Alphabet Inc‘s (GOOG, GOOGL) Google has a well-deserved reputation for coming after Apple Inc. (AAPL) whenever that company hits a tech home run. But rumblings out of Silicon Valley have Google eyeing the surprise success of a different competitor this time: Amazon.com, Inc. (AMZN). Specifically, GOOGL could be aiming to take down the Amazon Echo.
Apple is often described as a company that lets others do the leg work on a new product category, carefully studying their mistakes before swooping in with a killer device that quickly dominates the category.
The iPod, iPhone and iPad are all classic examples of this strategy.
GOOGL, on the other hand, has frequently fallen into the pattern of watching what Apple does, and when it succeeds and proves the viability of a product category, it releases its own version.
Google tends to come at the project hard, offering lower prices and bringing in third party manufacturers at favorable terms in order to quickly ramp up market share. Think of Android, Nexus smartphones and tablets and Chromecast for example.
But, it sounds like its next high-profile target isn’t an Apple device or service — it’s the Amazon Echo.
The Amazon Echo caught many people by surprise. When AMZN first announced the device in late 2014, it seemingly came out of nowhere. Bluetooth speakers have been extremely popular with consumers, but for Amazon to release its own speaker priced at a premium $199 with always-on voice recognition and its Alexa virtual assistant on board?
That seemed a little out there.
The thing is, the Amazon Echo turned into a sleeper hit that first proved popular with consumers — who initially used it to request music, set reminders and order products from Amazon — then drew the attention of smart home partners.
Now, even as Apple and Google continue trying to figure out how to take over your home, AMZN has stealthily become a key player. Thanks to the integration of Alexa into the Amazon Echo, consumers can ask Fitbit Inc (FIT) for their stats, order an Uber ride, program their smart thermostat and they’ll soon be able to tell Alexa to start their Ford Motor Company (F) car in the morning.
That success has apparently drawn the interest of GOOGL.
What Arsenal Does GOOGL Have Against Amazon Echo?
Google has repeatedly tried to barge its way into smart home leadership. It has the virtual assistant in Google Now, it has moved millions of Chromecast streaming devices, taken multiple stabs at smart TV integration, released its own line of home Wi-Fi routers and even announced its own premium, smart streaming speaker — the Nexus Q — that disappeared before ever hitting store shelves. It tried buying its way into smart home leadership with the 2014 acquisition of Nest, but that’s not going as planned.
With AMZN making such big waves with the Amazon Echo, Google would naturally take notice and according to The Information, it’s now working on a competitor in a top secret project. The GOOGL version would employ Google Now’s speech recognition technology to take on AMZN’s Alexa.
As Android Central points out, GOOGL already does everything the Amazon Echo does; it just doesn’t have it in a single, consumer-friendly home device. A Google version would also have something powerful up its sleeve that the Echo lacks: Google search.
Naturally, GOOGL seems likely to bake in tight integration with its Nest smart home products — the Nest Learning Thermostat already works with Amazon Echo — and Google also has the option to leverage the billions of Android mobile devices carried by consumers.
One thing GOOGL lacks is a personality for its virtual assistant. AMZN’s Alexa, Apple’s Siri and Microsoft Corporation’s (MSFT) Cortana have all been designed as assistants with personality that speak back to the user, and the friendly approach is part of the Amazon Echo’s appeal. Google Now is extremely capable, but it lacks that personality.
Last year, the Amazon Echo was the top-selling product over $100 during Amazon’s Black Friday sale and it was a top-seller at Christmas as well. In March, two new Amazon Echo devices were announced: the Echo Dot and Amazon Tap. Now Amazon is selling the Echo experience in a portable version and a less expensive version, knocking down more barriers for consumers.
With momentum on AMZN’s side and the smart home market expected to be worth nearly $60 billion by 2020, the pressure is on Alphabet to do something to derail the Amazon Echo before it becomes the de facto standard.
If GOOGL acts soon, it can ride the wave of consumer interest and knock the Echo into a distant second the way it used Android to push aside Apple’s iPhone and iOS.
The fact that GOOGL already has virtually all of the pieces needed and its pattern of coming after new category leaders all point to the fact that Alphabet would be crazy not to be working on an Amazon Echo killer.
All of this makes the rumors that it is working on its own smart home hub far from shocking.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
