Company / division: Amazon
Amazon Readying Launch of Echo Device with a Screen (Apr 27, 2017)
★ Amazon Scales Alexa Back-End by Opening Lex Voice and Text Service to All Developers (Apr 19, 2017)
So much of the focus of coverage of voice assistants and interfaces is on the dedicated consumer products which use them, and that’s natural: these are the most visible and measurable signs of a company’s success or failure in this space. And yet the scale of those dedicated voice product is still very small relative to smartphones, which carry their own voice assistants. And scale is vital if these products are to improve, because they require lots and lots of training to get better, and so the more users there are training them, the better they become. As such, I suspect the next phase of competition in this space is going to be about developer voice platforms at least as much as it is about first-party hardware and software, and we’re starting to see signs of this from the big companies in the space, including Google and Amazon. Today, Amazon announced that Lex, which is a back-end service that combines many of the technologies behind Alexa, is opening up to all developers. But critically, this isn’t just a voice platform – it supports text and voice processing, which means that many of the developers might use it in chat bots or other similar environments that have nothing to do with voice but still help train Amazon’s natural language processing tools. Google is doing similar things with its own voice processing technology, but it’s doubtful whether Apple will ever open its voice tools up in the same way. That’s not a huge deal, because it has massive scale in voice on smartphones alone, but it may make a bigger difference over time as these other platforms benefit not only from growing first party scale but increasing third party adoption and use too.
Amazon Isn’t the Only Reason US Retail is Suffering (Apr 18, 2017)
Amazon to Provide its Echo Mic Array and Related Technology to Select Hardware Partners (Apr 13, 2017)
Amazon’s Third-Party Sellers Hit By Hackers – WSJ (Apr 10, 2017)
The bigger you get in almost any technology business, the more hackers will try to find ways to infiltrate that business and skim off some of the money. That now appears to be happening at substantial scale with Amazon’s third party sellers, many of which are likely relatively unsophisticated from a computer security perspective. The hackers are engaging in at least two separate behaviors, in some cases merely redirecting sellers’ proceeds into different bank accounts, and in others taking over dormant seller accounts and posting fraudulent products. Though it sounds like Amazon is making both buyers and sellers whole, it could be doing more to prevent the issues from occurring in the first, place, not least by requiring two-factor authentication for seller accounts. Though there’s often reluctance to force 2FA on users in the consumer space, these aren’t consumers, and the amounts of money involved make that an entirely sensible precaution. Given how much of Amazon’s total sales goes through third party sellers at this point, this could become a massive issue if it doesn’t do more to lock things down.
This is a fun little comparison done by a user in the UK of the ability to the two major home smart speaker units to answer 54 questions. Google Home wins in the end, with 32.5 answered correctly, to 19.5 for Echo/Alexa. The questions were a mix of simple and challenging, and the user was in the UK and asked quite a few UK-specific questions, taking advantage of the fact that both devices recently launched there. But it’s a great illustration of both how Google has the existing skillset to do really well in this category, and also the fact that all these assistants have some way still to go to answer all the questions users might reasonably expect them to deal with.
What do you do if you have two separate hardware products for the home which are selling modestly but not fantastically and have some common elements? You combine them, of course, and so Google is apparently considering a future device which would bring the features of its Home and WiFi devices together in a single unit. That would lower the combined cost and depending on the price potentially also increase the attractiveness relative to either the standalone Home or WiFi devices as they exist today. Given that a single unit of either item today costs $129, it’s entirely feasible that Google could combine the two in a new unit that would still be price competitive with the Amazon Echo while offering a lot more functionality, so this is an interesting angle. But Google Home’s main challenges continue to be less about price and more about name recognition and distribution – the Echo captured the early interest in this space and quickly became the market, heavily leveraging Amazon’s retail distribution channel, while Google continues to struggle to get adoption for its version. Though this move may help spur sales, I don’t think it’s going to lead to the kind of step change Google needs to be a more meaningful competitor.
via The Information
This is an interesting outcome to this bidding process, with perhaps the most interesting part being the price to be paid by Amazon, which is five times what Twitter paid for the equivalent rights last year. I had wondered if the NFL was going to let the winning broadcaster sell more of its own ads, which would have justified a higher price, but as that doesn’t seem to be the case it looks more likely that the higher price was the result of a bidding war. If I recall correctly, Twitter was said not to have been the highest bidder last time around, so it’s possible both that Amazon (and possibly others) bid more and that the NFL decided to go with the higher bidder this time. From Amazon’s perspective, the deal certainly fits with two existing initiatives: its increasing focus on TV and in particular live TV, and its slow but steady push into advertising. The big issue Amazon has with TV at this point is that its efforts are spread over two very different brands and channels, namely Twitch and Prime. At some point, the aggregation strategy that’s served its Channels business well will likely make sense in live TV too. But broadcasting live TV is a great opportunity to market Amazon hardware products to a captive video audience as well.
In some ways, it’s very easy to predict what Amazon will do next in its e-commerce business, by simply identifying the biggest barriers to its continued growth. Which categories is it under-represented in? Clothing and groceries, and so you get private label clothing lines and various takes on combining online and other technologies with brick and mortar pickup. In the case of this item, we’re answering the question: what are the biggest remaining barriers to people buying stuff from Amazon online, to which at least part of the answer is that lots of people (around 7% of households in 2015) don’t have bank accounts or credit cards. Several times that number also regularly use check cashing, payday loan, and other related services, which expands the addressable market for something like Amazon Cash, which is intended to allow people to put money into an Amazon account by paying cash at a retailer. This is a logical next step in enabling more people to buy things from Amazon.com, and I expect we’ll see more efforts at this kind of thing going forward.
Amazon and Walmart are in an all-out price war that is terrifying America’s biggest brands – Recode (Mar 30, 2017)
This is a fascinating article that looks at the competitive dynamics between two of the most powerful companies in retail: Amazon and Walmart. Walmart is legendary for the pressure it puts on its suppliers to conform to price expectations, but it appears that it’s going even further in demanding that those suppliers get their costs and prices down so as to allow it to compete with Amazon more effectively. Meanwhile, Amazon is pricing in a way that’s not necessarily rational or consistent with generating profits, which means that the competition between the two, while great for customers in the short term, is likely unsustainable for both the retailers and their suppliers, and something will eventually have to give. No surprise, then, that some of the CPG companies are starting to look to alternative channels, though realistically no big brand can afford to be off either of these companies shelves – in warehouses or stores – for long. This is likely to get a lot uglier before it gets any better. Meanwhile, that means that we may see more slowing of growth at Amazon along the lines for what we saw a little of in Q4 last year, while Walmart and its ilk will continue to pursue stronger growth at lower margins.
To be honest, I’m surprised we haven’t seen more cynical takes on the idea that Amazon would shut down a business for not being profitable enough, given how razor-thin Amazon’s own margins on its core e-commerce business have been for years. It’s also surprising that Amazon hasn’t been able to do to this Quidsi business what it’s done for its own business and for other acquisitions like Zappos over the last few years. Diapers.com feels like very much the same core value proposition as some of Amazon’s other properties – great selection, good curation and other features, and so on – and yet it hasn’t been successful despite having Amazon’s backing and presumably access to its logistics and other operations. It sounds like the team will be wrapped into Amazon’s other operations at this point and of course Amazon already sells all the same items through its own site, so there’s probably no big net loss here for Amazon, because much of the business will just be redirected there. But it’s an unusual failure for Amazon in the e-commerce space.