If you’re following the news, you would think the biggest story facing Amazon.com (NASDAQ: AMZN) these days would be the pending divorce of company founder Jeff Bezos. But you’d be wrong. As market pundits and the tabloids debate what will happen to Bezos’ billions, AMZN keeps on keeping on. And its latest product launch now puts on of its best future money-making ideas on the road.
We’re talking about Alexa and your automobile.
As the focus has been on divorce, Amazon has quietly begun securing new deals and shipping new devices designed to take it’s A.I. assistant on the road. Already the dominant force in your home, Alexa will now be dominate force wherever you go. That fact will lead to even more revenues for the Amazon machine.
For investors, it’s just another reason why AMZN stock continues to be in a league of its own and is a big buy for long-term shareholders.
Amazon Hits The Road
Alexa has a lot of fans. According to Amazon SVP of devices and services, Dave Limp, the firm has sold more than 100 million devices with its A.I. assistant installed. That’s a big deal as Alexa has the potential to be a huge moneymaker through sponsored ads and premium content contained within so-called skills. It’ll collect some hefty fees from these millions of devices as these initiatives take off.
The problem is, once you walk out the door, AMZN can’t really influence you via ads or push you into making a purchase. Well, that’s about to change. That’s because Alexa is coming to your morning commute.
Over the summer, Amazon announced a slate of new devices that use Alexa. Tucked within the laughable microwaves and wall clocks was a small device designed to go inside your automobile — the Echo Auto. It turns out, AMZN has another runaway hit on its hands. The device still remains an “invite-only” item. However, over one million of these devices have already been sold and recently began shipping at the end of December.
In addition to its own branded devices, Amazon has begun selling several third-party auto-focused Alexa products. Amazon recently announced that it partnered with Pioneer to add its Alexa A.I. to new aftermarket stereo systems, while specialist Garmin (NASDAQ:GRMN) now offers several GPS and smart speakers with Alexa capabilities. Anker’s Alexa-enabled Roav Viva plugs directly into your cigarette lighter and functions nearly identically to the Echo in your house.
Amazon Makes Some Big Auto Deals
However, Amazon isn’t just taking the roadshow to older cars via the aftermarket. It’s making deals to get Alexa inside newer autos as well. The firm has already partnered with Toyota (NYSE:TM), Hyundai, BMW, Ford (NYSE:F), and Audi to get Alexa into their car’s infotainment/navigation decks on newer models. At the same time, Alexa maybe coming to every auto in the near future.
Amazon announced a big deal with HERE Technologies at CES to help develop a “voice-first” in-vehicle navigation system. HERE’s Open Location Platform (OLP) uses data from several car manufacturers to provide insights into real-time location and traffic. With it, users get real-time traffic information parking congestion, weather, live fuel prices, and now even EV charging stations. The reason why the HERE deal is a big one is that the software has already been installed in roughly 100 million vehicles.
Amazon signed a similar deal with TeleNav (NASDAQ:TNAV) to add Alexa to its in-car navigation systems.
Get Ready For A Big Auto Revenue Boost at Amazon
As you can see, Amazon as already overtaken our homes and is quickly moving to overtake our vehicles as well. For shareholders, that’s a great thing. Like before, the name of the game is selling sponsored ads and skills within the Alexa platform. And it should be able to do that easily.
For example, the HERE partnership opens up an interesting and natural way to make money from directions. Right now, a GPS unit will tell you to “Turn left on Allen Street.” But when you’re naturally talking to a friend, those directions often include landmarks. “Turn left on Allen Street” becomes “Turn left on Allen Street. Right after you see the Starbucks.” Naturally, Starbucks (NASDAQ:SBUX) would send Amazon a check in order to get its name into the directions. The beauty is, the speech makes it natural and we don’t feel like we are being advertised to.
At the same time, Amazon will be able to translate some of its digital ad mojo into the auto arena. Already, Amazon sells “sponsored ads” for certain key search terms on its website. There’s no reason why it can’t do that for location-based items. Search for a burger joint while driving and Alexa will gladly tell you the closest one… that happened to pay to be the top search result. Even better is that she can open the skill for the establishment and you can order it ahead of time. As a consumable, AMZN will collect another fee when you do.
All in all, the revenue potential is vast and is just another reason why AMZN stock is a must own.
Disclosure: As of the time of writing, Aaron Levitt did not hold a position in any stock mentioned.
