How the Amazon Echo Gamble Pulled the Rug from Under the Tech Giants. Again.

Amazon Echo with Alexa

Now that Amazon Echo has reached more than 8 million homes (at least), we can move past discussing how good the Echo is as a product, and start looking at how the AI powered smart speaker will evolve in the future. Specifically, what does Amazon want from the Echo?

Amazon once again caught the tech giants napping, this time in the gadgets market instead of cloud computing. As Apple and Samsung kept fighting for smartphone dominance in the premium segment, Amazon, fresh from its failure in Fire Phone, had to look elsewhere to get closer to the end user. Almost as if on cue, Amazon launched its smart speaker, the Amazon Echo with its AI-powered Amazon Alexa, in October 2014.

The funny thing is, Amazon wasn’t even the first company to launch a personal intelligent assistant. Apple launched Siri in October 2011, four years before. But it was Amazon that thought of getting a smart speaker coupled with a personal assistant into our homes.

If you think about it, nobody stopped Google or Apple from launching their own smart speaker. Apple is still sitting on the sidelines, as a matter of fact, and even Google took a full two years after Amazon Echo launched to get into the game. Meanwhile, both companies had to watch the soaring sales of Echo in the United States. And nobody still knows if or when Apple will ever get into the smart speaker market, even though they have a (relatively small) presence in the smart home segment with HomeKit.

The problem was, both Google and Apple were already in most homes and hands around the world. iOS and Android are firmly in control of our smartphone world. As a result, because they could offer a smart digital assistant as an app inside smartphones, it’s possible that both companies underestimated the need for a standalone device paired with an intelligent assistant. They likely thought smartphones were enough because the entire world was in their pockets anyway. Or, rather, their products were in the world’s pockets!

Amazon had no such luxury, but it took a gamble anyway and launched Alexa and Echo together. And the market’s response has been overwhelming so far, to say the least. According to Consumer Intelligence Research Partners, Amazon Echo has reached more than 8 million homes. That’s a significant number when you consider the total number of households in United States is around 125 million. If Amazon Echo continues its current momentum it could very soon find its footprint in at least 10% of US households.

The other key factor to remember is Amazon Prime, the total membership base for which is estimated to be more than 65 million users across the country. These hardcore Amazon fanatics will naturally be more inclined to chose Amazon Echo over other products, and that’s a huge added bonus for the company. That’s also the reason why Amazon pushed out its voice shopping feature for Alexa right before the holiday season last year. That’s paying off handsomely as well.

Amazon Alexa may have more longevity than Amazon Echo devices, but their journey together is far from over. Though Alexa is going her own way in the form of integrations with other smart products, this combination is something even Microsoft wants in on. They’re adding bells and whistles in the form of Harman/Kardon audio, and pushing hard on Cortana Skills, but it’s essentially about following Amazon Echo’s footsteps and trying to get a share of the pie that Amazon baked.

Amazon Alexa is Big, but Microsoft Cortana’s User Base is a Massive 145 Million

As for what Amazon wants from the Echo, that’s the easiest thing to figure out: they want one in every home so people can shop from Amazon’s core retail business and be a part of the Amazon “Echo-system”, and in the one place where people spend the most amount of time – HOME!

They’ve got a long way to go, but the momentum is certainly there to turn that dream into reality. Just like they now lead the field in cloud computing infrastructure despite having Microsoft, IBM and Google on their heels, they’re going to keep leading the smart speaker segment. pushing their competitors to offer better and more sophisticated products.

And the ultimate beneficiaries of that fiercely competitive scenario are you and I – the humble consumer in front of whom all technology companies must necessarily bow.

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