It’s good to be the King. But it can bring responsibility you’re not equipped to handle. Take Amazon (NASDAQ:AMZN), for example. Its Alexa smart speaker dominates the market for consumer-based artificial intelligence.
This means Amazon is winning the “Great Game” that the four largest “Cloud Czars” are currently focused on, the voice assistant market. Amazon is beating the Apple (NASDAQ:AAPL) HomePod, and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) Google Assistant in sales, although Google is doing all it can to catch up. This could mean putting voice interfaces like Apple’s Siri and Microsoft (NASDAQ:MSFT) Cortana in the shade, at least in the consumer market.
In addition to selling Echo speakers on its own site, Amazon is signing OEM deals in subdivisions and hotels, with special versions for things like room service. Consumers with Echo reportedly buy 29% more from Amazon than those without it.
But smart technology is no match for smart people, and AI is no different.
Alexa As a Weapon
The New York Times, for instance, recently reported on the Alexa’s use as a weapon in domestic abuse cases. Men who install the technology and later fall out with their partners may use it for surveillance or harassment, turning on lights and music at random, using their knowledge as a weapon. Courts have been slow to include technology access in restraining orders.
By recording conversations, and seeking to respond to what it hears, devices like the Echo are working precisely as designed, leading the U.S. Senate to recently seek answers directly from Amazon CEO Jeff Bezos.
Echo does have a feature that lets you hear and, if you like, erase interactions with it, but using it is like trying to edit your web browser’s history. It’s time consuming and most people don’t do it. If they have a problem, they just erase the history. Do this with the Echo and you destroy the intelligence you bought it to accumulate.
It’s these highly publicized problems that may yet allow the Google Assistant to catch up with Alexa’s early market lead. Statista expects the Google Assistant to overtake Alexa by 2020, thanks to its Google Android phone system.
Jupiter Research expects the voice assistant market to grow by 1,000% over the next five years, from the current 25 million homes to 275 million. Jupiter expects Amazon to maintain its market lead, as smaller merchants introduce monetized skills, like shopping lists, to its ecosystem. Amazon’s ability to get appliances supporting its system was first demonstrated at the 2017 Consumer Electronics Show.
The Next PC
As voice assistants become interfaces to home appliances, their “skills” become applications in a growing operating system. Think of Alexa or the Google Assistant as a Microsoft Windows for the home, their skills define what people can do with their property, and you start to see the potential.
If Amazon really is winning this version of the “Great Game,” as it appears, it offers an important insight to investors. It means that Amazon isn’t just dominating the server market of the future with Amazon Web Services, but the client side as well.
Eventually Microsoft and Apple may have to bend to this new reality, making their Cortana and Siri interfaces compatible with Alexa skills. But they would likely be subsidiary and subservient, unless the government intervenes in this growing Amazon “monopoly.”
The bottom line is simple. Amazon is winning the Great Game, and beyond the $1 trillion in market cap race now taking place among the Cloud Czars, it may be your best bet for profit in the next decade.
Dana Blankenhorn is a financial and technology journalist. He is the author of the historical mystery romance The Reluctant Detective Travels in Time, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing, he owned shares in MSFT and AMZN.
