Amazon, Fine Margins, and Ambient Computing

There are some keynotes in the tech world that serve as highlights of the year. There is Apple’s iPhone event and WWDC where Apple traditionally deals with software developments. Then there is Google’s IO, and also the Mobile World Congress. Virtually all of these are guaranteed to make news. Earlier last year, it was an Amazon event that captured the news (outshining Facebook’s Oculus event that was held on the same day in the process).

During the event, Amazon launched 14 new products. By any standards, that is a lot of announcements, products, and things to cover in a single event. And so it can be a bit much to keep up with and make sense of what’s happening at Amazon. The short version of the developments is that Amazon is trying to put Alexa everywhere it possibly can. It’s competing with the Google Assistant and Siri, as well as your daily phone usage. It wants you to check your phone less and talk to Alexa more.

It would explain why Amazon has launched ‘echo buds’. They have Bose’s ‘Noise Reduction Technology’ and are significantly cheaper than Apple’s Air Pods. There is also an Amazon microwave (also cheaper than its competition), as well as Echo Frames, and an “Alexa ring”, called Loop. The Echo speaker line has also been diversified to suit different pockets (and has also included a deepfake of Samuel Jackson’s voice, which is amusing and incentive enough to prefer Alexa over other voice assistants unless competition upstages them). Amazon launched a plug-in device called Echo Flex (which seems to be ideally suited for hallways, in case you want access to Alexa while going from one room to another and are not wearing your glasses, earphones or ring). Aside from a huge number of available form factors in which they can put Alexa in, the other thing about these products is how they are priced. You could make the argument that the margins are so little that the pricing is predatory (testament to what can be accomplished when one sacrifices profit for market share). Combine that with how they will be featured on Amazon’s website and you can foresee decent adoption rates, not just in the US, but also globally should those products be available.

In the lead up to the event, Amazon also launched a Voice Interoperability Initiative. The idea is that you can access multiple voice assistants from a device. Notably, Google Assistant and Siri are not part of the alliance, but Cortana is. You can check out a full list here. The alliance is essentially a combination of the best of the rest. It aims to compensate for the deep system integration that Alexa lacks but Google Assistant and Siri have on Android and iOS devices.

Besides making Alexa more competitive, the broader aim for the event is to make Amazon a leader in ambient computing. Amazon knows that it is going to be challenging to have people switch from their phones to Alexa and so likely wants marginal wins (a practice perfected in house). That’s why so many of their announced products are concepts, or ‘day 1’ products available on an invite-only basis. The goal is to launch a bunch of things and see what sticks and feels the most natural to fit Alexa in, so that they can capitalize on it later.

It is Amazon’s job to make a pitch for an Alexa-driven world and try to drive us there through its products and services, but not enough has been said about what it might look like once we are in it. An educated guess is that user convenience will eventually win in such a reality. As will AI, with more data points coming in for training. This is likely to come at a cost of privacy depending on Amazon’s compliance with data protection laws (should they become a global norm).

To be fair to Amazon, the event had some initial focus on privacy which then shifted to products. However, the context matters. For better or worse, these new form factors are a step ahead in collecting user data. Also, the voice interoperability project might also means that devices will have multiple trigger words and thus, more accidental data collection. To keep up with that, Amazon will need to improve its practices on who listens to recordings and how.

Amazon’s event has given us all things Alexa at very competitive rates, which sounds great. If you are going to take away one thing from the event, let it be that Amazon wants to naturalize you talking to Alexa. Its current strategy is to surround you with the voice assistant wrapped in different products. If it can make you switch to talking to Alexa instead of checking your phone, or using Google Assistant or Siri even 4 times a day, that is a win they can build on.