The Amazon Echo Phenomenon and What it Means to the $100+ Billion Retailer

amazon echo

Amazon is not the kind of company that is afraid to fail.

They started their push into the cloud segment through Amazon Web Services (AWS) when none of the tech majors realized there was so much pent-up demand for third-party infrastructure management. In fact, AWS is one of the biggest success stories of Amazon, and one that could fuel the retail arm to much greater heights due to the sheer profitability that AWS brings to Amazon’s table.

The retail giant has been pushing hard into the devices segment despite having mixed results. Kindle has been a moderate success, at best, even though it contributed heavily to Amazon’s early branding efforts. I still don’t understand the value proposition of Kindle, don’t have one yet to give a proper opinion on that, and only a handful of my friends have one – while that conversation will probably make a 180-degree turn if I talk about iPads.

But that didn’t stop Amazon from going a step further and dabbling in the smartphone market with its Fire Phone. Since then, Fire Tablets and Fire TV products have made their way into the market, each displaying varying degrees of success.

Neither the Fire Phone nor any of the other products mentioned thus far were able to set Amazon’s cash registers on fire. Still, Amazon kept pushing into the hardware segment.

But Amazon Echo is an entirely different kettle of fish. and the company might stay in the hardware fight for a long time now, thanks to Amazon Echo.

The retail juggernaut launched Amazon Echo, its voice-activated smart speaker, in late 2014. The connected device has now become a major touchpoint for Amazon customers, making it extremely easy for them to connect to the company, while also doubling up as their personal assistant.

Since the time of the launch until June 2016, Amazon Echo has been sold to over 4 million users, according to FastCompany, while Consumer Intelligence Partners estimated total sales of 5 million Echo devices in the United States as of November this year.

Amazon Echo sales

Echo has reached millions of users in a very short period of time and it is growing fast. Alexa, the Artificial Intelligence bot that runs behind the scenes of Echo, grew to 3000+ skills by September of this year, from around 1000 skills three months earlier. Today, there are 4,271 Alexa skills logged on GitHub and it continues to grow.

The reason the skills list is growing so fast is that there are “tens of thousands of developers” building them and integrating them into their own products. The Alexa Skills Kit (ASK) and Alexa Voice Service (AVS) make it simple – not to mention free – for developers to do this.

Amazon has tasted success with the Echo/Alexa winning combination, and the company is leaving no stone unturned as it competes with other virtual assistants such as Siri, Cortana and Google Assistant.

From a customer’s perspective, Echo offers many functionalities. It can answer most of their questions, place an order on Amazon, stream music or double up as a radio, and there are plenty of other services that it can do to keep them engaged.

From Amazon’s point of view the company is literally a voice command away from the end-user, further cementing the loyalty of its user base of Prime and non-Prime shoppers alike.

As such, I believe this is the second pillar of growth that Amazon can count on for a really long time, the first being AWS. But it’s worth much more than AWS because it funnels users back to its core business, unlike AWS, which is merely a technological offshoot of its business.

As a hardware product from Amazon, the Echo family is second to none of Amazon’s earlier attempts in this space, even the globally known Kindle family. And don’t forget, we’re talking about a product that is all of two years old.

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