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 the 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 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 (a 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 mean 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 naturalise 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.

The folly of breaking up Big Tech

Further, breaking up these companies would significantly reduce the value consumers get due to the high interconnectedness of the products. A lot of the value that Google has seen in the Maps platform, for instance, comes from all the data that they have from Search. Customers also receive a lot of value from other Google products that are cross-subsidised from revenue earned in other products. YouTube, for instance, is widely believed to be non-profitable but is supported by revenues earned by other products.We would also have to stop and wonder how is it that one of the most integral parts of our lives — Google Search — is provided free of cost. Google can give the service for free because it can monetise it with advertising. If Google is broken up, this would no longer be possible. Breaking up any one of these services would give us substantially less valuable services.Breaking up these technology companies would also have a severe impact on innovation in the sector. As an article in Politico points out, “The top five spenders in research and development in 2017 were all tech companies. Amazon alone spent more than $22 billion. The development of autonomous vehicles, artificial intelligence and voice recognition wouldn’t be nearly as advanced as they are now if it weren’t for the work of Google and Amazon”. Investing in R&D and finally introducing them into the market is an expensive ordeal. However, big tech companies can afford to do so because of the nature of interconnectedness that exist within their products...Read the entire article 

What All Those Ministers Say!

This is the ninth edition of The Jobscape, our weekly round-up of news and opinion on the state of employment and job creation in India. In this edition, we look at the ministrations of Modi’s ministers, Ambani vs Bezos, jobs for trans men, and unfair taxes on angel investors.Read more

Go Easy on Amazon and Flipkart

The FDI in e-commerce policy clarifications made by the DIPP was done in order to help the small retailers from getting exploited at the hands of the big e-commerce players. While it may help them in the short run, an atmosphere that is not conducive to investment in this sector is bound to hurt them in the long run.Both Amazon and Flipkart have planned to approach the government together to reconsider these provisions. If they fail to convince the government, they will shrink the size of their future investments. This can have a significant negative effect on the entire e-commerce sector and can lead to job losses due to the closing of their private labels. Not to mention the loss of the number of jobs they would have created by their extension plans. Cities in the US are fighting with each other to provide incentives and attract Amazon’s second headquarters, while the Indian government is driving away from the investment.Finally, the decision is bound to hurt the Indian consumers. By limiting the number of discounts given by the private labels, the consumers will have to pay a higher price for their purchases. It will also reduce the variety of goods that are available to the consumers for online purchases.Vertical integration can have anti-competitive practices but can be dealt with in a far more efficient manner than outright bans on such operations. Antitrust authorities across the world have tools to recognise and prevent practices that can hurt consumers and small retailers. The competition commission can be given the mandate to develop these tools and implement them instead of killing the goose that lays the golden eggs.Finally, this would also be the right time to revisit the policy of not allowing FDI in multi-brand retail. The parochial fears of potential harm to small retailers are overplayed in the public discourse. All of the small retailers in question have benefited massively from the presence of these platforms. They are now able to reach an unimaginable number of customers because of the platform. Similarly, multi-brand retail can have a massive positive effect on economic growth and job creation.Read More