon’s Alexas and echoes are everywhere. While nannying this summer, the kids would use these devices proficiently, showing me functions I did not even know was available. I wonder how the popularity and success of this product has affected overlapping markets. For example, the first that comes to mind is Bose. Do people buy less traditional speakers as a result? How are similar companies compensating for this? Awesome post!

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  5. Great post George! When I usually think of Alexa, I just think of the speaker in the home, but it is exciting to hear all of the different areas that it will continue to move into. I don’t personally have an Alexa, but the four-year-old kids I nannied for over the summer did, and they were obsessed with it, which got a little annoying to be honest. It was great to play them music, but I was always a little bit worried about everything they had power to do with it if I left the room. I think these are still concerns, making sure the right people are giving orders to it. I’m not sure if there are factors in place for this?

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  6. Solid post. Have a couple friends with Echo, but they don’t really use it. I was a bit doubtful of the product at first, however, their $100 million sales seems to have proven to me that Echo does bring value to its customers. Interesting to see how a first mover can have such an incredible long lasting advantages. Definitely emphasizes the essential timing element of releasing products.

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