Microsoft Corporation (MSFT) Takes on Amazon With Cortana Speaker

Quick: Which tech company would be your pick to pile on the connected home speaker bandwagon? With the surprise success of the Alexa-powered Amazon.com, Inc. (NASDAQ:AMZN) Echo, Alphabet Inc (NASDAQ:GOOGL) joined the fray with Google Home. The spotlight was then on Apple Inc. (NASDAQ:AAPL), but Microsoft Corporation (NASDAQ:MSFT) unexpectedly beat Apple to the punch last week by announcing Cortana on third party hardware.

Microsoft Corporation (MSFT) Takes on Amazon With Cortana Speaker
Source: Microsoft

And the company is already showing off an Amazon Echo competitor, with a video clip of the first Microsoft Cortana speaker, coming in 2017.

Adding another unexpected twist to this plot, the first Microsoft Cortana speaker is being designed by Harman Kardon. If that name rings a bell, it should. Harman Kardon is a premium audio brand that’s part of Harman International Industries (NASDAQ:HAR). And that company was in the news last month because it’s being purchased for $8 billion by Samsung (OTCMKTS:SSNLF).

Microsoft Cortana Speaker

The Amazon Echo has been successful at establishing a prominent spot in the home for AMZN, and made it the hub of many smart homes. This despite the fact that Amazon lacks a smartphone and doesn’t really make any smart devices (other than perhaps the Fire TV). Seemingly out of nowhere, hundreds of third-party smart devices and services now feature Alexa integration because of the Amazon Echo.

Like Amazon, Microsoft has also largely been left behind on the smart home front. Connected devices tend to come with smartphone apps that support Apple’s iOS or Google’s Android. Some are beginning to offer Siri integration and of course a growing number support Alexa — via the Amazon Echo.

Outside of the Xbox, MSFT has a minor footprint in the smart home. But a Microsoft Cortana speaker uses the same approach Amazon took.

It doesn’t matter if no one’s carrying a Windows smartphone if you can get them to buy a speaker that establishes Cortana as their home’s intelligent assistant. Like the Echo, a Microsoft Cortana speaker is then in position to become the de facto smart home’s hub. And it will drive more traffic to Bing — Microsoft’s Google search competitor.

Partnering with Harman Kardon is a smart move on Microsoft’s part. Instead of shouting “me too” along with the Echo and Google Home, MSFT can position its smart speaker as a premium audio solution. The Microsoft Cortana speaker wouldn’t just be an alternative — it would be an upgrade for Echo early adopters.

Once Again, Apple Seems Caught Off Guard

Apple has spent much of 2016 looking as though it’s taking a breather.

New product releases like the iPhone 7 and Apple Watch Series 2 have had the appearance of being iterative upgrades while the company works on true next-generation devices. With the new MacBook Pro, there has been a sense it largely ignored its core user base by introducing a flashy OLED Touch Bar and eliminating legacy ports in the name of getting thinner.

And with video streaming becoming a bigger and more competitive business, Apple seems to have fumbled. It was a pioneer in the living room with iTunes streaming and the Apple TV. But as competing hardware gets cheaper and gains 4K support, Apple still charges a significant premium for Apple TV streamers and neither its hardware or iTunes offer 4K support.

With Amazon selling so many Echo speakers and Alexa threatening to usurp iPhone-based Siri in smart home integration, the expectation has been that Apple would release its own smart speaker. The fact that the company owns a premium audio company that manufactures best-selling Bluetooth speakers — Beats Electronics — makes the move even more of a no-brainer.

But there’s been silence from Cupertino. It’s almost like Apple never saw this coming.

With Samsung’s peripheral involvement through its pending ownership of Harman Kardon, the Microsoft Cortana speaker means that all the big consumer technology companies are now in the game. Except Apple.

If Apple doesn’t move soon, the competition is going to be firmly established. Eventually trying to muscle its way into the smart home — convincing people to ditch their Echo or Microsoft Cortana speaker for a Beats/Siri version — is going to be similar to Amazon trying to get people to dump their iPhones for a Fire Phone.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2016/12/microsoft-corporation-msft-cortana-speaker-amazon-echo/.

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