Amazon ups the ante in the land grab for the home

Written by on September 22, 2017 in Guest Blog with 0 Comments

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Amazon increases its aggressive land grab. Not content to sit on 70% market share, Amazon is aggressively compensating for the lack of Alexa on smartphones by effectively giving the devices away and pushing e-commerce as hard as it can.

A land grab strategy makes complete sense because the more Amazon can drive Alexa usage, the more data it will generate and the better it can become.

  • Usage is the key to making all digital assistants better and this is the one area where Amazon has huge ground to make up compared to Google.
  • Amazon has launched yet another Alexa device which costs $20 but this is immediately credited back to the user when it is registered with an Amazon account making it effectively free.
  • The latest addition to the family is called the Amazon Dash Wand which can be used to scan bar codes or Alexa to order products from Amazon.
  • Alexa is present on the device and while this is clearly aimed at driving e-commerce, there is no reason why it can’t be used to answer inquiries or control the smart home.
  • The one thing it won’t do is play music or radio but when the whole device costs $20, it is obvious that the audio experience would not be worth the effort.
  • At the same time, Amazon is also offering $50 off the Amazon Tap reducing the price of the portable speaker to $79.99.
  • The two weaknesses of Amazon in the digital assistant space are that it is inferior to Google and that Google Assistant is present by default on every Android smartphone that ships.
  • This means that if Google can convince users to use their smartphones to access the digital assistant, then Amazon will be at a big disadvantage.
  • However, at the moment over 60% of all digital assistant usage occurs when the user’s hands are busy with another task which obviates smartphone usage as the device almost always has to be removed from a pocket to be activated.
  • This, combined with the fact that Google is still really struggling in the smart home (see here), is why Amazon still has the upper hand which it is showing no sign of losing.
  • This move is clearly aimed at seeding as much of the market as possible before Google can get its act together.
  • If a large number of households have Alexa which is working nicely with the other smart devices they have at home, it will be increasingly difficult for Google to win them back even with a superior product.
  • This is particularly relevant given that the market is still lowly penetrated in USA and is almost non-existent overseas.
  • Given Google’s very slow progress, I am increasingly of the opinion that we are witnessing a repeat of the VHS vs. Betamax battle.
  • I continue not to like either Alphabet or Amazon (even if it wins the smart home) on valuation grounds, preferring instead Tencent, Baidu and Microsoft.

This article was first published on RadioFreeMobile.

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Richard Windsor

About the Author

About the Author: Dr Richard Windsor is the founder of Radio Free Mobile which is an independent research provider. The research helps clients to understand and evaluate the players in the digital ecosystem and presents a unique perspective on how all the pieces fit together in an easy to read and digest way. The product is available on a subscription basis and counts members of the handset, telecom carrier, Internet, semiconductor and financial industries as its subscribers. RFM is the land of the one man band meaning that Dr. W. also makes the tea. .

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