Two Scenarios for Amazon’s Alexa

Amazon’s Alexa, or more specifically the Amazon ecosystem, is again the star of CES. This felt somewhat predictable, given the coming out party Alexa had last year at CES, but Google is trying to spoil Amazon’s party by creating the illusion Google Assistant is everywhere by advertising it along with a “Hey Google” branding campaign on nearly every available billboard and sign around Vegas. But that is all it is an illusion. As I saw the announcements from most the major brands and smart home accessory companies they are still fully on board with Alexa as many still support Google from a smart home control standpoint, they are not integrating Google Assistant into their hardware but instead choosing Alexa as the main assistant and interface. For many OEMs this is a full-on bet on Amazon’s ecosystem to the chagrin of Google which is not the main interface but a second-rate ingredient.

Given what we are seeing with Alexa’s dominance, there are really two main scenarios I see playing out. Either Amazon is entrenching itself as not just the early winner but the preferred partner by most major hardware companies, or this is all a short-lived anomaly and Google, and or Apple will swoop back in and push Amazon to the side.

I hear from a lot of pundits, the dismissing of these assistants and Amazon’s in general because they have no real presence on mobile devices. Yes you can install Alexa on your smartphone (both iOS and Android) but it will never be as integrated as Assistant on Android or Siri on iOS and on mobile integration will always win out. However, it seems hard to dismiss the sheer size of the wide industry and hardware OEM support we are seeing around Amazon’s ecosystem. And again, the meta-point/observation here is around the ecosystem.

The bottom line is many manufactures are not just supporting Alexa they are integrating it into their hardware. This carries with it some important challenges I will address later, but my point above was that integration always wins and Alexa is, as of now, is the voice assistant of choice of many smart home/and even auto manufacturer choice to integrate into their products.

This is very much like an Android situation for everyone not making smartphones. The broader consumer electronics atmosphere is moving toward Amazon’s Alexa platform the same way many smartphone OEMs moved to Google for Android and away from Microsoft’s platform.

In fact, I view what I’m seeing in similar ways to how Microsoft partners wanted an alternative to Microsoft and thus moved to Google. Google, however, has not proved to be a good partner to many OEMs and they now want an alternative to Google. In comes Amazon, who is also hard to work with but I hear much better things at this stage then I did with Android. When you don’t control your own platform like Apple does, you are really just selling your soul to another devil, but I think Amazon has more to offer overall than Microsoft and Google due to the size for their transaction marketplace to help partners sell products.

So could Amazon’s run be short lived? I find this scenario unlikely and those dismissing what we are observing short sided. There is simply too much momentum at this point. Now, that does not mean if you are an Apple customer or Android owner who wants to use Siri or Google Assistant that you are left in the cold. I fully expect many of the companies integrating the Alexa assistant to also support HomeKit/Siri and Google Assistant. So ultimately the choice will be yours, but the challenge here will be on how much better Alexa works in these contexts than Siri or Google Assistant. Again, we can’t dismiss how integration tends to win and outside of Android and iOS, Alexa seems to be the CE manufactures choice for integration.

From my discussions with CE manufacturers, the resounding feedback is Amazon has been a better partner than Google in all of this. This one insight alone is a key reason I think Amazon holds their lead here in markets where they compete. There are many dynamics to this market, and how it is developing that don’t favor Apple’s or Google’s approach. Both companies need to pivot or they do risk losing some of the grip they have on their customers to date. Hopefully in 2018 we will see, Apple in particular, make strides here and better position themselves and Siri for this battle.